I really don’t want this post to turn into a rant, but it just might. I can already feel my blood boiling a little bit thinking about our society today. That being said, let’s get rolling anyway =)
Today, we live in a society that overspends. We max out our credit cards, we leverage ourselves and our assets as much as we can, and we surely don’t budget.
The amount of debt that has piled up for Americans is downright scary.
- The average amount of credit card debt for a person living in the United States is $15,611, totaling $884.8 billion.
- The average student loan debt is $32,956, totaling $1.18 trillion.
Ummm. These numbers are ridiculous. I feel like we just throw these massive numbers around lightly. It’s crazy!
If you have credit card or student loan debt right now, it’s your number one priority to get out of it. You owe it to yourself and your family. You need to put together an aggressive debt reduction plan.
- No more vacations.
- No more new toys.
- No more new clothes.
- No fancy dinners.
- No more movies.
- No more cable TV.
If you have credit card debt (let’s say $10,000) and are making the minimum payment every month, every time you go out to a movie and spend $10, you’re really spending $12. $75 Date Night dinner? That just cost you $90. To get those numbers, I took a 20% credit card interest rate, for just one year. Honestly, these numbers start to look a lot worse if you don’t pay off your credit card debt for multiple years. That’s insane! Do you really want 20% tacked on to every purchase you make? That’s like tipping after you buy groceries…and you still have to make the food yourself!
Here’s my advice. Take all the money you spend on non-essentials and attack your debt. Attack it until it’s gone. Every month and every year that goes by, the interest just eats away at your future savings and retirement.
Okay, enough ranting for now. I want to share part of our story. I was extremely fortunate to have my college paid for, so I didn’t rack up any student loans. Rachael had to put herself through college AND law school. Honestly, I don’t know if I would have had the same fortitude as she did. I wasn’t the most disciplined all the time back then.
Throughout college, Rachael always worked. Most of the time, she had two different jobs on top of her school work and being a three sport athlete all year round. Did she have to work a lot harder than other people? She sure did. She also worked all summer. Then, she took a portion of her summer savings and brought that to school in cash. That was her spending money for the quarter or semester. It wasn’t an option to dip into savings because that was going towards tuition. Did that take discipline? Sure it did.
Then, immediately after graduation, Rachael entered law school. During law school, she worked two and sometimes three jobs at a time. This gave her enough to pay for school and minimal living expenses. Rachael and I were dating at the time and living about an hour apart. Many nights, I’d ask her what was for dinner and she would say “Chips and Salsa”. Was she eating like a Queen? Definitely not. On weekends, Rachael would be studying hard. There wasn’t much time for date nights or going out to eat. When we did have the opportunity, our date nights included going to Chipotle and the dollar movie theater.
No fancy dinners. No expensive movies. Rachael didn’t pay for cable TV and she wasn’t buying herself new clothes or taking vacations. (Remember the bullet list above).
By the time she graduated a private 4 year college and a 3 year law university, she had less than $30,000 in debt. Some of her law classmates were leaving with $150,000 – $200,000 in student debt. That’s a massive difference.
After Rachael and I got married, we immediately started to take action, saving aggressively to build a small emergency fund and pay off the debt as quickly as possible. We didn’t spend extravagantly and put the focus on wiping the debt out. In less than 18 months, the debt was gone.
Now I don’t share this story to brag. I share it to show you what is possible, but really, what is necessary when you have debt. It’s easy to let it just sit there. It’s easy to whine and think the number is too big. It’s easy to pay the monthly payments and think that is enough. But the sooner you eliminate debt, the sooner you can start working towards living like a King.
After the debt is gone, don’t stop! Put that money towards savings or investments. Sure, it’s reasonable to put some of that money into your monthly budget for things like clothes, movies, vacations, etc. But don’t put it all there. Now that you’ve built the habit of saving, keep it going and stockpile your emergency fund, deep savings account and your retirement accounts.
While you’re eliminating debt, it may feel like everyone around you is “more successful” or “doing better”. Most likely, they are in your shoes as well. Only they aren’t getting out of debt. 18 months was a short amount of time in the grand scheme of things for Rachael and I to cut back on entertainment and other expenses. And today, we don’t have any of that “debt” weight on our shoulders.
I encourage you to buckle down, tighten your monthly budget, and crush your debt as fast as you can. Your future self will thank you for it.