4 Reasons to Stay in Debt

If you are one of the five regular readers of this blog, you’re well aware that I have no love of debt. To me, there’s almost no good reason to go into debt, and a lot of good reasons to pay it off as quickly as possible. However, I try to keep an open mind. So, I thought it would be a good mental exercise to try to come up with some valid reasons to stay in debt. Here’s what I came up with.

#1. You have severe pulpuslacerataphobia.

That’s the fear of getting paper cuts, which is sure to happen while you sort through and organize all of those statements and bills you’ve piled up. Getting everything organized is usually the first step when you’re trying to get out of debt, because you have to have an accurate picture of your financial situation before you can move forward. While the internet and online banking are making mail and the paper it’s printed on less and less common, it’s not totally gone yet. Serious pulpuslacerataphobics might consider investing in good pair of gloves if they’re trying to get their money under control…or they can just stay in debt.

#2. The thought of divorce excites you.

Study after study shows that the top indicator that a marriage will end in divorce is the number of money fights a couple has per month. Debt adds a lot of tension to an already difficult situation. If one partner is desperately trying to pay off outstanding loans, while the other is constantly opening new ones, they’re doomed. Getting a couple to communicate about their money goals, make compromises, put all the numbers on paper, agree to it all, and not go off and do whatever-the-hell-they’d-like afterwards, is so important for a healthy marriage. They all should have that discussion before they head down the aisle…or they can just roll the dice and hope for an exciting outcome.

#3. You love your stuff.

Once you get going on paying off your debts, everything you own gets looked at through a very difficult filter. Namely, “Do I want that thing more than I want to be out of debt?” How much do you love that big and beautiful flat-screen television? Or that vintage automobile that you’re sinking hundreds of dollars every month into? Sure, you could always buy more stuff later, with cash, after you’ve paid off all of your debts, but that’s not the point. You already have this stuff, it’s yours, and you love it.

#4. You don’t want to change your life.

I can remember what it was like before we started fighting our way out of the financial hole we dug, and it was pretty easy on me. I’d go to work, bring home a steady income, and my wife would take care of making sure the bills were paid. It is shocking how different my perspective on life is today than it was four years ago. It’s way more difficult, but the future looks so much better in so many ways. Still, there’s a shrinking, immature part of me that misses what used to be. Maybe that part is bigger for you?

Perhaps that wasn’t the most open-minded list. How about you? Can you think of a good reason to keep your debt?

Quick Hits of the Week

• Here’s something for you to consider: If there’s an area of your life that is making you depressed, or frustrated, then you’re probably looking at it from the wrong direction. Stop staring at what has been and instead focus on what will be. As Dan Miller says, “I have never seen a person who has clear plans and goals for the future who is also depressed.” For example, if you’re having financial troubles, this is the year to make a plan and get out of debt. Debt kills dreams. Join the movement, and start looking forward.

• Of course, when you’ve lost sight of your dreams, and you’re feeling depressed, it’s hard to change. Here are nine habits, thoughts that we tell ourselves, that you’re going to have change in order to start moving forward. Numbers 3, 7 and 9 are ones that I have to disabuse myself of repeatedly. How about you?

• “Grace is offensive” … and thank God for that.

• I have friends and family that have adopted children from all over the world. Each of them so has been so blessed. As a result, it bothers me when I hear stories of international leaders playing politics, passing bad legislation, and denying the children in their country a good home when it’s available. Russia’s recent ban on adoptions to America doesn’t hurt anyone but the children languishing in their orphanages and the families here that want to adopt them. Guatemala’s similar policies aren’t any better.

• I’m sorry…I must have misheard. What scent of incense are you burning? Monkey what?

Is there something valuable or important or cool or funny or weird or awesome out there I missed this week? I can’t hit it all, but you should let me know about it by dropping me a line or sharing it in the comments below! I’d appreciate the heads up.

Finding Financial Peace

This week, we’re beginning a new session of Financial Peace University at one of our local churches. We already have about 30 people signed up, and I’m personally hoping for a lot to happen over the next couple of months. I’ve got a few reasons to be excited.

• Dave Ramsey and his team have recently reworked the course. The last time they updated was before the housing crash, so I’m expecting some new information in regards to that. There are so many people hurting in this area because of their out of control house payments, and I hope that we can really offer a few people some help.

• We have a few families attending. Parents are taking the time to make sure that their older children have learned the basics of handling money before they go out into the world. I love that.

• The course is now nine weeks instead of thirteen. I’m going to miss some of the material that’s been cut, but a shorter time commitment probably means more class retention, which is a good thing. Also, we might be able to fit in an additional session every year, and that would be awesome.

Here are the nine lessons:

1. Super Saving – Why you should save money, and why you need to start now.
2. Relating With Money – Why families must work together to achieve financial goals.
3. Cash Flow Planning – How to develop a monthly budget that really works.
4. Dumping Debt – What myths we believe about debt, and how to become debt free.
5. Buyer Beware – Why marketing is so powerful, and how to reduce it’s influence.
6. The Role of Insurance – What insurance you need to have, and what to avoid.
7. Retirement and College Planning – How to plan for the future.
8. Real Estate and Mortgages – How to buy or sell a home.
9. The Great Misunderstanding – Why you should live a generous life.

If you’ve never taken Financial Peace University, I highly recommend it. It’s a great first step for families who are struggling with money issues and don’t know where to start. If you’re in the Tucson area, and you’re interested in joining a class, let me know. Send me an email and I’ll see if I can hook you up.

Question: Have you taken FPU? What was your experience? What was the most important thing you learned? How did it change your life and your finances?

The Best Defense…

As a financial coach, one of my key responsibilities is to teach you, my client, strategies to overcome your financial troubles and to start succeeding with money. When that happens, it frees you to be more generous and more available to follow your dreams. When that happens in the lives of enough people, it can change the world, and I love being a part of that.

But, I digress.

And I really just want to discuss that word strategy. It’s important. When you’re choosing a strategy, you are deciding on a plan of action, and developing tactics to fall back on when things don’t go according to that plan. Every winning strategy has two key components: Offense and defense.

OFFENSE

This is your income. However it is that you go out and bring the money home is time spent on the offensive.

And we spend a lot of time and effort on the offensive.

We work long hours to earn overtime and get big bonuses.

We fight and negotiate for better raises and compensation.

If the money is good, we move into management. We might even change careers altogether.

There’s nothing wrong with having a great offense. In fact, without it, you’re not even in the game at all. You need to put forth your best effort if you want to succeed. Never sell yourself short when it comes to your income.

However, beware the opposite problem. You can’t spend all of your time and effort on the offense. There’s a common misconception that if you earn enough income, your money will take care of itself. That if your offense is good enough you can ignore your…

DEFENSE

… and that’s a lie.

Your defense is all about your spending. How well you control every dollar leaving your home is time spent on the defensive.

And we don’t usually focus a lot of time or effort on the defensive. Spending still happens, because it has to, but we don’t like to think about the when, where, and why about each dollar that leaves.

Off the top of your head, do you know how much you spent on food last year? What about clothing?

How much do you annually spend on your electric bill? What about your mortgage payment?

How big a chunk of your yearly income do each one of those items take?

Being great on defense means not only knowing how much is going where, but also being careful and frugal when spending.

This is where I spend most of my time when coaching people. When a family is forced to come face to face with their poor spending habits and complete lack of defense, when they see how little they must have to survive, and how much is being wasted, they’re free to change. Their budget becomes the key to achieving goals and their ultimate success.

So, how’s your strategy? Is your offense hurting? There’s only so much you can cut before you have deal with your income. Don’t neglect your offense.

Is your defense in shambles? No matter how much you earn, you will always find ways to spend it if you don’t have a plan. You have to start making a budget. Don’t neglect your defense.

Questions: What’s your strategy? How’s your defense? Get political and think about how great your city government is on offense and defense. How could changing individual families habits affect the community you live in?