Why So Many People Fail at Becoming Debt Free, Part II
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Welcome back for part 2 of ‘Why So Many People Fail at Becoming Debt Free.’ You can find the first part of this post here.
For years we tried, (or so we thought) and tried to get out of debt. Most of our efforts would end up with us simply giving up after a couple of weeks, or, if we succeeded in paying off our consumer debt, we’d get prideful and fall back into debt, spending “only a few” hundred, or thousand dollars, telling ourselves that we’d have it paid off “in no time” or that it was okay because “most people” had much more debt than we did.
The real eye-opener for us was when we made a serious effort to become debt free in 2012. Or what we thought was a serious effort.
The years 2010 and 2011 were marred financially for us by a 7-month layoff and then by attempting to survive on 80% of our previous income, when we’d been living paycheck-to-paycheck on the whole 100%. What followed was an ever-increasing load of debt that culminated in a huge breaking point near the end of last year. We had been in denial long enough, and we knew we were in trouble.
We also knew that we were at a crossroads: if we didn’t get our financial life together now, we likely never would.
So in January of this year, we began our long, tedious road to living debt free. And we’ve also finally figured out why we failed to become debt free so many times in the past. Today I’d like to share some more of what we learned about why people fail to become debt free.
1. OMG – Now I Knew Why We Weren’t Debt Free
In 2012, we made a concerted effort to spend less and get out of debt, yet, we really didn’t do much – we only put $6,000 toward our total debt level, mortgage included. As we began our “serious” getting out of debt journey this year, I thought it wise that we go back and look at what we spent our money on in 2012, to help get an idea of where we might have been wasting our money and why our debt payoff journey had been taking so long.
What I found was shocking. Our “less spending” year discretionary expenses amount was absolutely unacceptable. We were spending $175 a month on entertainment, I was spending $205 a month on gas (I’m a stay at home mom) and our grocery bill was roughly $900 a month.
With the revelation of those numbers, I got nauseous real quick. If we were blowing this much cash in our effort at spending less (and we truly did spend less and say “no” to ourselves a lot that year), what on earth did our spending look like during the previous 15 years of our marriage??? It was now becoming very clear to us why we had struggled so much financial during our marriage.
What we learned real quick was that spend-tracking is a crucial ingredient in any debt payoff journey. You must know where your money is going if you are going to learn how to manage it successfully.
2. Lack of Respect for Money
Note that there’s a difference between respecting money and idolizing money. Idolizing money means that money leads your decision making and trumps the emotional needs and/or physical needs of yourself or your family. Respecting money means that you value, in a healthy way, the money that comes into your life, and that you spend each and every dime based on what’s best for your family and yourself.
Before our great awakening, we simply could not figure out why our finances were such a mess. We didn’t take vacations. We didn’t buy new furniture, or fancy clothes. We hit the clearance racks when we did buy stuff. We didn’t drive new cars or buy gadgets or toys for ourselves.
Toys for the kids were limited to birthday and Christmas, and even then we spent much less than most people do on gifts. Yet, we never had any money and kept increasing our debt load. Why? Because we were nickel and diming ourselves into a massive debt hole. We spent a good $200-$300 a month on going out to eat, but because that money was going to the snack bar at Target or a fast food joint, we viewed it as “just a few dollars.”
The problem came when we spent those “just a few dollars” several times a week. We were spending $200-$300 in gas costs for me as a stay-at-home mom because driving was a “necessity.” Although we had a grocery budget and menu plan, we would regularly make extra stops at the grocery store for “just a few things,” adding 50% to our “budgeted” grocery money each month.
Because this was for food, we viewed it as a “necessity.” But we had to learn that chips and ice cream just because we wanted them isn’t a food necessity.
We didn’t respect our money enough to really think about what we were spending it on. We didn’t equate that extra trip to the grocery store with my husband having to work one more hour that week, or delay retirement by X number of years. Any successful getting out of debt journey has got to start with learning to have a healthy respect of money.
3. Lack of Addressing the Issues Behind the Spending
Why do people spend more than they should? Sometimes it’s because of ignorance or lack of respect of money, as I mentioned in the last section. Sometimes it’s due to trying to fill an emotional void. Or maybe it’s pride, as in “The Joneses” (or my brother, or my friend, or my neighbor) has A, B and C, I should be able to buy those things too!
Whatever the reason, it’s crucial for living debt free to uncover and addresses the issues behind all of your spending.
Case in point: In our old suburbia neighborhood, all “good” parents had their kids involved in extracurricular activities. Of course we wanted to be considered “good parents,” so we immersed our 3 girls heavily into life at the local dance studio. Now, there’s nothing wrong with signing your child up for dance or any other extracurricular activity, provided the reasons behind it are valid.
Although the girls loved dance classes, our reasons for putting them there were wrong; we were doing it because it was the thing to do. Our former suburb had set it as a standard for parents, and we fell into the trap, even though we really couldn’t afford it. It’s not like we weren’t paying cash for the lessons, but if we would’ve sat down and researched our debt load and assessed our spending habits, we would’ve quickly come to the decision that dance was being cut from the budget.
But instead, we focused on how important it was to be “good parents” by involving our children in activities. We’ve been out of dance for three years now (ironically, we quit for reasons other than money) and you know what? The girls are still happy and healthy, maybe even more so now than they were while in dance class.
If you’re going to go on a successful journey to living debt free, it’s crucial to address why you’re spending the way you are and to clear your head of any misinformation that might be leading you to spend unwisely. So that’s it. I hope the info here and in last week’s post will help you to get a clearer vision of what’s needed to get you and your family on the road to a debt free life. You deserve it.
Have you diagnosed your roadblocks to becoming debt free?
Photo courtesy of: Images_Of_Money
John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.
Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.
Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.
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