The True Cost of Debt

"The Great Recession is exposing people." This is a comment I read on a blog post about celebrities who were in debt. The comment was posted by a reader who was referring to the fact that before the Great Recession, celebrities were living high off the hog on borrowed money. Since, the recession, however, a lot of people's credit, including celebrities, is limited and, therefore, they are exposed; exposed for being a poser with a financed lifestyle. But, it's not just celebrities who are living a rented lifestyle.

Before the recession, a lot of people's emergency fund was their credit cards. The fallout from the credit crisis and its subsequent limitations on credit access, has caused a lot of people to question the true cost of debt. The true cost of consumer debt is almost always negative. Some of the negative consequences of debt are:


Debt is stressful because, most times, the amount of debt that one carries feels overwhelming. And despite making payments towards the debt, high interest rates make it appear as if no progress is being made. Additionally, when debt was used to secure depreciating assets, it is not uncommon for one to owe more than what the item is worth. Debt can become a crippling condition that can leave the debtor feeling enslaved and depressed.

Missed Opportunities

How many times have we heard, or even said ourselves, the phrase, "I would take advantage of this opportunity, if I only had the money." How many times has there been a great deal on a great vacation that you would have taken if you had only saved, in advance, and had the money when the deal was available? How many times have you known you needed to start saving for a new car, but didn't because you didn't have the money to spare? Then, low and behold, you see a great deal on a car right as your clunker has kicked the bucket. How many times would you have loved to allow your kid to join the sports league or go to that summer camp, if only you had the money. For many people, missed opportunities are a source of stress and regret brought on by debt.

Marital Problems

It is well documented that money issues are the number one cause of divorce in America. But even for those couples who don't end up in divorce court, how many arguments has debt or poor spending habits caused? How much stronger would your marriage be if you had the money to have a date night, at least, once a month?

Loss of Income

Since the recession and its negative affect on many people's credit, it's more common than ever for employers to run credit checks on employment candidates. Issues such as low credit scores can cause an otherwise viable candidate to lose a job to a candidate whose only edge was a favorable credit rating. The lost of a new employment position is a double blow when the new job would have come with a higher salary, which would have alloted more descretionary income that could have been applied to debt repayment.

Prolonged Retirement Date

Too many people don't take into account how debt will affect their retirement plans until it's too late. Despite the fact that some future retirees may have enough money to afford their life's necessities during retirement, they fail to take into account how much of their fixed income would be consumed by debt repayment. Oftentimes, by the time the person nearing retirement finally analyzes their entire financial situation, their only recourse is to extend their retirement date until they have eliminated all or most of their debt.

These are just a few of the ways debt cost debtor. It's been said time and time again, but the saying still holds true--debt, is in fact, a form of slavery.

Money can buy material goods. Lots of money can buy lots of material goods. Material things aside, we've all heard the sayings before, 'Money can't buy love'; 'Money can't buy happiness.' While I agree with these sentiments, there are a few non-material things that money can buy.

It's not a coincidence that I started this list with the trait of confidence. I realize listing confidence as something money can buy is a bit controversial. There are a lot of people who will say money can't buy confidence because there are a lot of rich people with low self-esteem who only use money to compensate for their lack of confidence. However, when I speak of confidence I mainly mean the confidence to take risks. What would you do if you knew you couldn't fail? If we all were born with silver spoons in our mouths, most of us would have at least attempted to follow our dreams and not followed the path of the straight and narrow because it was the safe thing to do, with minimal risk of failure.

Additionally, I know there are rich people with low self esteem, but, seriously, money does give some people confidence to the point of arrogance; two examples: Kanye West and Donald Trump. Who do they think they're fooling? The vast majority of their confidence/arrogance comes from the millions sitting in their bank accounts.

Having options is a wonderful, liberating thing. Having options means never being stuck--stuck in a bad marriage, stuck in a city you hate, stuck in a job you hate. Money affords its owner the opportunity to choose from a variety of alternatives that could possibly make his life more enjoyable or fulfilling. And if the first option is not a success, money offers him the opportunity to make a different choice and experience a different outcome.

Having enough money to fully fund emergency savings gives one the security of knowing that whatever crisis life throws at you--loss of job, expensive car repairs, unexpected tax bill--you have the financial means to weather the temporary storm. Having adequate emergency savings also means having the security of knowing that in the case of an unforeseen expense, you won't have to possibly swollow your pride and request loans from friends or family. Most people don't like the feeling of being a slave to their lender, especially when they have to see that lender across the dinner table for the annual Thanksgiving family gathering.

Peace of Mind

Money offers peace of mind in knowing that you don't have to live paycheck to paycheck and knowing you have the financial means to provide for life's necessecities, with a little to spare for fun and entertainment also. Money affords a clear mind and a calmer sense of being. Additionally, if the money you have was earned through hard work and sound financial planning, you can have peace of mind that you are passing down the same financial principles to your children.

I don't know about you, but I like these things that money can buy. Can you think of any other non-material things money can buy?

Quirky; Strange; Odd--these might be words some of us may have heard a time or two in our lives as a description of who we are, especially if we are into Minimalism and/or Frugality. Most people consider being calld weird an insult; I know I used to. Now, I consder being called weird a compliment

Nowadays, when someone is called weird, it simply means he is different from the masses. When I take a look at American society, I mostly see a culture of people who have no idea who they are, what they believe in, and, as a result, are living unfulfilled lives. We are, largely, a media driven, mass consumerism, keep up with the Jones society that is waking up to the same humdrum life, day in and day out. If this is what it means to be "normal", then I'd rather be labeled weird any and everyday of the week.

So, the question is: Are you normal or are you weird? If you conclude that you are normal and would like to join us weirdos, I might suggest taking the following steps:

Find a "weird" mentor

Growing up I didn't have any real-life people I looked up to or aspired to be like. Although my grandmother was somewhat of a financial role model, ALL of her views and opinions were EXTREMELY antiquated, to say the least. As a result, I gained my "weird" role models from viewing and reading biographies. My top five "weird" role models are, in no particular order: Mia Farrow, Marc Cuban, Oprah Winfrey, Maria Shriver, and Ted Turner.

Learn to Put Little Value on Other People's Opinions

Some of the best advice I've ever heard came from Oprah Winfrey. She said, 'It is not my business what others think of me." When I heard this statement, I had an 'Aha' moment. Additionally, I would advise you to stop telling people your plans because people, especially "normal" people, are dream killers. When you tell your plans to dream killers, it's in their nature to be pessamistic and you have no one to blame but yourself for subjecting yourself to their judgment.

Take the Necessary Steps to Eliminate Fear From Your Decision Making

We were not born with a spirit of fear. We become fearful because we begin to conform to societal pressure to be "normal". Fear, therefore, is nothing more than allowing other people's opinions influence your decisions for your life. Learn to block out the other voices, while listening to your inner voice and you will find that your fear will begin to dissipate. Do this until it becomes a habit, and your fear will vanish permanently.

When you take the essential steps to be true to yourself and embrace your inner oddball, you'll be surprised at how natural it becomes to be labeled "weird".

How Do You View Money?

Different people view money differently. The book "Your Money or Your Life' defined money simply as what we trade out time for. Others may view money as a means to status or acquisition of material items. Then, there are still those who may have a negative view of money because of the opinions of money that may have been passed down from childhood. I, personally, view money as a tool--a very important tool.

I know it's very important to keep money in its proper perspective. Some people lose sight of this fact due to greed or other selfish reasons. People and relationships definitely trump money. But after acknowledging that people should come before money, I feel it's imperative to also acknowledge the imporance of money. I HATE, with a passion, when people say money is not important. Whenever I hear someone say money isn't important, my response is always, 'If money isn't important, then try living without it. Good luck with your life of homelessness, nakedness and starvation." From my experiences, the people who say money isn't important are usually those who are being irresponsible in their handling of money.

Money is important because it's a tool we use to acquire our basic necessities for life--food, clothing, and shelter. Even people who don't value money, and as a result, are not responsible with it, must use someone else's money to exist; whether it's government, mooching off family and friends or committing illegal acts. This is why I cannot tolerate when people dismiss the impact of money and treat those who have a healthy value for money as money obsessed.

I value my money because I spend a great amount of my life working to earn it. Anything that requires such a great time commitment from me, deserves my respect. Money is also the means by which I build the life I desire. Money affords me a life that is fulfilling to me and brings me some degree of joy; the type joy that comes from things like a comfortable home, a great vacation, or a delicious meal.

I implore everyone to analyze what money means to their life--whether good or bad. If, after examination, it is determined that the money relationship is one that is not in line with one's values, then it's time to make the needed changes. But this change in perspective cannot come without the necessary introspection.

So, have you given the question any real thought? How do you view money?

I will admit that during our depressed economic state, there is enough blame to go around; blame for the auto industry, housing industry, wall street, etc. But when it comes to individual debt, we all must take responsibility for our personal financial state. My participation in the blame game was not about me blaming others, but me taking the position that there was simply no other categories in my budget I could reduce cost. Since coming to my senses, I've gotten rid of cable, adjusted my thermostat accordingly, looked at alternatives to buying (such as borrowing or bartering), reduced the use of my car, and not paying for Internet on my cellphone. These are just a few of the ways I've taken responsibility and reduced my expenses.

However, for some people who are in debt, simply reducing expenses is not enough. For those in extreme debt, desperate times may have to call for desperate measures---like getting a second job, if necessary. I know a lot of people are going to say, 'Yeah right...a second job in this economy?' But, I recently wrote a post about how my sister works two jobs to afford her big house. She acquired her second job about 5 months ago---during our current recession. My point is, in order to take full responsibility for paying off debt, a second job may be the only way to make a dent in the debt balance when cutting cost simply isn't enough.

When I speak of securing a second job I definitely speak from experience because I've had more than one job at different stages in my life. Although I'm not currently working a second job (only because I earn enough money to make sizable debt payments) you better believe I would if my debt balance necessitated it. Putting an end to the blame game and taking personal responsibility, in regards to becoming debt free, means taking the necessary actions, by any means necessary; even if that means sacrificing a few more hours of your personal time and putting in some sweat equity.

So, I'm interested to know, have any of you taken on a second job to pay off your debt or do you feel a second job is not worth the sacrifice? Or have you gone the route of extreme cost cutting?

I can honestly say I don't have many temptations. I am a handbag addict, but even that I don't consider a true temptation. I don't just buy random handbags in ridiculous colors. All of my handbag purchases are well thought out; I comparison shop (usually on the internet); I ensure they can be mixed and matched with other items in my wardrobe; and under no circumstances do I buy a bag that is similar to something I already have in my closet. So, the handbag thing....although I consider it a festish, I, pretty much, have a handle on purchases. So, that still leaves the question, what are my temptations? Hmmm....

I would have to say my temptations are going out to eat and traveling. Both of these things are tempting to me because they usually signal GIRL TIME! When I think about going out to eat, it usually means me and my girlfriends going out to a casual restaurant, sitting on the deck while eating, laughing and indulging in a few drinks. Likewise, because I'm single, most of my travel is with friends. It is SOOO hard for me to turn down an invite for a trip that is anywhere out of state. I love to travel, meet new people, and have new experiences. Additionally because I come from a family where people were content to just scrape by, there was no eating out or traveling for me as a kid. I believe this is another reason why I love these two experiences so much.

In examining my temptations, I have come to realize that my temptations aren't about spending money; rather they're about having experiences with people who are close to me. I guess this is why it is so hard for me to resist. But, because I'm living my life with financial goals, I believe I've found a balance that is reasonable and doesn't leave me feeling deprived--in regards to eating out, that is. The issue of traveling is a whole other story. I'm still trying to find a balance. For now, my solution has been to turn down smaller trips and save for that grand vacation.

So, those are my temptations. What are yours? And have you figured out why these are temptations for you?

I made my last lump sum payment of $819.63 to my Chase Mastercard!!! It feels sooo good to be free of credit card debt! I just need a moment to take that in.....*Exhales*. Now, I'm not one of those people who despise credit cards and preaches how they are evil. I have always known that credit cards are DEBT and MUST be repaid. Therefore, I have always used them responsibly--even when I did carry a small balance here and there. After completely paying my cards of, though, I have a completely different feeling about carrying a balance--I will NEVER do it again. And to ensure I never carry another balance, I'm only going to use my American Express Optima (no annual fee) to ensure that I pay the balance each month. Being free from credit card debt is a WONDERFUL feeling....

On the issue of the doctor's bill...It turns out I did have a credit in the amount of $1100.00. But instead of being transferred to the physician's bill to pay down that balance--which is a little over $1,700.00--only $700.00 can be transferred because my doctor's bill has increased to $400.00 to pay for my first follow up visit after my surgery. So, after the $700.00 transfer, I will owe approximately $1000.00 to the physician. That wouldn't be so bad...but, of course, there's always a catch. My initial follow up doctor's appointment was to test my thyroid levels because now I'm on complete thyroid hormone replacement. I was originally prescirbed 125mg of Synthroid (thyroid hormone), but upon receiving the results of my blood test, it was determined that my thyroid levels were too high. As a result, my medication has been reduced to 1000mg. I have another doctor's appointment on August 18th, for yet another blood test to determine if 100mg is the correct dosage. At approximately $400 a test--after insurance payment--this could get expensive. Of course, I'm praying 100mg is the magic number. After my second follow up doctor's visit and subsequent blood test, my total medical bill will be approximately $1,400.00.

Once the medical bills are paid, the only other debt I will have, besides my mortgage, is my student loan balance owed to Sallie Mae to the tune of $5,526.49. The plan is to have both bills paid off by the end of the year *Keeping fingers crossed and sending a silent prayer that I can make my goal and be debt free by the end of the year*.