Up to your eyeballs in debt – so what?
So you’re up to your eyeballs in debt and you’re beginning to get stressed about it? Don’t bother. More and more being in debt is seen as a lifestyle choice rather than an affliction of the cash poor. How many of your friends have debt? Quite a few I’d say and I bet a lot of them have well paying jobs? Yet they seem to progress through life just fine. Why not you? Where is it written that you have to get stressed over your debt?
You can sit there confused as to what your next step should be or you can simply acknowledge that you are in a whole load of debt, accept this fact and get on with your life. The choice is yours. Sure if you want to have the joy of the knowledge that you will be debt free some day then great – go ahead and read some of the articles on this website and they will help you on your way. For the vast majority of people becoming debt free is simply a pipe dream. I’m not being mean spirited. I believe people can change but if we are realistic and look at our debt situation in its entirety – short of winning a nice lump of cash a lot of us may never be debt free. Unless people change the spending habits of a lifetime (which is a very hard thing to do) then they are likely to go on spending and spending. So why even bother trying to change?
Now if the thought of being in debt for life depresses you then don’t let it. The vast majority of the people you know are probably in the exact same position. You can either fight against this and get stressed and worried or you can go with the flow and do the best you can to make the most of your current situation with a view to managing your debt or at least getting it down to a more manageable amount.
Accept that you will be in debt for the rest of your life and make peace with that fact. Like going to a job or taxes accept debt as a simple fact of your life.
How a stress free debt laden lifestyle would work
In order for this to work you are going to need a regular sustainable flow of income. This income can come from anywhere – rent out a room, benefit payments, salary. The key thing is that it is regular and that it is sustainable.
The main idea behind living a stress free debt laden lifestyle is that you learn how to better manage the flow of cash in and out of your bank account. In some cases you will need to be creative and may even need to rob Peter to pay Paul.
To manage your cash flow better you need an income and expense management system. This sounds very grand but this is simply a method of keeping track of your income and expenses each month. This system will help you identify who you can pay now and who you can hold off on paying while also allowing you enough cash to have a life.
To build this system all you need is a sheet of paper, a pen, a calculator, a calendar and details of when your loans, utility and mortgage/rent payments fall due each month. You also need to know the date when your salary/income is received.
Take the sheet of paper and list all your recurring monthly expenses. Beside each amount put the date when it falls due. At the top of the page put the amount of the salary and the date you will receive it.
Now here is the tricky part. You need to look at each expense and assigning an importance level to each. For example your mortgage would be considered highly important. The way to assign the importance to the expense is to think about it this way – what is the worst that can happen to me if I do not pay this bill this month. If your electricity is about to be cut off then it would be regarded as highly important.
Once you have assigned an importance level to each item you then need to allocate the available resources (your monthly income) to the most important expenses. At least this way you are managing to keep on top of the most pressing expenses.
Timing will play a big factor in this lifestyle. If you time your expenses correctly you can free up some cash. Here is an example of what I mean. Let’s say I’m ambitious and I want to pay off my entire credit card bill as it falls due. I know that if I purchase anything with my credit card after the 10th of the month I will only have to pay the credit card bill 56 days later. This gives me two months to raise the funds to pay it. With this knowledge I know that I will only have to take half the amount out of this month’s salary and the other half out of next month’s salary. Once I have allotted this amount and mentally prepared myself for the bill I don’t feel as much pain as I would if I had to take it all out of one month’s salary.
This is a simple example and you might say why bother paying off your credit card at all. Again this is a choice that you will have to make.
The things you need to do to maintain this lifestyle
Pay off more than the minimum amount each month on your credit card. This will help absorb any interest amounts that are applied to the balance and eventually it will help you pay down the entire amount – I did say eventually.
Pay the bills that absolutely must be paid – your mortgage, utility bills, phone, electricity etc.
Put limits on the amount of new debt that you are prepared to take on. To stop this ship from sinking you have got to stop taking on water, well at least until you have repaid some of your existing debt. So resolve that while your goal may not be to become debt free you need to be careful about taking on additional debt. This method looks to maintaining the status quo while letting you reduce some of the emotional pressure you may be feeling.
Remember the goal of these changes is not to make you debt free. The goal is to allow you to maintain your current lifestyle with only a few minor changes. You need to adopt a positive attitude towards you debt. Strange isn’t it? But it makes sense if you think about it. The less you resist your debt and fight with it the less of a problem it will be once you know your limits.
A word of warning
The one major drawback of this approach is that you are like a rat on treadmill. You can’t afford not to work or risk your income. It requires a lot of energy and focus on what you can afford to pay this month versus what you must pay this month.You are at the mercy of your boss and the economy.
For those of you that not happy with being in debt there is a way to become debt free. It’s not easy and it will take a lot of hard work but it is possible. Check out the articles in the archive section for more details.
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Posted in Debt Freedom - Starting your Journey
