Why I won’t be doing my debt free scream
I’m a huge Dave Ramsey fan. The debt free screams were what set me on my journey to financial freedom. I dreamed of the day my daughter and I would be on the show. Heck we’ve even rehearsed a remixed version of how we would do our scream.
I also know how impactful it would be to have a young black single mom and daughter on the show. I have yet to hear a story quite like mine, from someone who looks like me.
I won’t be doing my debt free scream because I have decided to go down another path with my finances. My path deviates in three major areas. First, I don't recommend that people in debt stop their retirement contributions. I also believe there is a responsible way to use credit and I plan to start using rewards to travel hack. And all the way contrary, I went back into debt for a car. A brand new one at that.
Taxes ain’t loyal
Dave Ramsey recommends that if you are in debt, stop contributing to your retirement. Every penny of available income should go to paying off your debt. This sounds good in theory but is not the best advice for everyone. It was definitely detrimental to me.
I came out of pocket $30,000 to pay my 2016 tax bill. That year being the first year I contributed nothing to retirement, determined to pay off my debt.
I missed out on the free money from my company match. And as a high income earner, I did not take advantage of the ability to lower my tax liability. For people in higher tax brackets, this is crucial.
I still get sick to my stomach every time I'm reminded of how much cash I gave to the IRS. As someone people turn to for financial advice. I can not recommend stopping retirement contributions as a blanket statement. Some people could benefit from the take home pay increase, but it's not a one size fits all approach.
One of my main drivers for financial freedom is to travel the world with my daughter. I am learning more about travel hacking and credit cards aren't as ominous as I once viewed them.
The key is to have your spending under control and pay your balances off in full every month. Viewed as a pillar of financial independence, travel hacking can save you thousands.
Luxury Car Pushing
If you followed me for a while you know about my kryptonite. I am not a car person at all. There are few cars that I even like. Hence, why I have had a three different model years of my last car.
That was until Tesla released the Model X. What!? An all electric luxury SUV? I fell in love.
I don’t know if it was the falcon wing doors, the autopilot or it being a zero emission vehicle that struck my fancy. It doesn't help that the Tesla factory is down the road from my job.
I dreamed of the day that I could have one of my very own. No doubt I would own one but I thought it was far off. I told myself I would only get one if I could afford to pay cash for it.
Well that day came sooner than imagined. I sold my house for much more than expected. After paying off the last of my debt I had the money for my Tesla.
Though I could have paid cash for it, I didn’t. Instead, I made some financial moves minimizing my year end tax liabilities. I also made some major investments in myself and my daughter's future.
My initial goal was to pay off the Tesla in 6 months. As the loan rate is so low, it might not even be in my best financial interest to do that. Yet I am still do debt adverse.
I go back and forth on what the best use of my money would be, investing or paying the car off. I'll make a decision soon. Whatever decision I make it will be an intentional one.
I respect Dave’s platform so much I could never go on his show knowing that I have deviated from his principles. I owe so much to him and his teachings. Instead I’ll use my own platform. Though I don’t have a fraction of his reach, I am confident that those who need to hear my story will.
I’m still a Dave Ramsey fan girl but now I choose to blaze my own trail.
Thank you Mr. Ramsey for helping me launch my path to financial freedom.
It's now all about being Financially Intentional.