The Debt Free Journey. To many people it sounds like a far fetched idea. Why? Because – “you’ll always be in debt.” “you only live once, you need to enjoy life now,” “ the government will pay off my loans in X number of years,” “how can you live and enjoy life if you put all your money towards paying off debt?” “there’s good debt.” Well, from what I’ve seen firsthand – the borrower is truly slave to the lender. You’re always worrying about the debt you have to pay and making sure you don’t fall behind because interest accumulates at a rapid rate. For many the interest you pay may be more than the minimum balance you have to pay. At least for me, it turned out that way when I looked at my student loans. I only had $22,000 from college and after 10 years of paying on that loan I’d only managed to take ~$3500 off of the principal. Can you believe that? Have you looked at your loans lately to see how much principal has been paid?
For many, life is too short to give up what you want to do now, to be able to to do what you want to do later. Discipline and consistency are key to paying off debt. Delaying gratification is part of the process. Not everyone wants to delay and it actually may be harder for people today because social media, the newspapers and magazines, reality tv shows a life that many people seem to want. A lifestyle that they believe they can enjoy now and look the part.
There’s a common phrase that talks about people trying to “ keep up with the Joneses.” Keeping up with the Joneses is what keeps people in debt. Social media has people thinking that what they see in a Facebook, Instagram, or Twitter post is reality. Reality TV isn’t even reality. Many believe that what they wear and where they go is the key to how others will perceive them. You’re living your best life right? But behind closed doors you’ve got credit card bills piling up from that life. So you look the part but at what cost?
In the book the Millionaire Next Door Thomas Stanley found that, “The press sensationalizes that very small portion of Americans who purchase expensive shoes and related artifacts. The popular media enjoy touting abnormalities in buying behavior. As a consequence, our youth are told that buying expensive items is normal behavior for affluent people. They are led to believe that the wealthy have a high-consumption lifestyle. They learn that hyperspending is the main reward for becoming affluent in America.“
In other words, what you think you are doing to keep up with the Joneses isn’t normal everyday behavior of wealthy people. Truly wealthy people don’t flaunt their wealth, they’re building their net worth, their portfolio. They are investing, saving, have budgets. They understand how compound interest is their friend. Forget about keeping up with the Joneses or keeping up appearances. With all your keeping up, could you, if you lost your job, be ok for 3-6 months? Or would you be freaking out because you wouldn’t know where the next paycheck is coming from? And I’m not talking about people who are truly struggling to make ends meet and living paycheck to paycheck because of minimum wage. I am talking about those of us who make a decent living but don’t want to save because we want to look like we’re doing big things. Let’s get over ourselves and instead focus on creating a legacy.
Thomas Stanley asked the question, “What happens when you tell the average American adult that he need to reduce his spending in order to build wealth for the future? He may perceive this as a threat to his way of life.” Understand that I’m not trying to threaten your way of life or mine by telling you, telling myself to get over ourselves. I’m telling us we need to focus on long-term growth potential. We need to look at the bigger picture and not just the now. We need to see that we can overtime build wealth that will allow us to live the life we want to live but not worry about bills creeping up on us. Forget the Joneses and remember yourself. Remember the credit card bills, remember the student loans, remember the car payments, remember that trip you took but had to come back and pay off over 6,7,8 or more months. Remember your paycheck coming in but going out because of all the debt you’ve accumulated.
In the Millionaire Next Door they found that, “The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning.” What do you want to be doing 20, 30, 40, 50 years from now? Repeating the same cycle of what you’re doing now? Or have an investment portfolio that will allow you to live the life you want to live?
In a case study in The Millionaire Next Door they share this about “Mr. Friend.” Mr. Friend is possessed by possessions. He works for things. His motivation and his thoughts are focused on the symbols of economic success. He constantly needs to convince others of his success. Unhappily, he has never convinced himself. In essence, he works, he earns, and he sacrifices to impress others. Now I’m not saying that you or that’s me, but let’s self-reflect when we are going to make any purchase. What’s our motivation? Let’s forget about the Joneses. Let’s live the present for our future.
