It seems that a goodly chunk of people who read and write PF blogs have been in debt. Deep debt. They then concentrate on getting out as quickly as possible.
Now, I’m not going to sit here and defend debt. It’s horribly unpleasant. But what if we are throwing the baby out with the bathwater?
People become obsessed with debt reduction, so they throw themselves completely into the cause. They crack down on every unnecessary expense. They throw every cent into debt snowballs. Every action they take is devoted to getting rid of debt.
The dedication is admirable, but I worry when I see this kind of behavior. There are very few folks out there who can really pull this off. The rest of us just set ourselves up for failure.
Unless your income is pretty high, chances are that it will take at least a couple of years to pay off your accounts. How many of us could actually sustain a Spartan existence for two straight years? How about three? Four?
No, the average person is going to end up with financial bulimia: living in (self-imposed) penury until it’s absolutely untenable, then breaking the budget. And once the worst of the spending is over, we are angry and disappointed in ourselves. The recriminations begin, and we devote ourselves even more to the cause. Which just leads to burnout again.
As someone who lives with cyclic highs and lows, I can tell you it’s not an ideal existence. And I would really love to see more people try to be more realistic with their goals.
Of course, this won’t be the case for everyone. Some people can truly find success in buckling down in the short term to achieve such an important goal.
But being so single-minded has its own set of effects. When everything is postponed until the debt is paid off, the future can’t possibly live up to your expectations.
People get out of debt, only to realize that, somewhere along the way, they started believing things would be easy once this goal was met. Once the debt is gone, they find that one big stress factor is gone, but there are other things bucking for the new vacancy.
It’s just so easy to get caught up in the idea that things will be okay – will get easier, will slow down, will just be taken care of – once you finish a project. But there will always be another goal to meet, another length to run. So it’s important not to lose perspective.
Other people survive the debt repayment only to find themselves curiously paralyzed. Even though they have the money for things, now, they can’t bring themselves to spend. Sure, it sounds nice abstractly. After all, that just means for for savings. But there’s a difference between choosing not to spend – perhaps you’re outraged by the prices – and not being able to spend.
Of course, no method is going to be perfect. Each one will have its repercussions. But maybe, just maybe, we should concentrate a little more on finding a balance in our lives rather than careening from one end of the spectrum to the other?
Perhaps we should allow ourselves to be human.
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When my husband and I first REALLY got serious about getting out of debt (i.e. added it all up and looked at what it'd take to get out of debt instead of just saying "we need to spend less"), we realized we had dug ourselves a VERY deep hole. This wasn't something we could get out of in a few months of gazelle intensity. We didn't have anything big to sell, our income was already good, and we didn't have more time/energy in the week to pick up another job (especially as our current jobs aren't your typical 9-5 work).
As much as I love the Dave Ramsey plan, we knew we needed a larger emergency fund to sleep easy at night and we knew that we didn't want to live in fear for years. Sure, it's a great motivator for some, but over time fear can be very damaging. We also knew that we didn't want to sacrifice certain things, like our health or time spent with family, friends, and each other. Some things can't be replaced and we didn't want to feel like we postponed living.
We have sacrificed a lot of things, but they are things that didn't seem so much like sacrifices after a short time because we were still spending on our priorities. But we cut back the list of "priorities" and found substitutes for a lot of things. We no longer go to the mall to spend time together out of the house. We go for neighborhood or nature walks instead. And while we still spend money on good food, we spend a lot less by watching prices and preparing much more of our food, as well as focusing on cheap, healthy ingredients. We do live very frugally, but we keep our priorities clear.
Things seemed slow at first, but over time we have picked up speed and, while we are not out of debt yet, we can see the light at the end of the tunnel far off in the distance. But, importantly, we're still happy, even healthier, and together. We don't fight about money and we don't live a high pressure life. There's less pressure now, in fact, which I think is important to sustaining what we've done — even after we're out of debt. We don't want to go back to our old ways because, frankly, things are better now.
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Abigail Reply:
April 21st, 2010 at 4:53 pm
Meg,
That's great, thanks for sharing!
I think you've really found a good balance between living in the present and creating a stable future.
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Laura Reply:
April 21st, 2010 at 8:50 pm
Your situation sounds very much like ours. Like you, we are living frugally on a good income, but don't have things to sell, or the time or energy to take on more work. We know getting out of debt is going to be a long, hard slog, not a quick, intense sprint. And like with weight loss, being debt free is not going to guarantee us a new and better life. We'll still be us, with all the same needs, likes, dislikes, whatever, so we're adjusting and doing what works for us now. And surprise, surprise, we are making progress and enjoying life as we go.
We were going to take the Dave Ramsey course, but after reading some reviews, and listening to a while to the free lecture currently out, we decided it wasn't a good fit for us for a variety of reasons. In the meantime we'll just keep slogging along.
And Abigail, yours is one of the best and most realistic posts I've ever read on debt reduction. Thank you.
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Meg Reply:
April 24th, 2010 at 2:37 pm
If you haven't already, I would check out his books from the library and watch him on Hulu. I do think he says a lot of great stuff. I just wouldn't pay for the class unless you felt like you really needed it. But then I haven't taken the course, either.
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Meg Reply:
April 24th, 2010 at 2:37 pm
If you haven't already, I would check out his books from the library and watch him on Hulu. I do think he says a lot of great stuff. I just wouldn't pay for the class unless you felt like you really needed it. But then I haven't taken the course, either.
[Reply]
Abigail Reply:
April 21st, 2010 at 4:53 pm
Meg,
That's great, thanks for sharing!
I think you've really found a good balance between living in the present and creating a stable future.
[Reply]
Laura Reply:
April 21st, 2010 at 8:50 pm
Your situation sounds very much like ours. Like you, we are living frugally on a good income, but don't have things to sell, or the time or energy to take on more work. We know getting out of debt is going to be a long, hard slog, not a quick, intense sprint. And like with weight loss, being debt free is not going to guarantee us a new and better life. We'll still be us, with all the same needs, likes, dislikes, whatever, so we're adjusting and doing what works for us now. And surprise, surprise, we are making progress and enjoying life as we go.
We were going to take the Dave Ramsey course, but after reading some reviews, and listening to a while to the free lecture currently out, we decided it wasn't a good fit for us for a variety of reasons. In the meantime we'll just keep slogging along.
And Abigail, yours is one of the best and most realistic posts I've ever read on debt reduction. Thank you.
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Great post. Thanks
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(cont'd)
That's not to say that I think everyone can live this way, but I also don't want people to automatically assume that they will feel deprived and will need to splurge now and then. Just change your definition of 'splurge' and you may find that you can do it in ways that don't cost a dime!
[Reply]
Abigail Reply:
April 22nd, 2010 at 4:53 am
Christina,
I'm glad to hear that your progress is going so well.
That said, when you tell people to change their definition of "splurge" you kind of point to one of the problems I am addressing. You have cut back your definition of splurge from expensive dinners and shows. Some of us still consider a $30-40 meal out to be a big deal — always have.
You might think that, somehow, that would make it easier. But it also means that we've been going without for a lot longer.
You guys definitely buckled down and saved and that's great. But having only car loans out — especially with $60,000 a year coming in — does mean that you weren't facing as grim a scenario.
Of course, no one can ever truly understand. And I imagine it was quite a slap in the face to go from $120,000 to $60,000, but please understand that that's almost twice what Tim and I were earning combined for the last two years.
I'm not trying to start a Who's Worse Off contest. I'm just trying to point out that you weren't both working full-time, bringing in (at most) what one of you brought in single-handedly and trying to pay down debt, keep a budget, deal with things that go wrong all the time, know that you have years ahead of you, etc.
This is probably coming off as confrontational and I apologize. But I just think it's a lot easier to temporarily cut back — especially when that means you can save $1,500 a month while STILL paying down debt — than to do it with no end in sight.
[Reply]
Abigail Reply:
April 22nd, 2010 at 4:53 am
Christina,
I'm glad to hear that your progress is going so well.
That said, when you tell people to change their definition of "splurge" you kind of point to one of the problems I am addressing. You have cut back your definition of splurge from expensive dinners and shows. Some of us still consider a $30-40 meal out to be a big deal — always have.
You might think that, somehow, that would make it easier. But it also means that we've been going without for a lot longer.
You guys definitely buckled down and saved and that's great. But having only car loans out — especially with $60,000 a year coming in — does mean that you weren't facing as grim a scenario.
Of course, no one can ever truly understand. And I imagine it was quite a slap in the face to go from $120,000 to $60,000, but please understand that that's almost twice what Tim and I were earning combined for the last two years.
I'm not trying to start a Who's Worse Off contest. I'm just trying to point out that you weren't both working full-time, bringing in (at most) what one of you brought in single-handedly and trying to pay down debt, keep a budget, deal with things that go wrong all the time, know that you have years ahead of you, etc.
This is probably coming off as confrontational and I apologize. But I just think it's a lot easier to temporarily cut back — especially when that means you can save $1,500 a month while STILL paying down debt — than to do it with no end in sight.
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I guess we are the odd-balls, because we've never had much struggle in 'hunkering down' and concentrating on debt payoff and savings.
Two years ago we made about $120k a year with two full time jobs. We spent all of it on who knows what. We didn't have debt besides our cars, but we didn't have savings either.
Then last year I got laid off and more than half of our income was cut. So, we drew up a budget, stuck to it, and we save almost $1,500 a month. We don't go out to eat, we don't go shopping for things we don't need, and we don't spend money unless it's necessary.
We have also paid off one car and almost paid off the other.
There are certainly some things I miss, but we get as much enjoyment out of free redbox movies, going on walks and hikes, and trying new recipes at home as we did out of expensive shows and dinners before. We haven't ever hit a 'binge' point, nor do I think we need one. For us, it was about changing priorities.
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Interesting take–I was able to pay down our debt pretty quickly–about 12,000 in student loans at 2,000 a month payments. Then, I just started saving that money.
Now that we live on one income, we live like we did before, we just don't have huge amounts going into savings. . . But we've never felt like we're on a diet or something. We're happy this way.
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