Friday, September 28, 2007

The Day I Realized Almost Everyone was in Debt

I remember a time when I thought everyone had money but me. They had the latest gadget, the camera, the newest tv, a new car every year or two, every game console known to man, a brand new house. I thought we were the only ones who had debt or financial troubles at the time. The people like this who come to mind shall remain nameless- but they had everything, and if they wanted something new they went and got it that day. I admired them, and hoped to one day be in a position like them.

I'll never forget the day I overheard one of them saying to another that they went ahead and paid down one of their credit cards that month. "WHAT! " I thought. "I can't believe THEY have credit card debt- they have everything and they make so much money." Here we were on half of what they made and barely swimming. That day was a new beginning for me. Even the most affluent people I knew had debt.

Fast forward several years when I started listening to Dave Ramsey. Callers making over 100k would be deeply in debt and about to file bankruptcy. My thinking changed radically after only a couple of days of listening to Dave. I realized almost every person I ever admired or envied were in a mess of debt. That fancy car they have is really a huge monthly payment on a car they don't own yet. And the house is the same. And all the nice clothes they wear are being paid for with the Mastercard. The nice lawn furniture they have is on a credit card at Home Depot.

After I realized that most people aren't making it, I had a huge change in the way I view "stuff." When I see the nice car on the road I don't think "Wow, they must be rich," I think "Wow, they must be deeply in debt." Clothes and purses don't even phase me anymore- I realize that people are trading their financial future for a material object that will be out of style next year. This change of perspective was so liberating for me. I don't care anymore about things- I just want to be debt free. It is amazing what a change in perspective will do for your financial life. Your priorities change and when you stop spending your money on "stuff," you have so much more money to pay off debt and grow wealth. All you need is that change in perspective.


SAHMmy Says said...

Great post! I don't envy anyone's material possessions anymore either after following Dave Ramsey's plan. I'm much more likely to desire their level of savings! It's gone so far that I actually become annoyed by those who complain about debt and at the same time refuse to stop spending money and accumulating debt on fripperies.

WrdFrk said...

People are even going into debt for boob jobs! This is really a terrible development for women, who are not only agreeing to get their chests cut open for beauty but are driving themselves and their families into insolvency. We write about it on the Beauty and the Breast blog:

Boob Jobs and Credit Cards

Jennifer said...

Thank you for a great post! It's very true - most people are in debt. Realizing that is a great step towards stopping trying to keep up with the Jonses.

Anonymous said...

I agree that a lot of people with lots of 'nice stuff' use credit to finance their lifestyle, but that's not always the case. I'm single, newly debt-free, and have savings and investments. Since becoming debt-free, I've purchased a lot of cool toys, some clothes, took a nice vacation, and had some medically necessary plastic surgery... all paid with cash (well, my credit card so I could get rewards points, and then my credit card was paid in full each month *g*). All of these things were acquired after I paid off my debt and put some money aside for a rainy day. So, it's not fair to automatically assume that a person with a lot of nice stuff is automatically living above their means and in debt to their eyebrows. Some people with a lot of nice stuff are actually frugal in that they only spend their money on things that matter to them instead of frittering it away on frivolities.

Mandy said...

Anonymous, I totally agree with you that this is not the case for everyone. I went from thinking I was the only one in debt to realizing that the majority (though not all) of people I admired were actually in debt. You probably already realize you are one of the few people who are completely debt-free, and as Dave likes to put it, "weird." Congratulations on becoming debt-free- I can't wait to be like you!

Willow said...

I struggle to pay off credit cards, then I slip back into old habits and charge. I'm gaining ground, but not as quickly as I could have done if I'd stood firm and resisted.