Should repaying debt be an obsession?

Some people never take control of their finances because they're afraid that doing so would require them to give up everything they enjoy. I don't believe that's true. Getting out of debt requires hard work and sacrifice, but that doesn't mean you can't have fun along the way.

Aaron recently sent the following e-mail:

You paid off $35,000 in debt in just over three years. Does that mean you were balls-to-the-wall dedicated and had no frills and were dour-faced the whole time? Were you using every spare penny to pay debt? Did you give up all luxuries and all fun? Did paying off the debt consume you?

That's my greatest fear about the whole thing. What makes it worse is that I'm serious about getting out of debt — I just don't want to be miserable in the process. Especially since I'm going to be married soon.

Any encouragement you can give would be greatly appreciated.

When a person decides to make a lifestyle change — financial or otherwise — there's a temptation GO ALL OUT. With the zeal of a new convert, you leap headlong into a life of thrift, for example, giving up everything you valued before.

There's a problem with this.

Most people who leap from a lifestyle of deficit-spending to one of extreme frugality find the waters very, very cold. It's a shock to the system. It feels oppressive. They struggle to stay afloat, but before long decide they're going to sink rather than swim, so return to the warmer, familiar waters, the waters of debt.

I made several false starts before I found my way. I would decide to give up comics completely, or to never buy another computer game. These sorts of goals are foolish. Nobody has that kind of god-like self-control. Everyone needs an indulgence now and then.

Rather than quit cold turkey, I think the best way to begin a life of frugality is by taking small steps. Small steps eventually become big strides, but only after you've developed your frugal muscles.

Testing the Water

When I was working to pay off my debt, I was not obsessed. I did not give up all luxuries and fun. I was dedicated, yes, but debt reduction did not consume me. For much of those three years, I was struggling to figure things out. I didn't suddenly move from clueless spender to clued-in saver. It was a gradual process, one that's not even wholly complete today.

I started to focus on debt reduction in October 2004. In January 2006, over a year into my quest, I had one of my worst financial months ever. I spent over $1,000 on comic books. (I was buying expensive hard-bound compilations.) I'm almost ashamed to admit that, but it's true: for that month, I spent more than I earned.

That's an extreme example, though. Most months I made smart decisions with money, and gradually improved my situation. Measures that seemed extreme at the beginning became much easier by the end. When I started to get out of debt, I thought of cable television as a Need. By the end of the process, I saw that it was a Want. That's just one example; I cut back in many areas. But again, these changes did not occur overnight.

Finding Balance

For some people, the gazelle-like intensity espoused by Dave Ramsey is absolutely the right way to go. But I believe that the people who succeed with this sort of devotion are those who actually learn to enjoy extreme frugality. They don't feel like they're making sacrifices. The rest of us need some sort of balance.

In my case, my most austere period came after I had re-paid my debt. When I quit my job at the box factory last spring, I spent a few months being too frugal, and I was not happy. It was then that I discovered the balanced money formula, which I've mentioned frequently over the past few months. Adopting this technique helped me to continue saving while also allowing room for fun. The same thing can be done while you repay your debt.

Yes, you should cut back as much as possible. Yes, thrift and frugality are important tools to meeting your financial goals. But I believe it's important to develop sustainable financial goals. If you're miserable, or if you cut your spending so far that you cannot maintain it, there's a risk that you'll lapse back into old habits.

There's no one right path to debt-free living. Each of us has different priorities. To find the way that's right for you, you need to set financial goals, draft a spending plan that moves you in the direction of these goals, and then practice patient persistence. And let yourself have a treat now and then.

More about...Debt

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DDFD at DivorcedDadFrugalDad
DDFD at DivorcedDadFrugalDad
11 years ago

Obsession– maybe. Laser beam focus– absolutely!

Debt is an enemy that must be destroyed as quickly as possible. The reason is it continues to grow through interest– the bad side of compound interest.

The faster you slay this dragon– the better!

Foxie
Foxie
11 years ago

What a refreshing breath of fresh air — the fact that you DON’T have to give up everything in life to be “fiscally responsible.” You tell ’em, JD! 🙂

Just because you have debt doesn’t mean giving up the life you want to live, it just means redefining the life you want to live to fit within your means at any given point in time. We can indulge in our vices, but only to the point where they fit comfortably within our earnings, sometimes right along paying off past mistakes.

Beth @ Smart Family Tips
Beth @ Smart Family Tips
11 years ago

I agree completely that there has to be some sort of balance, or the frugality that allows us to pay down debt won’t last. My weakness is books. I love to read and whenever I hear about a good book, I want it. I have started checking with my local library first, and have saved a lot of money as a result. However, our library doesn’t have many of the books I’d like to read. I have come up with a plan to purchase fewer books, but to tell myself that I’m not EVER going to buy another book again… Read more »

PizzaForADream.com
PizzaForADream.com
11 years ago

The process (as with anything in life) is a marathon and not a sprint. It’s all about setting a goal and making small changes and small decisions each and every day. Over time, these add up to the results you’re after. It has taken us several years, a new business, and a second job (delivering pizzas) in order to put ourselves in a position to get out of debt. While we’re not their yet, life is great!

Adrienne
Adrienne
11 years ago

I think how you frame it matters even more.
If you consider it “sacrificing” it will always feel painful.
If you consider it “making choices about what matters most to me” it will make you feel powerful.

Jason
Jason
11 years ago

Aaron — the question about debt repayment is what your personal financial reality is: Income < Expenses – you need to change your lifestyle significantly, or find a means of acquiring more income. You may need to be “gazelle intense” just to stay afloat. Income = Expenses – Likely the debt payment is what is preventing you from making meaningful progress towards saving for retirement, having an emergency fund and developing financial security of any type. You’re living paycheck to paycheck and any unexpected expense is going to put you in “Income Expenses – You have some cushion in your… Read more »

Jason
Jason
11 years ago

That last part should be “Income > Expenses” (Income greater than Expenses)

Aniruddha
Aniruddha
11 years ago

I am into a (relatively small) debt of 15k (car loan). I am not obsessed but yeah obvisouly I want to pay-it-off asap. After paying all my bills and minimum loan payments, I was confused whether I should put all I am left with towards loan payments or towards savings.

Having established a 3-month emergency fund, now I have decided to divide it 50-50. Any thought, anyone ?

Bryan
Bryan
11 years ago

I think you have to find a balance and a style that fits you or both of you if married. I don’t think you can make any progress if you resent what you are doing. Until you are in the right frame of mind you will not do anything. It wasn’t until my wife and I took FPU that we finally were able to be on the same page. Too bad it took almost 13 years to get there but now that we are there things are going great. Thanks for all the great articles.

Jason
Jason
11 years ago

@Aniruddha — look up the “debt snowball” approach. I use a modified version where I’ll hold the money I want to use in my own account (or, more accurately, a sub-account) and when it gets to a certain amount I’ll make a big payment towards the debt. So you certainly could pile all of your extra money in savings and just pay off the debt when you have enough there. It’s likely that the small amount of difference the interest on the debt and the interest on the savings won’t amount to much either way. The biggest risk using this… Read more »

Danny
Danny
11 years ago

I would say that obsession is the wrong word here. Dedication is better. For any lifestyle change you have to make sacrifices, otherwise it isn’t a real change (more like a mood-swing).

~DB

Frank Rizzo
Frank Rizzo
11 years ago

I find it’s just like “dieting” – if you go from one extreme to another (poor eating habits to say, atkins) the change is extreme and many times unsustainable. But, if you make gradual changes to your eating (or spending) habits over time, they become engrained and a part of your lifestyle, with much less risk for “relapse.”

Aniruddha
Aniruddha
11 years ago

@Jason: Thanks for a detailed response Jason, sounds like a plan! I will start trying this right away, I am confident I never spend money anywhere untill unless it’s needed. 🙂

Wendy
Wendy
11 years ago

@ Beth –

Libraries can borrow books from other libraries. It is called interlibrary loans. If your library doesn’t have a book you want, they can get it for you from another library.

Sarah Chia
Sarah Chia
11 years ago

I don’t agree with your assessment that people who are gazelle intense don’t see it as a sacrifice because they like living frugally. My husband and I just paid off $6000 in 7 months on about 30K take home. THAT was a HUGE sacrifice. But it was worth it. I no longer have to sit down and write a check every month. I no longer have to think about all the things I wish I could buy for that $130/mo. We worked hard and sacrificed big to pay it off quick so that we don’t have to sacrifice small for… Read more »

Baker @ ManVsDebt
Baker @ ManVsDebt
11 years ago

My theory is to get intense. Shock the system, but do so knowing that you will need to surround yourself with the right people and information to keep your momentum.

Snowballer
Snowballer
11 years ago

Oh man talk about close to the mark. I’ve been chronicling my progress on the GRS forums for months now. It’s been a hell of a roller coaster, emotionally. I have gone absolutely crazy; that “gazelle intensity” thing describes me perfectly. I am wearing out my socks because I’ve told myself I won’t buy any more until I pay the debt off. On the one hand I feel better than I did before I started because I am doing something about my problems. I feel like I’m in charge for the first time in a long time. I can see… Read more »

Linear Girl
Linear Girl
11 years ago

Yep, you need dedication to the long-term goal, but it doesn’t have to take over your life. When you’re starting the process you have to devote more thought to the project because you’re training yourself into new habits, but, as with working out, once you’ve got the habit your behavior becomes somewhat automatic, I come at financial responsibility from the perspective of one who has never had overwhelming debt but who chose to take a 55% in pay in 1995 in order to move to a place I wanted to live. This place has nearly as high a cost of… Read more »

Jessie
Jessie
11 years ago

I agree with some folks here that you need to dedicate yourself, however; your right – it is very easy to become obsessed and in the same note, overwhelmed with debt reduction.

I find myself constantly having to step back and reevaulate my debt repayment goals so that I down drown but manage to keep happy at the same time.

April
April
11 years ago

We cut back more and more as we went along, but it didn’t feel like a sacrifice because it was gradual. At first it was hard to not spend my lunch hours shopping, but I was focused on paying off debt, and that outweighed my desire for clothes and other stuff that I truly did not need (truly…I had a closet packed full of clothes, some with price tags still on). The desire for many things disappears, and that actually feels really great. Now we’re debt-free and we have an EF. We enjoy our money a little more, but I… Read more »

Rob
Rob
11 years ago

Personally I think it’s all about how a person feels about their debt. I would think the more worrisome the more obsessive one would be about it

Nice blog I can across it reading an article about how much bloggers make. I have a blog with a similar theme to yours. Just started mine in Dec 08. Looks like you have been around for a while

Good luck
Rob

Brigid
Brigid
11 years ago

What always puzzles me is how people equate money with fun. Some of the best times I’ve had required little to no money. Some of the best times for me usually involved friends, good conversation, cooking, taking a walk on the beach That may not help all the coastally challenged folks out there, but I’m sure you can find scenery wherever you live (sorry, Gary Indiana) Several weeks ago, my sis and her husband came down for a visit. We could have gone to Epcot and spent a bundle. Instead we went to Old Town in Kissimmee, had a few… Read more »

Jason
Jason
11 years ago

Also, keep in mind that Dave Ramsey’s approach is not about only getting rid of debt — that’s only one step in the process. Later steps introduce filling out the emergency fund, funding retirement, college for the kids and building wealth. He also is pretty clear that he’s not against spending money on toys and fun as long as you have your finances in order (in addition, of course to giving some of it away). The Total Money Makeover is pretty easy to read, I got it from my library and my wife and I read it in a week… Read more »

JerryB
JerryB
11 years ago

First things first. Sit down with your fiancee and talk about debt and spending habits. Make sure you’re both on the same page or you’re doomed to failure (just read the previous post here on GRS). Once you know she’s on board then develop a spending and debt reduction plan. Getting intense is needed, but it doesn’t have to be all consuming. As other’s have said it’s all about balance. I can speak from experience that becoming a miser and not spending a dime more than is absolutely needed will have a serious affect on your relationships in the real… Read more »

Wendy
Wendy
11 years ago

Here’s the catch 22 I can’t seem to escape from: as a result of the flailing economy we have had to cut back like most of the country. Cable, landline, going out to eat, etc. have all been cut out. Now that we are out of non-mortgage debt and are building emergency savings, we have very little left in the budget for “fun money.” Even when I allow myself to spend a little on myself, the tremendous guilt I feel afterwards negates any fun I get out of it. So, I am obsessively depriving myself of everything that is not… Read more »

Nancy L.
Nancy L.
11 years ago

I have often mentioned how I chose a slower debt repayment path because that is what works for me. Like a dieter, I’d tried multiple times to do hard core debt repayment, but after 3-4 months, I’d get frustrated by the strict lifestyle, and would relapse. I eventually realized that the only way I could succeed was if I chose a more moderate approach. The difference between my current repayment and my previous failed attempts is night and day. Instead of just rushing in and making drastic changes, I took each step gradually, and didn’t move on until I was… Read more »

sandy
sandy
11 years ago

@ Wendy: It’s NOT a lose/lose situation. You are now, due to strategic actions on your part, out of non-mortgage debt. That’s a big WIN from my perspective! Congratulations! If you had credit card debt…you couldn’t have afforded it in the first place. Also, does fun necessarily = spending money? I guess I learned early on as an underpaid social worker, that if I was going to have fun that I had to pay for, I had to find really cheap or free fun. Once you get your head around fun can be free…it’s not that big of a deal,… Read more »

Ralph
Ralph
11 years ago

Great post! When dealing with addicitions to food, smoking, or drugs, going cold turkey is necessary. I think with lifestyle changes such as getting out of debt going all out is not benefical.

I have, however, run into people who seem to be addicted to something and that something seems to drain thier bank accounts. In cases like those, deprivation may be the answer.

Meredith
Meredith
11 years ago

I think this is a personality style question. Some of us naturally fall into addictive/obsessive patterns. I do and for me debt repayment is an obsession. However, because I had no desire to fall into the “dour-faced”, over-sacrificing situation, I made sure to have budget catagories for the things I consider fun. Since I knew I would be obessive about following the budget, building in the pleasure was the key for me. This way there is no guilt or even question about there being money for pleasure while shifting the priority to becoming debt free. So if Aaron is naturally… Read more »

Des
Des
11 years ago

@Brigid I second that! I want to gain more from my debt reduction plan than just a positive net worth. I want REAL financial independence. I want my “wants” to not be so tied up in money. I hate to admit that going shopping sounds life a lot more fun than going on a picnic with DH. I want to learn to love the things that are important, without needing to equate spending money with having fun. I think (regardless of my financial state) that learning to enjoy these things will make me happier later in life. To that end,… Read more »

Aerin
Aerin
11 years ago

It does not have to be painful. It WILL be different, and change can be uncomfortable. The biggest change for us didn’t really have to do with money. It was all mental – once our priorities changed everything fell into place. When my husband and I moved in together I had $3000 in credit card debt, and he had about the same, plus a $10,000 loan for his car. No savings. No budget. We moseyed along for a few years, not adding to our debt, but not paying it down or saving anything either. Our combined incomes are just under… Read more »

Andy
Andy
11 years ago

My wife and I have paid down a considerable amount of debt over the past 18 months. We still have a ways to go. With such a long road ahead, we’re trying to have some fun in between … making time for us and budgeting for some fun things/events while we attack our debt with passion. I think some fun helps ease the tough weeks when we’re saving like crazy to pay off our debts.

Jason
Jason
11 years ago

@Wendy – My spouse and I use the concept of “blow money” or “an allowance” to allow for personal spending without guilt. It’s added in as a line item in the budget, it’s withdrawn as cash, and can be used for anything we want to use it for — and the other can’t say a thing. It’s possible to be TOO accurate in a budget, to where every purchase seems to require approval (and perceived judgement) by the other party in the relationship. Having some amount of “your own money” conveys the approval and removes the guilt. Even if it’s… Read more »

Craig
Craig
11 years ago

Shouldn’t be an obsession for a major factor in your decision making and life because it has such a huge affect on the outcome of your financial life.

Wendy
Wendy
11 years ago

@sandy true, getting out of non mortgage debt is a great accomplishment and it is a HUGE relief for us both! i don’t HAVE to spend money to have fun, but sometimes it’s nice to buy those shoes even though i don’t need them or go out to that expensive restaurant when we could cook a nice meal at home. we enjoy lots of free things, too, like hiking and camping with our 2 crazy dogs, or going for a bike ride, or spending time with friends. i’ trying to balance between saving for goals, having cheap/free fun, and having… Read more »

MP Dunleavey
MP Dunleavey
11 years ago

Hi JD, it’s MP here. 😉

As you know, I did the same thing when paying off my debt, and it’s such a relief to hear your moderate POV. I sometimes feel like my backside is still sore from the public beating I took for admitting that I lived life AND paid back debt, and that felt right for me (for us). In case your readers would like to check out my journey (with the Women in Red on MSN Money):

http://articles.moneycentral.msn.com/SavingandDebt/ManageDebt/after-5.5-years-finally-debt-free.aspx

Tyler@Frugally Green
11 years ago

Obsession can be healthy and as they say, “everything in moderation, including moderation.” It takes each individual to know what will work for them. As JD makes very clear in most of his posts, there is no prescribed approach for everyone, no “one size fits all.” You probably know if becoming obsessed with something will help you reach your goals lightning fast or burn you out well ahead of the finish line because you’ve probably tried it before. Learn from your past mistakes and don’t try to evaluate each situation in isolation because every facet of who you are will… Read more »

Jason
Jason
11 years ago

@Wendy — maybe you should donate some of your $100 somewhere — church, a charity, your library or just walk up to someone and give them $10. Perhaps you could take someone you know out to lunch. Maybe you could save up and surprise your (I assume) husband with something he likes to do but you “can’t afford” — a concert, sports event or really fancy restaurant.

I don’t think you should feel guilty, though.

KC
KC
11 years ago

It just depends on personality. When my husband and I have a few thousand consumer (credit card) debt – we focused very hard on it and paid it off quickly. Same way when I borrowed about $15k from my dad for a car – I became very focused on paying that debt as soon as possible. That focus has probably been the main reason we haven’t gone into any other consumer debt – I hated owing that money – especially on something that was depreciating before I could pay it off. The house is a different matter entirely. I can’t… Read more »

Brandon Schmid
Brandon Schmid
11 years ago

When talking about debt, I think it is important to first identify if you have good debt or bad debt.

Good debt = A debt incurred to increase assets or income
Bad debt = A debt incurred to acquire a liability

I have quite a bit of debt but all of it is for my vending business which doubles my income and net-worth.

Brandon

Jesse Hines
Jesse Hines
11 years ago

In theory, I love the gazelle-like intensity espoused by Dave Ramsey and others, for goal-attainment in general. In reality, it just doesn’t work that well for me. My attention span quickly wanes and I find that life tends to get in the way. Via David Bach and Tim Ferriss, I’ve had better success by changing my environments and setting up more automatic approaches. For example, when I do my budget each month, I pencil in 5% to 10% of my income for savings as a bill that must be paid–before any of my actual bills. I’m much more likely to… Read more »

Corporate Barbarian
Corporate Barbarian
11 years ago

I think “small bites” might work better for someone who’s never had any discipline regarding spending. I can equate it with going on a diet – try giving up one “bad” food at a time, so it’s not so earth-shattering. I find it’s easier to adapt to new behaviors if you change your habits a little at a time.

mbrogz3000
mbrogz3000
11 years ago

I think if there is severe debt, the obsession needs not adding to the debt while paying down the existing debt.

Dave Farquhar
Dave Farquhar
11 years ago

The faster you can eliminate debt the better, of course, but the important thing is getting there somehow. An obsessive approach isn’t necessary. I got obsessive, but didn’t start out that way. I started on a 7-year plan to eliminate all debt. Then about a year and a half in, I lost my job. Once I landed on my feet, I went all in, because I didn’t want to ever be in the situation again of having no job and having $2,000 worth of bills that still have to be paid. The result was that I ended up being out… Read more »

John
John
11 years ago

In contrast to the implication of the e-mail that prompted the initial article, I think the real issue here is NOT “what must I sacrifice to get out of debt quickly (or be obsessed by it)”, it is “what choices am I prepared to make in order to live within my means?” My family and I started the Dave Ramsey program about 8 months ago now. While I am probably a bit obsessed about the debt thing than my wife (she might say more than a bit), we both have the same goal in mind – to become debt free.… Read more »

Garry - thisimprovedlife
Garry - thisimprovedlife
11 years ago

Like loosing weight, it is best to start small and get to a rate where you are comfortable. Finding that balance is the key thing.

Geri
Geri
11 years ago

JD, I love reading your blog and find your advice very helpful. Today’s post, however, rubbed me the wrong way. Perhaps it is because I am still stinging from a recent veterinary bill of $1K. Many people are struggling with debt that was not begotten by “fun” spending. In my own case, my debt is primarily a result of medical costs. I have insurance (thankfully), but also have many disorders and a few medical emergencies here and there that still leave me with a bill to pay. I don’t make much money, but the bills have to be paid some… Read more »

hustler
hustler
11 years ago

Yes! Everything in moderation. When I started paying off debt and a savings account, I started small. An extra ten dollars here and there, more when I could. Pretty soon I was seeing a difference and my savings was getting bigger.

Jeff
Jeff
11 years ago

I totally agree with this approach. In the old days I would take my GF to lunch 2-3 times per week. We have cut that out at a savings of $30 – $60 per week. We are also eating out less often on the weekends. I enjoy cooking, so this works out. Now when we do go out, we enjoy it even more because it is special instead of routine.

Christine @ Money Funk
Christine @ Money Funk
11 years ago

While I am on my $80K debt repayment journey I have cut back, but not completely cut out. Because every time I go extreme I rebound and end up spending. Now, I am on a solid stable path (which require little attention on my part). I know how much is paid towards the bills, how much is going into my savings, and how much I have left for variable costs. If I choose to cut back on these variable costs then it allows me to have some fun. Like the family trip we are planning to Hawaii. It may take… Read more »

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