Last month I was having a beer with a new friend, and talking about how awesome our recent trip to India and how much travel in general had shaped my world. He replied by saying that he’d love to see the world, but “couldn’t afford” it, concluding that well being a world travelling vagabond sounded appealing, he was convinced it could never happen for him.
Now, I’ve only known him a short time (like a couple of months) but knew that in his chosen profession he must be pulling in close to 80K if not more; plus his wife works. So I asked the obvious question: “Why not”? He explained that after servicing their monthly debt commitments – including two car payments, mortgage payments (including a time share) credit card payments, child support and line of credit payments, there simply wasn’t enough money left over to do the things that he “really” wanted to do in life… or so he believes. Worse still, this chap quietly slipped in that he’ll be turning 40 soon, and should start thinking about saving money for retirement, since he hasn’t got anything put away as of yet.
As mentioned, I’ve only known this guy for a few months, but can appreciate his situation because we see it all the time; Heck, I can remember being in a similar place myself many years ago when money was tight, and spending (not mine) was rampant, so I understand this scenario first hand. Regardless, the bottom line is that debt – sometimes overwhelming crushing debt – is a very real scenario for a lot of people, right? But worse still, is a scenario of crushing debt with no savings for the future. This is a recipe for certain disaster, and one that need to be avoided at (if you will pardon the pun) all costs.
What if I told you there was a “one-step” formula that – when followed – guarantee anyone can become, and STAY debt free; would that be of interest to you? Well the good news is that there is; and the best news is that it works! I know this because it’s this exact formula that has allowed Paula and I to pay off a $240,000 mortgage off in seven years, to accumulate several hundreds of thousands of dollars in our savings, to travel all the world without borrowing from the bank, and finally to be able to many (note: not all*) of the things we want to do – all while remaining debt free.
And to be clear, I don’t say these things to impress anyone, but rather TO IMPRESS UPON them that it’s highly possible for anyone to live this way. So if this kind of lifestyle sounds appealing, then listen carefully; as I’m about to share the brilliant wisdom that makes it all possible… Are you ready? Good; here it is:
SPEND LESS THAN YOU EARN. PERIOD.
Yep! It’s Really That Simple
What’s that? Where’s the rest of the wisdom? Well that’s the thing; while there are a few nuances to this formula, this is 90% of it. You see, as my new friend’s story clearly points out, the reason he can’t afford things like travel is because he’s bought into the myth that he needs to have (and has) things like: A huge house (for 2 adults + p/t child), a vacation home (used maybe six weekends a year), new car leases every couple of years for both he and his wife, dinners out or pizzas/ Thai food in three or four times per week, etc. etc. – all things that erode his wallet, and bank account.
But as I pointed out that day, he is spending a ton of money on things he doesn’t need (Seriously? A fixed cost on a vacation property that is rarely used even 2 weeks a year? New cars every 24 -36 months?) rather than making do with what he has. Instead, he could use this money to pay down debt, or better – get in a position to actually begin saving for the future. I tried to explain that most of the things he mentioned are “wants” versus “needs”, and that he probably didn’t need them – even citing my ugly old van as a reasonably reliable mode of transport that rarely costs me any money as an example. In contrast, he spends almost $7,000 per year on a lease for just one of his vehicles. Sorry, but to me, this is just crazy-talk.
I’d love to tell you he saw the light; but based on the new A.T.V. he debuted on Facebook this week, I don’t believe he did… you know, being something he told me last week that he couldn’t afford. To be honest, seeing this actually inspired me to write this post, because I think it illustrates a common problem we have as consumers, and it’s this: For many of us, when we are in so deep in debt we don’t think adding an extra few thousand dollars to the pile is such a big deal, but it is. Having been 100% debt free for almost a year, I can tell you the amount of worry that goes with paying this money back is absolutely mind boggling; not to mention the anxiety and stress that goes along with it.
I can promise you that regardless of how much we may want a shiny new trinket, Paula and I will never, ever, EVER trade our feelings of financial security for a monthly payment (at prime plus 2%) so we can have it. Never, ever. It’s simply way too big of a price to pay.
Some Ways To Cut Debt Quickly
So if any of this resonates with you, I’ve got some great news: It’s never too late to begin. Living a life without the burden and stress of debit, requires commitment, sacrifice and an overall change of perspective of what’s important both today, and in the future, but can be achieved by anyone who truly wants it. Besides not buying big ticket items that you don’t need, small amounts not spent / or saved also add up so very quickly: Here’s a post I wrote about this; and here’s another, and even one more about why this is the way to go. Check ’em out and see if they can help you save a few extra dollars to help pay down your debt and get you on the road to financial freedom. Trust me when I say you will love the feeling you get when your assets not only exceed your liabilities; but when they eliminate them once and for all, you will experience fiscal Nirvana.
And what about my new friend? No worries; he’ll eventually figure it out; although unfortunately, it will probably be in ten years or so when he’s so entrenched in lifestyle debt that not only will his chances of ever getting out be almost nil, but worse… by then his only chance to see the Taj Mahal or The tanneries in Fez will be in the travel section of a glossy magazine. On one hand this is truly sad; but on the other, it’s also a choice he’s clearly making – one visa payment at a time. Can’t say I didn’t try…
* I say “not all” because sure, we’d love to live in Tuscany for a month each year, fly to Santorini Greece for the weekend or host a pig roast for 100 of our closest friends; but if we did, we’d sacrifice our debt-free lifestyle. So therefore, we don’t do these things, but find alternative ways to be happy instead.