Tuesday, March 10, 2009

Your Debt or Your Life... or Both

Kristy, the author of Master Your Card wrote a post last week that really struck me. It was called Does Debt Control Your Life? and as I was reading it, I thought, "Wow! That is exactly how I feel!" Well, Kristy must have thought the same thing because a little later she used me as an example!

Kristy's point is that even though paying off debts is incredibly important, it should not control your life to the point of making yourself miserable. I think about that a lot. In fact, it beautifully sums up what the heck I am doing.

There are several options I could have taken to fix my financial situation. I could have taken in roommates. I could have cut every single non-necessary thing out of my budget. (I have a $100 dining out budget. Cut that alone and I would only have to get $800 a month.) I could have tried to do some kind of short sale on the house and take the huge credit ding - or even worse, just let the house slide into foreclosure. I could have sold, done a short sale, or let slide into foreclosure my cabin instead. I haven't done any of these things, however. As it says up there at the top of the blog, this is "One woman's goal to avoid foreclosure by getting nine hundred dollars more a month - without ending up in jail, dying of starvation or going insane."

It's those last two words that are important...

If I had chosen any of the options above, they would have made me miserable and depressed. At the time I started all this, I had already been riding the emotional roller coaster of divorce, a mental break down was not out of the question. The part about "going insane" is not totally tongue in cheek. I realized (with the help of my therapist) that whatever option I took, however I chose to solve my financial problems, I had to do it in a way that made sense to me and preserved my sense of peace. This is obviously different for every person, some folks would have preferred getting a roommate or short selling a property in order to avoid scrambling each month as I do. Different strokes for different folks - the point is finding what works, without adding to the stress.

As I mentioned in the comments on Master Your Card, I see getting out of debt a little like going on a diet. If you starve yourself, you might lose weight, but several bad things will also happen: 1) you won't develop healthy habits, 2) you are likely to gain the weight right back and 3) you will be so miserable that you will be ready to binge at a moment's notice. If I were to let my financial problems completely control me the same thing would have happened. I wouldn't have learned all the things that I have over these past 9 months, and would have probably been likely to put on more debt. The thing is, you don't get into debt in a month. If all it took were cutting back to nothing for 4 weeks, well, that would be one thing, but for most people it takes years to get out of debt. In my case, even though my credit card will be paid off in just a few months, I won't be done with debt until the housing market turns around and I can sell the house. I am figuring on at least a few more years before that happens. That means a choice: years of going a little slower, but steady, or years of "starving" myself of the small extras in life, but having more money faster. In the former I have room in my budget for going out with friends and family, buying presents at Christmas, and getting to go see a play or going to the art museum upon occasion. I may have to cut back in other areas or work a little harder, but I am still living my life the way I want to live. Honestly, I can do this for the long haul - as long as I need to. On the other hand, if I were to take the other option and completely cut out all extras, I would be absolutely miserable. I wouldn't be able to do it long and I would be ready to blow any minute. Which is better? It seems obvious to me.

Someone commented on her blog, "Shouldn't getting out of debt be your number on priority?' My answer is no. Your number one priority is YOU. Remember Maslow's Hierarchy? Your first priority is making sure you have the basics - food, water, shelter and sleep. Your second is your health - this includes financial and physical and mental well being in equal measure. If you are working three jobs that aren't bring you joy, but instead are burning you out, you might make a dent in debt, but you won't be able to keep up that pace very long. That's exactly why I have been very specific in the types of part time work that I do. It doesn't pay as much as other forms of employment, but I love doing it. That makes a huge difference to me. Getting out of debt or saving for the future is admirable and should be high on the list, but you have to live today as well as tomorrow.

If someone were to ask me how to get out of debt, here would be my advice:

1.) Cut out anything you don't need. Start with the easiest cuts first. Think outside the box - some might surprise you.

2.) Identify the things that would deeply effect you if you cut them out, but look at ways you can make those things more frugal. I contribute a bit to my "Christmas Fund" each week, but this year when I shopped, I tried to get the best deals and make those dollars stretch. Or look at my grocery bill - I pretty much only buy good, quality ingredients - yet I use them in such away that I can keep that budget pretty low.

3.) As you are saving, find ways to make more income. If possible find things that you would enjoy doing, that make your life better (decluttering through eBay perhaps) and/or further your other goals. (Picking up part time work in an industry you are thinking about a career change into, for example.)

4.) Do not neglect your loved ones. Now is when you need them more than ever. I have been moved to tears on more than one occasion by the wonderful amount of support and love I have gotten. Be honest in telling them where you are and don't be afraid to accept help, if you are comfortable with doing so.

5.) Do not neglect yourself. Depression, physical illness, unkempt appearance, anger - none of these things will help you with your goals. Shopping for good clothes at Goodwill is a great frugal tip, letting yourself go for the sake of putting a few more dollars away is not.

Everyone has different ways of making things work. What works for me won't work for others. Some people's situations are so desperate that shelter alone becomes a problem. I know this and know that sometimes you gotta do what you gotta do. Yet, I encourage anyone who is trying to pay off debt, build a budget, or save for retirement (or all three!) to remember the old story about the tortoise and the hare - slow and steady wins the race. It is possible to manage your money and still enjoy life - I promise.

Photo by: Jehsuk


Kristy @ Master Your Card said...

Amen! And thanks for the mention!

It's amazing to me the response I get from people at work when I sit down and talk budgets with them. They look at me askance because I'm a big advocate of having a life. I don't think debt should mean the end of the world. Yes, it's a priority, but like you've pointed out, it's not number one. People in general give themselves little credit for anything. We often overlook the fact that we are our own greatest asset, so I know we're overlooking the fact that we are our first priority. There's a reason financial guru's spout "pay yourself first."

Excellent post!

Dawn said...

Couldn't agree more Kristy. Maybe one of the reasons people hate the idea of budgets is because they think that by making them they have to give up all the fun. That just isn't the case. By budgeting it right in, you can see how much you can spend and feel good - not guilty - in doing so.

Anonymous said...

Couldn't agree with you more!! :)

It's all about balance, and finding what works for YOU!

Dawn said...

Yep Frugal Dreamer, I agree. Balance is the key.