The Ironic $64,000 Question
Why is there no real easy way to get out of debt?
(This was originally asked and answered on Quora.)
It’s tough, isn’t it? And just when you start to make some headway, something really expensive comes along, that isn’t a choice, and you’re back where you were or even deeper in debt.
My own experience, not only having run businesses and worked for financial institutions for a long time, but having been both in and out of debt at various times in my life, is that money is actually very emotional. It’s obvious from a practical standpoint, everyone needs the basics in life — food, clothing, shelter — all of which require money. When you don’t have those, or they are threatened, the emotions crank up.
Getting a handle on the internal forces that drive our decisions and choices that get us into debt is key to changing the perception about whether it’s “easy” or “hard” to get out of debt. There is no fairy godmother that appears one night and erases all your debt with one flick of her wand. But the notion that we would even wish for something like that (don’t kid yourself, what do you think the lure of the lottery and Las Vegas is?) gets to the heart of why we’re in debt in the first place and then want a quick and easy solution to make it go away.
We each have a money story. It often is one handed down to us by our parents/up-bringing. Remember, how we grew up is the basis for our “normal”, so rather than assuming your ideas and beliefs about money are truth, be willing to reflect on what your money story is. Do you believe money/wealth is the defining by-product of a virtuous life? Do you believe money is the root of all evil?
“We buy things we don’t need with money we don’t have to impress people we don’t like.” — Dave Ramsey
Our entire society runs on debt. Think about that. All of everyone’s assumptions stand on the foundation of “Get It Now, Pay For It Later” or “Get It Now, Pay For It In Installments”. The US economy is consumer-based, meaning the money that makes the world go round comes from you and me. If citizens don’t go to the mall and buy enough stuff on a monthly basis, the entire economy becomes unstable. But what if they don’t have the cash money to buy more stuff? The companies and banks who need us to buy more and more of their stuff, make it easier and easier to buy their stuff. A big part of making it easy to buy their stuff is to accentuate the positive or pleasurable part of “getting” something and hide the painful part. Welcome to the land of credit and monthly payments, oh and One-Click purchasing….
The idea (sales pitch) of deciding whether you can afford a car or a house is based on the monthly payment amount, not the total amount. That new car isn’t $38,000, it’s $460.00 a month. Once you’re done paying $460 a month for 9 years, you’ve paid $50,00.00 for the car that’s not worth even $20,000 nine years later. The excitement of a new (fill in the blank) and the manageable payments, play on our emotions and the corresponding dopamine hit to get us to buy more of their stuff. Removing the barriers to being able to buy that something (i.e. not having the money), is what credit and “just 4 easy payments” is all about.
“The things you own end up owning you.” — Tyler Durden in Fight Club:
This is not a conspiracy theory article. The fact that the system is set up to benefit the creditors and not you is true. Railing against that imbalance is not the point. The important thing to understand is there are internal and external factors at play that push us into debt and make it so much harder to get out. We’ve “bought-in” (sorry) to all of the assumptions about what having money and what it can buy, means. The assumptions are so ingrained in us we don’t even realize they are a) assumptions/beliefs and b) not necessarily (at all) true.
The reason there is no easy way to get out of debt is that 1) you think it’s hard, 2) the entire system and society we live in is built on debt and keeping you there, 3) you aren’t aware of the emotional and financial forces at work on you in relation to money, possessions, work, leisure — from inside and outside, and… 4) you don’t want it badly enough.
That last one is tough because it triggers emotions around self-worth and it sounds judgy. The best approach I’ve found about getting out of debt is to listen to/read Dave Ramsey, do his Total Money Makeover. Ramsey explains in simple terms many of the forces at work pulling us into debt. Understanding them is the first step to resisting them. He addresses the internal and the external and then sets out a path to follow.
Yes, he is a Christian and includes his perspective on his method. If that works for you, great. If not, don’t let it turn you off to the core of his message about getting out of debt. It won’t be “easy” but it will eventually be fun and completely transform your life.
- I do not receive any compensation from Dave Ramsey, I just think his material works.
