Are You Too Comfortable with Your Debt?
Other than an aunt and uncle who recently paid off their mortgage, I don’t know anyone in real life who is completely debt free. Literally every person I can think of (I went through my Facebook friends list) has some combination of student loans, credit cards, car loans, personal loans, and/or a mortgage. Many of my friends have all of the above.
When all my friends and family carry debt of some kind, sometimes it’s hard for me to remember why I’m working so hard to become debt-free someday. Now that I’ve paid off my credit cards, all I have left is my car loan and student loans. I don’t have the income to throw huge chunks of money at either of those, so I’ve just kind of settled into a sense of complacency. I’m not drowning anymore, I’m not overdrawing my bank account, and I couldn’t tell you the last time I ran out of money between paydays. I’m doing pretty good, right?
Except I’m not. Because I’m still in debt.
Ever since I paid off my credit cards and changed jobs, I’ve gotten out of the habit of finding extra money to go toward debt payments. Some of this was expected - I no longer earn a salary, so my income fluctuates - but some of it is just me thinking it’s okay. I’ve become comfortable with the idea of having a car payment and student loans instead of staying angry at my debt. I’ve hesitated to calculate a debt-free date or any of the stuff most people do because it’s not bothering me as much as it should be.
Are you too comfortable with your debt?
Debt repayment is exhausting at times. For awhile, it’s easy to get excited because you’re knocking out the little piddly debts pretty quickly. But how do you stay motivated when the only remaining debts are so massive you can’t see the light at the end of the tunnel?
Here are a few signs you might be getting comfortable, as well as some ways to get your payoff mojo back:
1. You aren’t sure how much you owe anymore. This problem is pretty easily solved - recalculate all your debt totals. Make a list or spreadsheet with all your accounts, balances, interest rates, and due dates. Include the date you’ll pay it off if you keep making the minimum payment. Hang it up where you can see it every day and get pissed off about it.
2. You haven’t snowballed the money you were paying on previous debts. I’m totally guilty of this one. No more credit card debt means an extra $130 a month in my pocket. But have I rolled this onto my car payment? Nope. I said I was giving myself time to adjust to the job change, but it’s been almost 2 months and I’m still wasting money. I sat down last night, added up all my expenses again, and figured out how much I can throw toward my car payment. AND (the important part) I logged into online banking and changed my automatic payment amount, taking the money away before I can use it for anything else.
3. You’ve relaxed your savings standards. For 9 months, I didn’t set foot in a mall. I didn’t buy anything other than gas, groceries, and cigarettes (yes, I know that’s a poor choice). I was saving money like crazy and using it to wipe out debt. If you’ve seen my spending roundups over the past few months, though, I’ve spent a TON of money on random stuff. Money that could have paid off over 1/10th of my remaining auto loan balance. Did I need that stuff? Some of it, but not all. I could have lived without 85% of it. So now it’s time to reinstate the spending fast. No more shopping, no more boxes piled up on my front porch when I get home from work.
4. You’ve stopped tracking your income and expenses. My bank tracks my paychecks and expenses for me, so I haven’t stopped doing that. But I also have a little bit of blog income, which is funneled through Paypal and never sees my primary bank account. Have I made a plan for how I should use this money? Nope. I’ve used it for all kinds of unnecessary things, thinking in my mind it doesn’t count because it’s not part of my budget. When every dollar doesn’t have a purpose, those dollars are much easier to spend. Decide ahead of time what you’ll do with any extra money, whether it comes from a part-time job, a yard sale, or eBay sales. Then do it.
5. You give yourself passes. A lot of PF bloggers talk about rewarding yourself (within reason) when you reach a milestone. I’m a huge fan of that! But there’s a fine line between a reward and thinking you deserve something - the latter is what gets most of us into debt in the first place! If you’ve just paid off a debt or reached a milestone in your savings goals, pick ONE concrete reward, then it’s back to business.
Get Off the Debt Couch
If you’re all comfy with your minimum payments and debt levels, it’s time to get uncomfortable again. Remember what made you hate your debt in the first place. Think about how easily you could end up in the same situation you were in before. Make a plan and do something about it NOW. You’ll be much more comfortable when your debt is gone and the only room you need on the couch is for you.
Have you been relaxing on the debt couch lately? What have you done to motivate yourself? What do you still need to do?
We're back to keeping at it on paying down the mortgage, but we did go through a similar stage after we each paid off some other debt. And now I'm excited about getting rid of the mortgage ASAP. Sometimes it just takes a little refocusing.
Congrats on getting to mortgage only! I can't wait for the day when I'm down to one, but I'm sure it's overwhelming waiting for such a large amount to go down.
I feel like I'm in a similar place to this, being too comfortable with my debt. At the beginning of the year I was busting my butt. Working a full time and part time jobs which equaled 70+ hours a week, and every penny was spent to pay down my credit cards.
Thankfully all I have left is my car loan, but I've become complacent. I haven't been making triple payments like I was before, and any extra side income I've been using to save for a new laptop. Plus I've been shopping and eating out more, where at the beginning I was basically working or sleeping (no time for going out).Thanks for giving me a swift kick so I'll get back into debt repayment mania.
I can relate to this. In the past I have tried to shrug off our debt so I wouldn't feel so stressed. Now we take a proactive approach to it. We don't have any debt apart from our mortgage but we are making an active effort to work on paying it off sooner.
I like your idea of posting the amount of debt you have in big angry letters! I think I'll try that — I'll print a picture of Italy, write "You need 9600$ to get here!" and put it on my front door (the inside obviously). Maybe I'll keep a copy in my wallet…
Ooh, I need a trip to Italy!! Maybe that's part of my problem - I'm not really working toward a specific goal right now other than paying off debt. Hmmm… I need to think on this awhile. Thanks for the inspiration!
I can relate to this article so much. Although I'm debt free (100%, not just consumer debt), I am presently going through a funk where I've stopped tracking my spending and stopped really watching what I do anymore. I was pretty relentless about paying off the mortgage from 2008 to 2011 and then well, I got burnt out. I needed a break and the extra money has just been spent on this or that (basically everything I didn't buy the last 3 years). I need to get back into the groove, but it's been tough after such prolonged intensity.
I will admit, some months I'm more comfortable with my car payment than others but this really depends on the amount of income I bring in. Since my income has gone up a lot more lately, I know I should be paying my car loan down, and I'm really motivated to as well, but something has come up and I really need to think about that instead.
Oh totally- there is a difference between rewards and backpedaling! I know when I've tried to get my spending under control there have been times I've bounced back to my bad habits with a vengeance! I curb this by setting up a pre-determined reward with an item I love. When I try to say "Oh, I'll reward myself for saving by spending only $50 on clothes" it never works, I always go a little over since you know…things hop in the cart, or the belt would look so good with the jacket.. I have to be strict with my rewards otherwise I totally wipe out my progress.
I'm finally getting a system down that works for me. Accepting my limits - I am not good with large, unfocused, long-term goals. Paying off my house is too overwhelming, getting $500 into my savings account I can handle as long as there is a reward for me. I get $50 to spend however I want as a reward but here is the key for me, any amount over that I have to pay back to myself. This month I overspent by $45 on things I don't need but love, specifically Etsy. Now I have to put $45 into my secondary savings account (that I refuse to withdraw from except in a dire emergency) before I can purchase anything else. I will have effectively "spent" $90 for that merchandise.
I still have 2 credit cards to pay off. I have rewards set up at getting to 50% of credit limit, 25% and 0. I need lots of rewards or I just give up and resign myself to being in debt like everyone else seems to be. I can crap away $1000 faster than anyone I know.
Funniest comment ever - "I can crap away $1000 faster than anyone I know."
I'm pretty sure we could compete for that distinction - I'm pretty good at wasting money! Or at least I was. I'm sure the habit hasn't left me completely, though I'd rather not find out.
Awesome post, good luck wiping out the last of that debt. Imagine how awesome it will be to be totally debt free!!!
I agree…I went after my credit card and car loan hard, but just don't feel as motivated to take care of my student loan. I'm okay with it for now because I've made other goals, but I think you make a valid point.
I had been comfortable with my debt for over 13 years before my wife and I finally hit a point where we couldn't ignore it any longer. I'll be very uncomfortable until all my credit card debt is paid off.
I am so far debt free, but dunno how long. The biggest expense of life is still to incurred. One part of my brain says keep on renting and buy with 100% down payment, another part says missing on the joy of home ownership is not good.
That's a tough one, SB. I definitely understand wanting to own your home!
Listing the total amount you would pay by only paying the minimum and then calculating the total amount you would pay with accelerated payments, which shows your savings in interest alone, is what motivates me the most. I'm saving money just by paying it off sooner.