QUESTION: Lex and his wife are on Baby Step 3. They live in Portland, Ore., after moving to America seven years ago. They are saving up for a car, but his wife wonders what the difference is between borrowing a small amount to buy a car and borrowing to buy a house. They have about $3,000 left before they can buy the car they want. Dave explains his take on these types of debt.
ANSWER: For one thing, cars go down in value. The second thing is I don’t really like borrowing on a house, but I tolerate it because it’s a much larger purchase.
Don’t misunderstand. I recommend you pay cash for a house, too. I don’t like debt of any kind. But I’ll put up a small, 15-year, fixed rate mortgage where the monthly payments are no more than a fourth of your take-home pay. Still, I want you to get that kind of thing paid off fast, as well.
The best way to have a high-quality life financially, the best way to build wealth is to not be in debt. It stabilizes your life. And if you can’t learn to delay pleasure, then you’re not going to win with money. That’s the bottom line. Personal finance is about controlling the person in your mirror.
Every one of us has that 4-year-old kid inside us; that little kid in the grocery store who’s throwing a hissy fit because he or she wants that cereal. That kid’s name is Immaturity, and he or she doesn’t want to delay pleasure. What your wife’s asking is a normal request, but it’s also a sign that we have to address the kid that’s inside us — and tell that kid no!
QUESTION: Darcy and her husband are debt-free except for their house, and they live on a monthly budget. Recently, they began saving for a travel trailer. Her husband decided they needed to buy it quicker by financing it and paying it off quickly. Darcy disagreed, but felt it was her duty as a Christian woman to submit to him in this decision. She calls in from Spokane, WA, to get Dave’s recommendation going forward for a woman who doesn’t want to be in debt but wants to honor her husband.
ANSWER: Christian submission has nothing to do with you honoring misbehavior. Let’s use an extreme example. Christian submission would not demand that you go along with his using cocaine. He’s obviously not doing that, but that would be misbehavior. Borrowing money to buy a trailer you can’t afford is misbehavior. It’s financial misbehavior, and his wife is telling him that.
In Proverbs 31 it says, “Who can find a virtuous wife, for her worth is far above rubies. The heart of her husband safely trusts her; so he will have no lack of gain.” So, submission is support. It is not slavery. You guys have engaged in a toxic version of scripture, in my opinion. I’m not asking you to be a jerk, rebellious or a nagging wife. I wouldn’t want to be married to someone like that, and neither would you. You wouldn’t want a husband who acted that way. But you guys have to work together and learn to have a level of respect for each other’s input and opinions.
You asked me this on biblical grounds, and that’s how I’m answering it. That’s the paradigm by which this whole discussion starts. Submission would never tell you to submit to him doing something that isn’t biblical. So, here’s the trick. Do you believe debt is biblical? I’ve studied it for 25 years, and I can’t find a single time where there’s a positive reference to debt in the bible. Every time it’s mentioned it’s in a negative connotation; God is saying anyone who goes into debt is a slave or a fool. So, biblically speaking I can stand really firm in saying debt is stupid. It’s not a sin or a salvation issue, but I think your husband made a biblically unwise decision. And I am positive, in my understanding of submission, that God doesn’t ask you to submit to biblically unwise decisions.
I would sit down and talk this through with him. The good news is that you didn’t say you were bullied or that your arm was twisted. You, as an act of your spirit, stepped back and said okay. Sometimes this kind of thing takes a lot of work, Darcy. But you make better decisions this way.
QUESTION: Trudy in Tampa, FL, is a long-time listener of Dave’s show. She’s debt-free except for her home, is currently making $60,000 a year, and she’ll have her house paid off in 12 months. Trudy lives in an area that is a designated flood plain. She pays $1,070 per year for flood insurance, and her house is worth $325,000. Water has come halfway into the yard a couple of times in 26 years from a river behind her house that empties into Tampa Bay, so she asks Dave if she should continue to maintain flood insurance.
ANSWER: It sounds like your biggest issue might be if a hurricane caused a backwash in your area. Insurance is already pretty tough in Florida when it comes to hurricanes and that kind of thing, but you don’t want to run the risk of the house getting mowed down and losing the whole thing.
I think I would go ahead and stick with the flood coverage if I were in your shoes. What you’re paying for it is such a small percentage of your world, compared to the value of your house and your income. Keep it!