Your Debt Makes Decisions For You
Posted by The Happy Rock on May 16, 2008
The thing about debt is that our financial systems are setup to make it as easy as possible to spend money you don’t have. Your mailbox is littered with credit applications, and if you sign up at a store they give 15% and you are approved in about 3 minutes. At a car dealership all you have to do is sign a few papers. Even a mortgage is easy, although you have to sign a lot more papers. Thousands of dollars can transfer hands in a few minutes, and you are usually left with a depreciating asset and the obligation to pay back the money they gave plus whatever fees and interest they decide to charge you.
The ironic thing is that we often think we are buying stuff that we think will make our lives easier and more free, when in reality we just gave control of a portion of our earnings to someone else.The fact that you gave someone else control of some of your money means that they have a say in what job you work, how much you will save, and how much you will spend.
Now you can’t quit your higher paying dead end job that you hate to take a lower paying job doing exactly what you dreamed about all your life. Can you save $500 a month for some goal that you have always dreamed off? There is a good chance that Wells Fargo, Chase, Amex, or Honda will let you know that there are a lot of things that you can’t do now.
For those that trying to get out of debt or those that think I am overlooking the benefits of debt, do this calculation. Total up your monthly debt payments: mortgage, student loans, car payments, credit cards, everything. Now divide that total by the amount you take home after taxes and you will see what percentage off your own money you aren’t in control of.
Scary, depressing? It was to me. After getting rid of $70,000 of debt, we just have a small mortgage left. It represents about 10% of our take home pay, which means I am in total control of 90% my money. The encouraging part is that you can do something about it! It might take a while, but it is worth it.
» Filed Under Debt Elimination, Psychology of Debt, Spending
Trackbacks/Pings
- The 140th Carnival of Debt Reduction: Circus Day Edition | Prime Time Money on May 19th, 2008 7:32 am
- Carnival of Debt Reduction » Blog Archive » Prime Time Money has posted Carnival #140 on May 20th, 2008 1:16 am
- Hanks Weekly Hangouts #31 (May 25, 2008) | My Investing Blog on May 25th, 2008 4:02 am
- Weekend Roundup-Memorial Edition | Think Your Way to Wealth on May 25th, 2008 12:51 pm
- Visit the Carnival of Debt Reduction | Green Panda Treehouse on June 2nd, 2008 4:15 pm
Comments
7 Responses to “Your Debt Makes Decisions For You”
- Rick Vaughn (4 comments.) on May 16th, 2008 11:56 pm
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RC@ThinkYourWayToWealth (5 comments.) on
May 23rd, 2008 9:31 pm
Good point! Depressing was the same thing that came to my mind as I was reading through your post.
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The Happy Rock is a dual writer personal finance and personal development community dedicated to creating positive change that propels us towards success.
Admittedly, credit cards have paid for alot of great vacations and memories that would not have been possible without them. Still I pay for those things each month and in weak moments wish I never used the credit.