Let’s pause a moment in Jane’s adventures to look over some of the mistakes she was making.
According to Dave Ramsey, if you want to get and stay out of debt you have to do a few things:
1. Get Mad
Jane wasn’t mad about her situation, she was sad. And while she pondered this fact, she really thought it would be good enough to keep her out of trouble.
2. Commit to NEVER getting in debt again
Which means you need to stop using your credit cards, which Jane wasn’t doing. And you need to stop living above your means, another thing Jane wasn’t doing.
3. Stick to your budget
Jane had a budget. But if she went over, oh well, she would just save less money that month. She thought she had the money, so she stopped paying attention.
Sticking to your budget doesn’t mean you look at it on the 1st of the month and don’t look at it again until the end of the month to see how you did. It means you keep track of what you’re spending and when you’ve spent $199 of your $200 a month grocery budget, YOU DON’T BUY ANYMORE GROCERIES THAT MONTH! Well, you can buy a pack of gum.
It might as well have been rocket science for all Jane understood it, but following a budget really is horribly simple.
The thing is, Jane was still very immature when it came to her finances. After getting out of debt, it’s like she had tightened the belt so tight for so long that she completely lost her mind and ran wild when she was free, thus setting herself up for failure again. She should have just sat back and enjoyed being able to breathe. Things weren’t squeezed so tight anymore.
She was making enough money to cover all of her expenses AND save. It’s what she’d been wanting. But she didn’t think about the future. Saving wasn’t a priority because she never looked any further than the next month. She didn’t think about the fact that her 13 year old Saturn wasn’t going to last forever or if something happened in her townhouse, like her water heater going out or God forbid, the air conditioning unit, she would need money to replace those things — money she certainly didn’t have.
Another thing, Jane didn’t take the initiative and start paying on her student loan again. She mentioned it to her father once, to which he responded: it was okay, and he said he’d take care of it so he’s taking care of it. But she still could have taken control, after all, she had complete online access to the account and could have changed the address and started making payments again at any time.
A third thing, Jane still wasn’t entirely taking care of herself. Upon moving into her condo, her father was also still paying her car insurance AND her car tag and registration fees. This isn’t about whether or not she should have waited another year or two before she bought something. Maybe, maybe not. It certainly wasn’t worth it to Jane to stay another month in that noisy apartment. But at the very least, she should have been paying on all of her own bills and buying new things for her townhouse only as she saved up the money to pay for them. Those things alone could have kept her out of a lot of trouble.
Immaturity and money DO NOT go well together. And Jane kept falling into yet another dangerous trap: trying to out-earn her stupidity.
Because she could “afford” the minimum payments, she thought it was okay to carry a small balance for a while. After all, Dave Ramsey is radical, and Jane wanted to do what she wanted. She didn’t understand why he was radical. It was because he’d be burnt by debt something bad. And when something is dangerous, it’s a natural tendency for people to want to scream at you and yell, “DON’T DO THAT, YOU IDIOT! You’re going to fall off a cliff. You’re going to get burned! STOP IT!”
Jane thought debt still had a place in her life. She thought she could use it to her advantage, get those points, reign in some “free” merchandise. But Jane didn’t have that kind of control. She didn’t use the credit cards within the scope of her budget. She just ran amok with them.
What Jane didn’t understand was that hundreds and hundreds of dollars that she needed was going to the credit card companies. What she didn’t understand was that, they wouldn’t offer those “free” goodies and cash back if they weren’t making their money back one hundred fold off of her and millions of other people in the form of interest and fees.
Jane was living like a teenager. She was playing with fire. And we all knows what happens when you play with fire.