Wants vs Needs with Cliff Ravenscraft
Tracy J Trost sits down with his good friend Cliff Ravenscraft to talk about why we get ourselves in debt chasing wants. They look at what we can do about it and how to break free from the debt based cultural mindset and get into a Successful Life Mindset.
On an Average
Tracy shared some astounding averages with Cliff….
The average credit card debt, per person in the United States today is $15,500. It is actually higher when you consider the fact that many people do not have a credit card. The average income for that same person is $20,000. What drives us to have debt nearly equal to our income for the entire year? There are several responses people give when asked that question. “Everyone does it”, “Its normal”, “You’re always going to be in debt anyway”, or something similar, but it doesn’t have to be that way.
Wants or Needs?
A few years ago, Tracy had about 60 call center employees. One woman came to him and asked for a one-week advance on her pay. He asked her how she planned to pay it back and they agreed to a payment system. She didn’t make the payments and soon came back and asked for more. He said he couldn’t and asked her how much she needed to catch up on the bills she had. She said an amount and he asked her a series of questions about her spending – do you have cable/satellite service, how often do you eat out, do you get a newspaper delivered, and more. When they were done he pointed out she could save the money spent on those things and spend it where she actually needed it. She was angry and said he didn’t understand. He owned a business and didn’t have to make those sorts of choices. But she was wrong. Years before, he was making about $700 a month and his wife was making money cutting hair. She became pregnant and had to go on bed rest at six months. They couldn’t make it on his income so they were forced to sell their home and rent his parents’ basement. They did that until his income was enough to move out. Even then, his furniture was a beanbag, his TV was a small black & white set, and the car was old.
Debt, debt, debt
Cliff and his wife were in debt in excess of $80,000. A small student loan, two car loans and credit card balances had them in over their heads. Some friends raved about Dave Ramsey and his financial revolution. Cliff thought they were crazy, but one day, while listening to the radio he happened to hear Dave Ramsey’s show. It made sense so he began to listen to learn more. He began to believe it would be possible to live debt free, but his wife wasn’t convinced and was tired of hearing about Dave Ramsey and his advice. Cliff planned a weekend away for him and his wife and took her to a Dave Ramsey live event. She listened and was hooked. They began to follow the plan, starting with baby step number one, an emergency fund of $1000. They took the next step of putting all their extra cash to paying down the high-cost bill. When that was paid, they moved to the next, then to the next. It took 7 ½ years, but they now live debt free except for their mortgage, which will be paid off in the next 3 to 5 years. Two of the illustrations Dave Ramey gives at his live events are coming on stage, wrapped in chains to show how we live and having your boss yell at you – again – for something someone else did. Living debt free you would have the option of walking away from that job. A couple of take-away lines from his plan are “debt is dumb” and “cash is king”. While they are cliché, they are also true.
The first and most important step is to believe. Believe you can live debt free. Then act on that belief. Learn to determine the difference between a want and a need. You need transportation. You want a new luxury car to drive. You need to eat. You want to eat out. Learning the difference and making choices based on your needs, not your wants will help you start your journey to living debt free.
Many times the problem is our mindset. We believe we are entitled to certain things in life. We believe we are entitled to a yearly vacation – whether we can afford it or not. We believe we are entitled to have premium cable or even basic cable – whether we can afford it or not. We believe we are entitled to a new car – whether we can afford it or not. The salesperson tells us it’s only $260 a month – surely we can afford that. What they don’t say is that over the life of the five-year loan that $21,000 car will ultimately cost us $45,000. We need to change from the entitlement mentality! If you can’t afford it – don’t buy it.
Things to Remember
- Learn the difference between wants and needs.
- Take control of your debt.
- You are not necessarily entitled!
Connect with Cliff
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Tracy’s movies, books and more are available through his website trostmovingpictures.com
Remember, live your life to its greatest potential!
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