[Today’s post is from Dads, Dollars, Debts, a cardiologist blogger who lives and works in California. Debt, unfortunately, can equalize people’s lifestyles. By taking on debt, a person with a middle-class income can buy things individuals who earn twice their income can afford. In this post, DDD notes that financial stress is highly correlated with debt level, so even individuals with high incomes (i.e. doctors) who choose to take on significant debt can feel the same stresses about money as those with lower incomes. This post previously ran on DDD’s blog in March 2017. -WSP]
Imagine we are on a desert trip. Every 2 weeks we come across an oasis with a spring full of fresh water. We replenish our water supply. We feel good, revitalized, and ready to go. So off to the next oasis. Over the course of those 2 weeks, we drink and drink and drink. We drink all the water so as the end of week two approaches we get nervous. What if the water is not there? If we can’t access the water? If we need more water? All of this leads to stress, sleepless nights, and a more difficult journey. And it sucks! No one wants to live this way.
Debt desert
In the modern era, at least in most developed countries, water is abundant and instead we thirst for money. We imagine that those with lots of money are doing great. They are living in big homes and driving fancy cars. It is true, they may be living the high life, but if they are in debt, they are still stressed.
Debt is the great equalizer. It doesn’t matter if make $50,000 or $500,000; debt is the great equalizer. Debt is waiting to take it all away. Debt doesn’t care how much we make. It just wants to take what we have.
I may be a doctor and make more money than the average American. We may eat at more expensive restaurants and vacation at fancier hotels (well maybe not fancier hotels, but I do like to travel), but at the end of the day if I am taking on debt to finance my lifestyle, then I am stressed and unable to focus fully on other aspects of my life.
Make more money
If most people had the option, they would choose to make more money. Money makes life easier. It doesn’t fix all of our problems or make us happy, but it does make things easier. The problem is that money does not equal smart decisions.
I have plenty of colleagues who make a ton of money, while also sitting on a lot of debt. Instead of focusing on debt pay down, they buy $100,000 cars and spend $10,000 on trips. Then they sit home and stress about where their money has gone. Despite large paychecks, they are running high credit card balances. They are living paycheck to paycheck. It’s okay to buy things if they will make us happy, but to buy toys while worrying about debt doesn’t make any sense.
Many of us in the US live paycheck to paycheck, and it is stressful. Debt can ruin sleep, lead to ulcers, and upset the natural order of home life. I have been there and it sucks. In fact, while I am better off now (less debt), I am still not out of the woods and depend on a regular income to keep me afloat. I am not financially independent. It doesn’t matter that I make a lot of money, if everything that comes in goes out then I am not relaxed.
So what can we do to improve our lives?
It depends on how much we are (or are not) saving.
We need to figure out how much we make and how much we spend. By tracking the amount in and the amount out (a spending report), we can get an idea of what, if any, money is left over to pay debt. If we are spending everything we earn, then we are breaking even. This is not ideal, but is better than taking out more debt. In this situation, we should pay attention to spending and determine a few places we can stop spending and save money to pay down debt.
Are we saving the equivalent of half our income?
This is respectable, particularly if we are thinking of early retirement, as saving half of our income means we can typically retire in 10 years. I would be cautious of such extreme saving, however, as there are no guarantees we will be here in 10 years and such saving may leave life a bit dull, a bit mundane, and a bit monk-like (though Mr. Money Mustache would disagree).
Are we spending more then we make?
This is the case for most Americans that are in debt. We buy a car with a 60-month loan so we can afford the monthly payments. We cannot necessarily afford the $40K sticker price. This is a bad scenario. We should not be buying everything on debt. Some items are okay and arguably necessary. Our family’s security or education is worth it. Even an automobile, if it is needed for transportation to and from work, can be worth it (albeit we can all likely buy cheaper and equally reliable cars). Taking on more and more debt, without first paying those we owe will lead to more stress down the line.
What is the best scenario?
Ideally, we spend most of our money (70-80%) and save the rest. This requires some discipline but allows us to enjoy life now, while planning for the future. We have provided for our family while protecting them. We pay down debt and prevent it from stressing us out. Once the debt is paid down, we start saving.
Once we figured out which scenario we are playing out in our lives, we can move forward and make the changes necessary. It may not be easy at first to stop borrowing and pay down debts. As our net worth approaches 0, we can all sleep easier at night. Our financial stress (and likely familial stress) will begin to fade away. As our net worth grows positive, we will feel more relaxed. Remember Debt is the great equalizer. I may take home a bigger paycheck, but I am currently just as broke as most of the dads out there.
I appreciate this post very much.
I recently bought a house and had to take on a mortgage. I had been happily renting, but my family is growing and my wife was “nesting.”
The mortgage payments are appropriate for my salary. They are only 25% more than my prior rent, mostly because of the taxes. But then there are house maintenance (and improvement) costs, which are more than I anticipated.
I am, frankly, not happy with the debt.
Every financial advisor I have talked to has told me it was better to take out a mortgage (debt) rather than sell the few stocks I own to buy the house, which I could have done if I emptied my brokerage account.
They said that since the market will ultimately pay more than the 4.2% of my mortgage interest rate, so I will come out ahead. I followed their advice, but only took out a 15 year mortgage (instead of 30). I couldn’t stand to pay so much interest on each payment!
Somehow, their advice seems flawed, but I can’t find the flaw. Maybe it’s just that it creates debt?
What do you think?
It’s tough to state what is the right decision for you. I currently am in a similar situation. Do I buy a house with cash or take on a mortgage? You have the mortgage now, so one option is to pay it down quicker. Convert it to a 15 year instead of a 30 year by making higher payments.
You highlighted the problem that is plaguing society. It is so easy to finance a lifestyle even after credit access was tightened from the mortgage crisis. People look at the monthly payments to see if they can afford it rather than the entire amount and manufacturers realize this and make it easier to get longer loans to drive down this amount in order to sell more product.
Becoming debt free was one of the greatest highlights of my life and a huge weight was lifted. Even more so then I realized. We are all conditioned to being in debt and almost numb to the interest we pay. Add it all up and we are making someone other than ourselves rich
It is a huge relief. I have been debt free for 10 months and am loving it. It is hard to describe unless done.
Debt free. I hate having debt. It is this specter that is always there, waiting. I look forward to the day it is all gone and we can move on and finally own our educations.
GET RICH WITH BLANK ATM CARD … Whatsapp: +18033921735
I want to testify about Dark Web blank atm cards which can withdraw money from any atm machines around the world. I was very poor before and have no job. I saw so many testimony about how Dark Web Cyber hackers send them the atm blank card and use it to collect money in any atm machine and become rich. {DARKWEBONLINEHACKERS@GMAIL.COM} I email them also and they sent me the blank atm card. I have use it to get 500,000 dollars. withdraw the maximum of 5,000 USD daily. Dark Web is giving out the card just to help the poor. Hack and take money directly from any atm machine vault with the use of atm programmed card which runs in automatic mode.
You can also contact them for the service below
* Western Union/MoneyGram Transfer
* Bank Transfer
* PayPal / Skrill Transfer
* Crypto Mining
* CashApp Transfer
* Bitcoin Loans
* Recover Stolen/Missing Crypto/Funds/Assets
Email: darkwebonlinehackers@gmail.com
Text & Call or WhatsApp: +18033921735
Website: https://darkwebonlinehackers.com
My name is Tom Peacock from USA, I want to say thank you to Dr Emu for the good thing he has done for me, Though am not sure if this is the best forum to show my joy and happiness for what he has done for me but i can’t hide my happiness and my joy so i have to share it with people, my marriage got crashed about two years ago and i tried all i could within my power but to no avail. I saw a post and testimonial about the good things Dr Emu has been doing so I decided to give it a try. though he is always a busy man but when he responded back to my email, he gave me 48 hours for my marriage to be restored really just like he said my marriage was restored since then I am happy and i am living happily i am so grateful to Dr Emu you can always email him here: {emutemple@gmail.com} or WhatsApp: {+2347012841542}
HOW I FINALLY RECOVERED MY LOST CRYPTO: I lost all my crypto to a fake investment scam to someone I met online. I started searching for help legally to recover my funds, and I came across a lot of Testimonies about HACKER STEVE. I contacted him, providing the necessary information and it took him and his team of experts about 36 hours to locate and help recover my stolen funds. I am so relieved and the best part was, the scammer was located and arrested by local authorities in his region. I hope this helps as many out there who are victims. I strongly recommend Steve professional services for assistance with swift and efficient recovery (Crypto, Credit card, Forex, NFT, etc) on Gmail: Hackersteve911@gmail.com | https://hackersteve.great-site.net
BE SMART AND BECOME RICH IN LESS THAN 3DAYS….It all depends on how fast
you can be to get the new PROGRAMMED blank ATM card that is capable of
hacking into any ATM machine,anywhere in the world. I got to know about
this BLANK ATM CARD when I was searching for job online about a month
ago..It has really changed my life for good and now I can say I’m rich and
I can never be poor again. The least money I get in a day with it is about
$50,000.(fifty thousand USD) Every now and then I keeping pumping money
into my account. Though is illegal,there is no risk of being caught
,because it has been programmed in such a way that it is not traceable,it
also has a technique that makes it impossible for the CCTVs to detect
you..For details on how to get yours today, email the hackers on : (
atmmachinehackers1@gmail.com < Tell your
loved once too, and start to live large. That's the simple testimony of how
my life changed for good…Love you all .
last year, I was tricked into investing by a dishonest online bitcoin trader, who stole every penny I put into his platform. Cryptocurrency has fundamentally changed the way we think about money, but with significant power comes considerable responsibility, especially when it comes to safeguarding and recovering your digital assets. With the continued growth of cryptocurrency use, there is a greater need than ever for trustworthy recovery solutions. It can be terrifying to lose access to your cryptocurrency, and due to security precautions and intricacies, retrieving it can occasionally be difficult. When attempting to recover lost assets, there are several hurdles that should not be ignored, including hardware malfunctions and forgotten passwords. evaluating recovery options in light of variables such as security,expertise, and Reliability is necessary to achieve success. The moniker named Lion Cyber Security Company, which promotes trust in the cryptocurrency recovery space, is here. In order to assist clients in overcoming the challenges they face in regaining access to their bitcoin holdings, Lion Cyber Security Service provides a range of services. The company is run by a group of experienced people who understand the nuances of digital assets. It’s not only about getting your belongings back; it’s about the journey. Along the way, there are grins, high fives, and happy customers who can relax knowing that Lion Cyber is handling their cryptocurrency with skill. Lion Cyber distinguishes itself from competitors with their sophisticated security processes that provide top priority to the confidentiality and privacy of customer data. Additionally, the unique demands of every individual are considered incorporate into their customized treatment programs, guaranteeing a successful and distinctive method of cryptocurrency recovery. Lion Cyber Security Company adheres to regulations when it comes to safeguarding your priceless bitcoin assets. With their superior encryption and data protection procedures, they’ve got you protected. People may feel safe knowing that their bitcoin holdings are in capable hands since Lion Cyber Security Company has a proven track record of success and a dedication to preserving digital assets. For additional information, send an email to lioncyberrr@gmail.com to get in touch with them or through WhatsApp at +1 (929) 660- 4485