Dear Dave: Do you view personal debt and business debt the same way? I have about $210,000 in farm loans that are mostly tied up in land I rent to farmers. It’s the only debt I have, and the rental prices supply me an income of about $200,000 a year.
Dear Anne: Your debt required you to personally sign for it, right? So, it’s all personal debt. The law is going to treat you exactly the same if you don’t pay a Small Business Administration (SBA) loan as the law treats you with an unsecured personal line of credit. You’re still going to get your butt sued, and they’re still going to come take your stuff or garnish your wages. It’s debt. The only way it’s personal debt versus business debt is in your mind.
If I’m in your shoes, I’m going to live on as little as I can and pay this off like I was trying to pay off a house. If I made $200,000 a year on investments, and everything was paid for except one of my investments, how quickly would I pay that one investment off? Two years. In your situation, surely you can live on $100,000 a year.
Dear Dave: I started working your plan earlier this year. I even budgeted for Christmas and got my shopping done early, but in the process I overspent and blew my whole monthly budget. Now I’m having a hard time getting motivated again. Do you have any suggestions?
Dear Misty: Lots of folks make mistakes like this, even though they went into things with the best intentions. The Bible says that no discipline seems pleasant at the time, but it yields a harvest of righteousness.
The best way I know to encourage you to get back on the wagon is to ask one simple question: Where do you want to be in five or 10 years? Is your current path going to reward you with a financially secure life? Is it going to give you the ability to retire with dignity and to have fun living and giving in your golden years, or is it going to leave you broke, scared and desperate? There’s one simple answer if the path you’re on isn’t going to get you what you want and where you want to be in life: Change the path!
Most people don’t even take the time to identify where they want to go in life or how to get there. They just shuffle along, blame others and circumstances for their situations, and think someone will take care of them. That’s called being a child. Children do what feels good at the moment, but adults devise a plan and stick to it.
Lazy is always easier, and more fun, in the short term. But it’s a huge mistake when it comes to the future, Misty. Think ahead, plan ahead, and jump back on the wagon!
Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.