Zero Debt

When you read the title of this post I bet your mind immediately thought about money. Well, I’m sorry to disappoint you but this post is not at all about money. It is about another form of debt, one that subtly creeps into our lives and creates must-do situations. Can you think of what it might be? Let’s start with the definition:

something owed; a state of owing

See, that definition doesn’t say anything about money. Debt is a state of mind, created when you feel like you owe something to someone or something. Owe as in you are obligated, there is no other choice. When we start to think about debt that way you can see how you can fall deeper into debt in any area, no credit card required.

brain-tiredI ran across an article, Busyness is a Kind of Debt. The article wasn’t what I expected but I do like the title so I want to reframe the conversation in terms of what my expectations were after I read the title. We sign ourselves up for things all time, sometimes weeks or even months in advance. We’re optimistic that we’ll have time and we over commit. The act of “signing up for something” makes us feel important or special or part of something or whatever we like to call it. Commitments are debt that creates busyness. Busyness is a kind of debt. And we all know the toll financial debt can have on you: it makes you feel overwhelmed, you stress out about it, you have to spend time and energy figuring out how we’re going to deal with it or make it work, along with a host of other emotions!

The goal of this article is not to convince you to stop committing to things or to stop you from taking on more debt. in the case of busy debt, just like when it comes to money, the maximum level you can tolerate is up to you and only you; but, unfortunately there is no bank or other entity setting a limit for you, in other words you can easily go over the limit, your limit. Yes, you can take on as much or as little debt as you want. When we think of debt in the financial sense, we know what to do when it gets to be too much: we stop using our credit cards, we cut we them up, give them to a friend to hold onto or we might even freeze them; but, what happens when you get overwhelmed with busyness? Do you know what to do? Maybe you get tired and just need some down time. What do you do when you find yourself with a string of debt affording you zero time to relax, recharge or rejuvenate. How about we freeze our busyness every now and again, get our debt level back to zero???

Take a few moments to think about the debt you create in your life. And maybe the next time we’re presented with a debt-creating/inducing situation or opportunity 🤔, we can all practice saying, “Let me get back to you on that.” Check your tank first, then decide.

Financial Peer Pressure

Before you read, L-I-S-T-E-N to this!!!!

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Over the years, I’ve noticed that moment when each of my children started caring about what other people think of them. One by one, I’ve watched as the opinions of others become a big deal in their own decision-making.  As smart, mature adults, we have a term for that: peer pressure.

game-of-lifeThis can cause all sorts of trouble in our financial lives. Instead of making financial decisions based on what will be best for us, we start doing things based on what others will think. We end up trying to live other people’s financial lives. Very few people actually pay attention to how and why they use money. When pushed, they have a hard time separating their “why” from someone else’s “why.” Not everybody you try to “model” your life after has the same financial makeup as you (income, expenses, assets, liabilities), so trying to “match” what you see in fact may work for someone else but may not work for you!

The goal is to separate what we want from what everyone else wants. Only then can we start to ignore the peer pressure we all told ourselves we left behind in high school. Personal finance is exactly that: personal. There are some basic pillars of personal finance, sure. Beyond that, all you can do is soak in the advice, learn the basics, and make decisions that benefit you the most.

The content of this post originally appeared in The New York Times and Lifehacker.

Interest = Stupid Tax

interest-rate-cutThis article I ran across this morning is BRILLIANT! The title is Pay Your F#$%ing Debt; but, to sum it up in one sentence, the author states: “Interest is a stupid tax added to your loan balance every time you make the wrong decision with your money .

This concept is best illustrated with the following example:

  • If you owe $20,000 at 5% interest and your minimum monthly payment is $150, it will take you almost 17 years to eliminate your debt and you’ll pay $12,125 in interest.

  • Increase your monthly payments by a mere $50, and not only will you be debt free 6 years earlier (yes, SIX YEARS), you’ll have spared yourself $2,710 in interest.

It always amazes me how people don’t get the simple concepts like this and consciously choose to tackle lower-interest debt first, when really the MATH shows this is not the best financial approach. You can read more of the article at Money After Graduation.