A Life of Debt is No Life at All

Did you know you have more employers than just where you go to work each day? You may say, “no I don’t” but guess what not only you are working for them, but you are paying them for the opportunity to work for them.

Where Do You Work

“So where do you work?”

I am in a new neighborhood and ask that question all the time when someone moves in, and you get the typical company answer. However, when you think about it you work for more than just your company. Because of the massive amounts of debt out there, you may also work for Visa, MasterCard, Discover, or American Express…. you get the point. This list could go on forever and include lots of companies, credit cards, families, car dealerships, banks, credit unions…etc.

Deal With the Debt Devil

So what are you worth? What is your time worth to hand over your hard-earned cash plus interest to these companies? You have your regular job (which you may or may not like) just to pay off these other companies that are also controlling your life. You may think you are in charge but as long as you are in debt technically they are in charge and have set the conditions of repayment. 

I don’t think you are setting the conditions of the debt. Maybe you can negotiate once things get really tough, but the businesses and credit cards setting the rates, terms, and conditions. They are in charge as long as you are in debt to them.

$29,000 Binder

A while ago I found a binder lying around next to the sidewalk about a half-mile from my house. I figured I would take a look inside to see if there was a name so I could return it.

There was no name inside but there was a list inside on a legal pad. It made me gasp. I couldn’t believe the numbers and I just couldn’t stop staring at them.

The legal pad had a list of credit cards and amounts on the first page. The total was $29,000 dollars. They also had a monthly amount that appeared to be what they paid to cover the costs of all the bills. It was nearly the amount of my mortgage payment.

I have not been in serious consumer debt. If I have a credit card bill I have always paid it off each month. I have never maxed it out. If you haven’t been in serious debt (other than your house) then it’s hard sometimes to understand how folks can be so comfortable living with so much debt.

I have heard of people with more consumer debt than $29,000. I’ve known many people with more tremendous amounts of debt from their medical or MBA programs, but I just haven’t seen a list of consumer debt laid out like what was in this binder with so many credit cards listed.

I think for the first time it made me realize what some folks are going through each month when they get their mail and why they would have tremendous amounts of stress in their lives.

Working on the Debt

After the initial shock of seeing the amounts, I did have the thought that at least this person had a list of their debts so they knew where they stood financially. I wondered if this person was finally turning the corner and trying to take a hold of their debt and pay it off. I hope so. I’m glad they may be working on it but it would be even better if the debt didn’t exist.

Reality of Debt

However, the fact is most people are in a tremendous amount of consumer debt. A story the other day in USA Today said that 1/3rd of Americans is delinquent on some form of debt, a good chunk is likely housing. This article on CNN Money says the average household has more than $15,000 in credit card debt. That is horrible. Debt cripples your ability to build long-term wealth because you are continually paying someone else instead of yourself.

Being Controlled by Debt

If you feel like you have to use a credit card or you just think you can hide an expense away on a credit card you do not have control of your debt. If you think you can still afford something because you still haven’t quite maxed out your credit card you do not have control of your life or debt. If you don’t pay off all of your credit cards each month you are in survival mode and not living life. 

Maybe you realize you are losing control or maybe you don’t; maybe you are still in the stage of blissful ignorance or maybe that first collection call has given you a wake-up call. Let’s take a step back and look at your situation. Can you answer this question? Is my life being controlled by little pieces of plastic?

The goal of this post isn’t to depress you but maybe awaken you to your plight. Really I am writing to the person who lost their binder. I feel bad for them because they are in a stressful spot unless they are bringing in a tremendous amount of income. 

Maybe they just started a new business and the binder was a list of their start-up expenses, but I doubt it. Chances are it is vacations, eating out, new rims, a jet ski, a $500 vacuum (which does way better than a $100 vacuum – *sarcasm), and various other things that just add up over time.

Habits of People Who Control Their Debt

So, what are the habits of people of wealthy people who are in control of their debt and spending?

  • They understand the exact amount of money they bring in each month.
  • They understand the exact amount of expenses they have each month.
  • They look to save their money first and not spend it.

You just earned your paycheck, why do you want to give it to someone else right away? Plus you can take that money and invest it in the hopes of making even more money. You like money right?!

  • They realize a credit card is something that should never be maxed out and should be paid off each month.

Whether you are a credit card or cash-only person is up to you, but as long as you have enough to pay the bills and be able to save how you do it isn’t as important as being in control of your spending.

They realize it’s not how much you make, but how much you save.

Who cares if you make $250,000 a year if your expenses are $300,000 a year; you are poor. Sorry to break it to you, but you have no control despite bringing home a large paycheck. Spending more than you bring in makes you poor. Ask any former bankrupt professional athlete.

  • They realize having more stuff doesn’t make you rich, having more money and investments makes you rich eventually.
  • They think long-term and not just short-term.
  • They constantly evaluate expenses and look for ways to cut costs and not add to the costs.
  • They look for ways to increase savings and investments.

So let’s get a handle on things. Take baby steps and work on one debt at a time and get rid of it. Once you get rid of one you will realize that it is not impossible, but you have to get rid of the cycle of adding to your debt and start the cycle of adding to your savings.

Oh and if you lost a binder with $29,000 of debt listed inside…. I still have it.

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