What is Your Philosophy on Debt?

Society programs people to think in specific ways and accept certain ideas. Consumerism fueled by credit and resulting in debt is normal. Mortgages, auto loans, credit cards, home improvement loans, signature loans, equity lines of credit, student loans – all normal. Think about it for a moment. Who does having all this debt really serve?

Does it serve you – or does it indenture to you serve others at your expense?

The debt of the people serves lenders and power mongers. It subjugates you to the will of others and limits your freedom. The more debt you have – the less freedom you have.

Don’t think so? Then think about this. Can you take today off work? Can you take the week off? How about if you want to take six weeks or six months off to travel, go camping, build a boat or just do anything else you might want to do – can you just do it without falling behind on debt payments and suffering all manner of negative consequences?

How about if your employer doesn’t want to “let you” take the time off? Can you afford to quit and support yourself without that job? Or are you financially trapped there and subjugated to the will of the “boss”?

Could you afford to live without that job for weeks, months or even years if you wanted to? Then when you do decide to work – can you choose interesting fufilling work of your own choice that you enjoy, or would you have to take what ever you could find so long as it makes a lot of money? Money needed to give to lenders.

Debt traps you. You have less freedom and fewer choices the more debt you have. Instead of working for yourself and your family to get ahead – you must work as an indentured servant for lenders to pay them back and their fees and profits on top of what you borrowed, which they want to extract as much of as possible from you, so you no longer have the choice of whether to go to work or even how much to work, you must work to earn sufficient amounts of money to pay them and still eat, feed your family and cover your other expenses.

Do you believe debt is a tool – or do you believe it is a disease that should be eliminated?

For most of my life I had a normal philosophy on debt. I had all the normal debts most people have, and then some too. I thought the solution was to make more money – so I did. I worked harder, longer and smarter – I produced more income. It still wasn’t enough, and I became ever more frustrated. So I started a side business and I worked most of the few hours I had off from my other work. It still wasn’t enough. I became angry, but not angry enough yet to really change my approach. My wife started a business and she worked very hard at it – and I helped her with the heavy lifting and labor of getting in and setting up raw materials and then in packing and loading and or delivering finished products. She made money. But it still wasn’t enough.  So I started another business and took work as an independent contractor recruiting truck drivers and consulting with owner operators on setting up and runing their trucking businesses. I made more and more money.

But by then I wasn’t doing anything except working and sleeping and then working and sleeping some more pretty much seven days per week. Once in a while I could find a few minutes to spend with my family here and there and if I was very lucky a few minutes to myself to actually think. When I had time to think all I could think about was finding a better way to live.

No matter how much money we made it was never enough. The more we made – the more we spent, the more debt we incurred. It doesn’t make any damn sense – but that is what we did.

Together we were making plenty of money – the problem is that we always had more going out than we had coming in because I had not yet figured out that income alone can never be the answer – no matter how much you make. I was miserable. I began to hate the company, and I noticed that when I left work as I was driving home I could literally feel the muscles in my neck and back begin to relax as I got further and further away from a place I had come to hate being at. Then when I got home, back to work I went, often until very late at night. The next morning I would get up and repeat the whole thing all over again.

As I researched money and personal finance I slowly began to change the way I viewed money, credit and debt. We began to change how we spent our money and started working on getting rid of our existing debts. We cut our expenses. We paid off our vehicles and owned two decent vehicles that were completely paid for. That felt good, and we felt like we  were beginning to make a little more progress.

One weekend in between other tasks, I was going through our bills and noticed we had missed a due date on a credit card bill, and the entire payment we sent in after the due date had been gobbled up by a huge late fee – and that had triggered their ability to charge an over limit fee that was equal to their crazy late fee. By the time the total was calculated not only had every dollar of the payment we sent been taken for fees and interest – the balance actually went up!

That really pissed me off. I took a closer look at that card account and realized we had not only paid back the total principal amount – if you took out their crazy ass fees and usury interest  – but we had paid an amount equal to more than three times what had originally been charged to begin with – and even though there were no new charges to the card, with every payment being made at the previous minimum payment amount the balance was going up not down! That’s because they were charging an over limit fee which ate up the entire payment!

That was the beginning of a major change in my philosophy at that instant. I finally realized that what I had been doing my whole life up to that very point in time simply wasn’t working – and had never worked to begin with. I realized that everything I thought I owned that had debt on it really owned me and I was working my ass off practically every waking hour just to support a bunch of financed crap. Up until that time I always thought the solution was to simply work harder. Make more money and slowly work on paying down existing debt. The problem was that it didn’t work, and it eventually occurred to me that I would die of old age long before I would ever get rid of all the damned debt.

I finally realized clearly for the first time really – that we were not getting ahead at all – we were merely getting by. We were comfortable, we had a more than adequate home, plenty of food, plenty or clothing and more than enough computers and gadgets… But I was becoming more and more unhappy. Almost everything we had was built on a foundation of debt.  I hated my primary job by then – but the problem was that I had increased my income there to the point that I would have difficulty immediately replacing it with another job in the same area.

To be certain there were many other things I could do and which would all pay me very good money – just not quite enough to immediately cover the massive debt load we had burrowed into over the years. Other opportunities were available that would pay more than enough – but they involved being on the road and gone all the time or they were in other states hundreds of miles away from where we lived. At that stage of  life my wife and I did not want to be apart for weeks and months at a time – we had already been there and done that years before. One solution that would have been fine with me would have been for her to go on the road with me as an owner operator – and I would have been perfectly happy with that solution at the time. She on the other hand would have been miserable because she didn’t want to live that lifestyle at that point in her life.

So I didn’t know what  we were going to do exactly at that time – but what I did know was that I had finally had enough and I wasn’t going to play the fucking game anymore – no matter what. I wasn’t going to keep working like crazy just to be getting by instead of getting ahead. I wasn’t going to keep working for a company I now hated just for a pay check that was already spent on debt before I even got it in my bank account. I didn’t know what I was going to do – but I knew for certain that I was going to do something significantly different and I was going to do it soon.

I decided that we would at least start by getting rid of all the stuff we didn’t need – junk that had been sitting around unused for years. We looked around to see what we had that could be sold and otherwise gotten rid of. I began to pull things out of the attic and the basement and the closets and inventory all the stuff we had accumulated over the years. Much of it we had not even laid eyes on in more than a decade. Then I began to take note of how much of the stuff had been financed on credit cards, or sleazy pay programs, or bought with money taken out as a second against the house – and I wondered to myself what the hell I was thinking when we got all this crap!. None of it served any real necessary purpose or use in our lives and most of it had been stored away most of the time we had  “owned” it.

The truth was we never owned it – it owned us…

So we started selling off all this stuff. The things we couldn’t sell we gave away to friends and family. Some things we donated, others we disposed of – but we got rid of truck loads of stuff.

My wife and I had many long serious conversations too. We  had much finger pointing and blame, and many tears. I blamed her for it all – after all she paid the bills, I just worked and earned as much of our money as I could. So it was her fault that we had charged all this crap to begin with. Of course I was wrong about that too – it wasn’t her fault – it was mine. There was not a single purchase made that I hadn’t either known about or actually asked her to get.

I also had never really sat down with her to review and help her pay the bills or manage the finances – I considered that her job. I earned most of the money and it was her job to pay the bills. That was unfair and it was wrong and it led to many problems. So we began to seriously change our philosophy. First we decided that we were never going to use another credit card for anything, and that we were going to eliminate all existing debts as fast as possible using every available means we could figure out – but rule number one was no more new charges and no new accounts ever.

We also decided that neither of us would ever buy anything at all without discussing it first with the other and both of us agreeing to the purchase. It didn’t matter if it was a book or a house or anything in between – no purchases without prior agreement from us both. It took awhile and a lot of contemplation and decision making and effort, but In time it evolved into what it is now, our debt free living philosophy that we live by and will follow for the rest of our lives.

 

Our philosophy is extreme and very simple; All debt is bad debt and should be eliminated. Buy nothing you can not afford to pay for in full at the time you buy it. Evaluate every potential purchase asking yourself three questions in order;

  1. Can I afford it?
  2. Do I need it?
  3. Do I want it?

In the event the answer to number one is “No” then that’s the end of the consideration.

I realize this is extreme. I also realize that while it is the right philosophy for us it is not the right approach for everyone else – each person has to find a way that will work for them – and that includes you too. You have to figure out for yourself what will work and what won’t, what you are willing to do and what you wont do.

In our case this works for us quite well. It didn’t happen over night, and it did require some effort to get to following this philosophy on a daily basis but we do now and will continue doing so for life.

We also decided to take things more extreme even. The biggest debt we had was the mortgage payment – so we decided to get rid of the house. I called the mortgage company and informed them that we were going to sell the house but since the real estate meltdown we now owed more than it would be possible to sell it for, so they were going to need to be prepared to take less than the full balance on the existing mortgage most likely. They said that they had a program going at the time where they would actually buy the house back from us and give us a small payment of a few thousand dollars for it if I preferred that over trying to sell it. I told him to send me the paperwork.

So we got rid of the house and got a couple of thousand dollars which I was happy to get. We got rid of the house and the mortgage along with it – and that was a primary objective, to get out from under that huge debt and monthly payment. But before we did my wife and I discussed where and how we would live. Our son had graduated college and had gone out on his own, so it was just my wife and I and our two cats. We discussed various ways of living and the requirement that what ever it was would not involve a mortgage or long term rental – no lease in other words other than a month to month rental possibly but even that was to be avoided if at all possible.

Many years earlier we had owned and lived aboard a boat. That was my first choice again – however my mate wanted nothing to do with boats, though we did go look at several she really didn’t want to live on one again. Finally it came down to three possible choices –  a truck camper, travel trailer or an MCI 9 bus to convert into a motor home. We decided to leave the area where we had lived for more than a decade and a half and get rid of everything that was in our way of living a better life.

Was it easy? Hell no! It is very hard to completely change your entire life and way of thinking in a few weeks, but we did it anyway. We soon after bought a 35 foot Keystone travel trailer which we named Nora and started a new chapter in our lives with a whole new philosophy – Debt Free Living Philosophy. We lived in Nora for a year before we sold her – and I can tell you that it was one of the happiest years in our lives. We lived with less, but had more than ever before – life was simple and very good. Maybe later I’ll tell you more about  our adventures in Nora and after, but for now – what about you?

What do you believe about money and debt? Are you happy with your life? If you aren’t happy are you unhappy enough yet to actually get up and go do something different to change it?

Your life, your choice, and your responsibility – but if you aren’t happy with what you have then change what you do. Develop a new philosophy that will work for you. It certainly doesn’t have to be my philosophy either – use what ever works and figure out a path that makes sense to you personally and then go do it.

 

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