I want to walk you through a couple tough conversations this week and next in order to build an understanding and framework around why living a debt free life is important and worth it. Then you will be able to apply great principles to take back ownership of your finances and gain ground in truly living the dream you want, not just in the here and now, but in the future as well.
Debt is like deception. You think you own your finances; you think you’re keeping on top of things, but the next thing you know it owns you.
I have been on this cycle and have seen countless others struggle with this as well. The ads pull us in. It’s only $69.99 per month, and then listed in small print, “for the next 84 months”. We think we can manage it. The car gets financed, the tuition goes on a student loan, the house gets mortgaged, etc. But it’s all manageable so why not? Why not travel, live life to the fullest and do all that you can while you’re young? The opportunities are going to pass you by before you know it. You want to enjoy the single life while you can. You want to enjoy the new married life, travel around, and get some nice things for your first house. You want to enjoy the freedom before the kids start coming along. All of that is understandable and I’ve been there! I am grateful for many generous people in my life because, to be honest, I don’t know how I managed to do half of what I did when I was younger!
The issue is that you spread yourself thin with all of the “small” monthly payments for everything. Each payment plan puts another dent on your account, and the next thing you know, you’re living paycheck to paycheck and wondering where your money went. You think your grandparents were hoarders and cheap with their money, but I can guarantee you that probably the majority of them owned every last thing they had.
What if you were to lose your job tomorrow? Do you have any savings built up to cover the time it’ll take to find a new one? Are you willing to take a job that pays less to supplement the loss and help keep yourself afloat, while you wait for something with a higher pay scale? What if you got sick and needed to go on EI either short term or long term? Is this going to spiral you into bankruptcy? These are real scenarios that happen all the time. You think you’re exempt and that everything is good, but as I am a living example of job loss and illness, these things can happen out of nowhere.
So many people are blind to financial matters. They don’t want to deal with it because they don’t like the feeling of insecurity or panic that it might cause. Or perhaps they are ignorant about it all. A lot of people don’t know how to handle their finances because no one ever taught them, so it instantly feels overwhelming. All they know is that they’re getting money coming in every pay and they get to do something with it. There are credit cards, money stores, and other resources to fall back on in hard times.
However, sometimes, those hard times never seem to end. I worked at an insolvency company and I would see people coming in with ten or more credit cards! I don’t even know how so many credit cards get authorized for one person, but it all adds up. I’ve heard scenarios of people making double what we make and yet have to file for bankruptcy because the debt got the better of them. The more you lean on the debt to get you by or to make the upfront payment easier, the more debt you’ll accumulate and the further into trouble you’re going to get.
The biggest thing you need to come to terms with is you. You need to break the ignorance, habits, and behavior you’ve created and see that there is a way to live on what you make. You can pay for purchases without using credit payments and you can gain freedom and progress as you save for the future.
