Rich. One word interpreted so many ways.

I’m out running errands with my two younger girls when the oldest suddenly announces that the owners of the house we just drove by “must be rich”.  I ask her why she thought that and she states “well they have all these nice things in their yard, a pool, a big house, and all those new cars”.

Oh my!  It’s time for us to have a little talk about what rich really means, and of course about debt.  You see I want my kids to grow up knowing that we are rich, their friends are rich.  That they are surrounded by some of the richest people I know.  No, they are not all rich in terms of wealth, but their life is rich.  It’s full of contentedness, spirituality, happiness, fun, memories and so much more.

feeling richphoto credit (adapted by practicing frugal)

Merriam-Webster defines rich as:

1. Having abundant possesssions especially material wealth 2. having high value or quality 3.magnificently impressive  4.  vivid and deep in color 5.  highly productive or remunerative

Why is it that most kids start out with the generalized thought that wealth makes a person rich?  or that having a lot of possessions makes a person rich?

I can remember growing up thinking this very same thing.  Thinking that most of the kids I went to school with were so rich.  They acted that way, they had really nice things, they had big houses, but did they really own it all? Were they really happy?

Until I became an adult, I thought those were the things that defined wealth.  Until I learned about credit and debt, I thought just having something meant you were rich.  Having many something’s meant you were really, really rich.  It wasn’t until I became an adult that I learned about things like quality, colorful, and most of all contentedness, I thought wealth was the only path to being rich.

So what exactly did I tell my 10 year old that day?

After thinking a few minutes about what I wanted to say, I decided to take it to the dictionary.  I felt it would be best to explain what rich means with the definition.  Besides, that’s what we do at home if we don’t know what a word means, we look it up.  So she pulled it up on my phone and read the many possible meanings of such word.

First, I explained to her that most people associate wealth with being rich, but there are so many more ways to define rich.  Just like the dictionary said, there is having quality. Living a quality life doesn’t necessarily mean you have a bunch of money.  You are trying to carve out the best life you can for your family.  Spending quality time with family and friends. Making quality memories that will last a lifetime.

Quality can be achieved most when a person is content.  It doesn’t mean you may settle being in a bad situation, it’s a place, it’s a feeling, and it’s being okay with where you are now.  It’s knowing things will get better, but not dwelling in misery about the things you don’t have.

We also talked about having color in our lives and how it can add richness to your life. Just like people say colorful things make them feel good, having color in your life, variety, fun, love, and spirituality will make you feel good.  It will make you feel like the richest person in the world.

The last thing I told her came from the practical financial side of me.  The side of me that want’s my kids to know that possessions don’t define wealth.  I told her that you may very well hear it defined that way, but having possessions does not mean a person owns them. I explained to her about debt and that some people have an appearance of owning many things, but they are still paying for them, and that you really don’t own something until it is paid for.  We talked about how many times these seemingly rich people never pay for all those things, and it can all be taken away, further reinforcing the reality of ….. you don’t own it till it’s paid for.

I’m so glad we got to talk about this subject.  I want my kids to have the contentedness that I did not have growing up.  I want them to enjoy the here and now in their lives and not live life wishing they had more or could be like someone else.  I want them to know that it doesn’t mean settling somewhere that is not their goal, but to be content in the path it will take to get there.  To be content in doing what needs to be done to get where you want to be.  To enjoy life along the way.  To savor relationships, make memories and most of all laugh a lot.

These things make me rich.

What’s your meaning of rich?  

making a habit out of living frugal…..

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Why We Could Care Less About Our Credit

How do you think people would respond if you told them that you don’t owe any creditors? What would they say if you told them you don’t have any credit cards except your debit card?

Credit Card Issuers
photo credit to ptmoney

Recently my husband had a particularly low paycheck due to unpaid days off he receives around the holidays.  One morning at work he made a joke that he was gonna fall below the line (not get his part) because of the small paycheck.  His co-workers asked him what he meant.  He told them that falling below the line meant he wouldn’t get paid.  You see it’s something we learned when we listened to Dave Ramsey several years ago.  It means you pay all the bills down the list (Dave helps you order the list) until the money runs out. The line is drawn where it runs out.

This conversation continued until somehow it came out that we owe only one creditor and that we don’t use credit cards.  He said you couldn’t imagine the shock on their faces when they heard that.  Of course the next question was “you really don’t have any car payments, credit cards or anything” followed by “you have to have loans or credit cards to get credit”.  Hubby said he proceeded to tell them that he could care less about credit and that he didn’t need credit.  So they then asked him how he would buy another new truck or new boat.  He told them that he had no plans to buy a new boat or truck ever again, but a nice used one purchased with cash would do him just fine.  He said the look on their faces was total disbelief.  He said at this point he was having such fun.  The last question asked how we just bought our daughter a small SUV to go to college.  He told them that we paid with 75 one hundred dollar bills taken out of our account that was earmarked for this purchase.  It was time to go to work at that point, but he said one of them walked away shaking his head and mumbling “I’ve gotta have credit”.

This kind of mindset is what is wrong in so many households right now.  Add to that the need to have everything nice and new and you get people with piles of debt that can’t even manage to think about paying for things with good old cash.  Creditors are out there just waiting to give you that loan.  They will jump through hoops to finance that boat for 10 years.

You see we could care less about credit because we plan to pay cash for our purchases.  As students of Dave Ramsey’s Financial Peace University we know that you can live without credit.  If the car breaks we will fix it with money we have saved or if it’s an emergency we have this neat little thing called an emergency fund.  When you get out of debt, you have more cash in your hands.

Did you ever think about how much that new car really costs you after you finance it for 60-72 months?  I’m talking about payments and interest.  It’s easy to figure out, just multiply the monthly payment by the number of years you financed it and then add any late fees you have incurred.  The total is the real price you paid for the car.  You see I did this figuring once and in 1999 we bought a brand new SUV for 30,000.  We financed it for 72 months (can you say ouch) at $650 per month.  The price of that vehicle was actually a hefty $46,800.  We actually paid 56% more than the original price.  If you take $7500 cash to pay for a car, that’s all you pay.  There is no more.  No interest.  No late fees.  Nothing. Pretty good idea don’t you think?

It all goes along with this saying that’s been around for many many years “if you don’t have the money for it you don’t need it”.  How novel is that idea.  I can tell you that we had ignored that for years and years.  We had to work hard to get where we are now.  Paying off the debt was so freeing.  It’s such a relief.  It’s so much fun to watch people’s faces as they ask you about debt and credit.   Ten years ago I would have turned around and hid.  I wouldn’t want to tell anyone that we were in a huge pile of debt.  Now it’s so much fun to get in on the conversation.

The best part is when people ask how to do it.  You must start with a budget.  You must change the way you think about money.  You must cut out the unnecessary.  (Starbucks everyday is unnecessary)  You must be ready to change the way you live.  You must quit buying every new thing for your kids.  Teach your kids by being an example.  Teach them how to handle money, and that you cannot have every high dollar, brand new item out. When they get out of your house they will not be able to afford or keep up that kind of lifestyle.  The cycle will then repeat.  Your kids are now in debt.

If you are interested in getting out of debt or have made that a goal for your year, and you need help, I highly recommend Dave Ramsey’s Financial Peace University (and I’m not earning a thing, just a huge fan).  If that is not in your budget, you can check out my series on creating a budget.  I also recommend The Money Saving Mom’s Budget by Crystal Paine (again making no money for telling you this, just a fan).

If you would like to take a look at what Dave has to say about budgets, and I strongly recommend that you do, he is offering a free download of Dave’s Guide To Budgeting. I’m not sure how long this free offer will last, so hurry on over and download today.

What are your thoughts on credit and debt?  Do you need credit?  Have you had success using any kind of budgeting tools?  What works best for you?  Need help or have any questions.  Leave a comment letting us know your thoughts or shoot me an email.  

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*Please remember I am not a financial expert or professional.  I post about what has worked for me and what I have learned from research and helping others.  I cannot be held responsible for any ideas expressed here.  You are to plan, read, follow at your own risk. For more information see my Disclosures.