Maybe Drake Bell can’t control his debt, but you can certainly tackle yours….if you frame it correctly.
I’m always amazed when people who are up to their eyeballs in debt share that their “goal” is to get out of debt.
I understand the feeling, but their use of the word “goal” is misguided.
As my friend Chris said when he reached the top of Mount Everest and found out his oxygen tank was leaking, “That’s gonna be a problem.”
Having a goal to “get out of debt,” unfortunately, sets you up for failure.
Goals should be a positive experience, not the lack of a negative.
When people retire, often I find problems with people who retired “away” from their job instead of “to” future experiences. You may have heard the same stories I have: a guy retires in January and is dead by July. I have no medical proof, but I believe that this person had no reason to live anymore. The job was done, and now they woke up every day with a blank slate.
That’s a good time to die, don’t you think?
It’s the same with “getting out of debt.”
By setting a goal where you want debt gone, you’re setting up a vacuum once you’re beyond your debt. When I interviewed Travis from Enemy of Debt about his goal on our podcast (here’s the link if you want to listen….it’s a great story), he had clear objectives he wanted to achieve that debt was keeping him from: saving for college and securing his retirement.
For Travis, getting out of debt is an incredible accomplishment that he should be proud of, but I don’t believe for a second that getting out of debt was ever his goal.
Getting his life back was his goal.
Debt relief isn’t a goal. It’s a hurdle that you need to cross to reach your goals.
Your job is a hurdle that you need to leave to free up time for other pursuits.
An advisor friend of mine worked with a client to help her pay off all of her credit card debt. Within three months she’d purchased a boat (payments) an expensive television (on credit) and was seriously considering upgrading her home (bigger mortgage).
She had nothing beyond the hurdle of debt. For her, clearing that hurdle was the only goal.
Here’s a Great Debt Relief Strategy
Instead of focusing on the debt, think of all of the things you could be doing if you didn’t have debt. Put yourself across that hurdle.
Building a cash reserve. (not a goal yet? here’s why this is important)
Building a new home.
Educating your family.
Creating a retirement full of experiences.
List out your dreams. What is debt robbing you of? Write these out. Get angry about all that your debt has stolen from you. It’s completely screwed you out of tons, hasn’t it?
Time to get those moments back.
Now, when you clear the debt hurdle, you’ll be ready to face a new future…and instead of being the guy who “retires” to nothing because his “goal” was to “stop working” or instead of being the woman who wanted to “get rid of her debt” only to replace it with new ones, you’ll be debt free and focused on building for a clear future.
…and what a better future it’ll be without that hurdle in the way!
What is your goal when you’re out of debt…or are you too focused on the hurdle to look beyond it? Next week we’ll talk about what that debt’s doing to your ability to achieve your dreams.
Yes!! I completely agree. My real goal is traveling the world, save enough in retirement to enjoy life and feel secure, and be generous with friends and family. Debt is my hurdle and one thing in my way to reaching my real goals. It’s obvious that people in debt should get out! It shouldn’t be a debt sentence! (pun intended)
Definitely. I call it a goal, but it’s really just the first tangible step to getting my life in order. I know that money isn’t going to go into a vacuum when I am done paying off my debt – it has many important things to do, but debt is currently standing in its way.
Wow, this seems like such simple advice but really changes the way I look at things. I want nothing else than to get rid of my student loan debt but why? Just so I can say I’m “debt free”. I can’t think of any real goals that this debt is preventing me from doing. I’m going to think on this – thanks for the thought!
Very interesting way to look at it. I’m not in debt, but I probably would have used that word goal too, but I totally see your point! Ah, and very “pin-able” image you got there! 🙂
Clarisse @ Make Money Your Way
Absolutely, my goal is to be financially stable, travel and go to the beach. I really want to enjoy life without worrying my future. So now, we are trying to save more and invest in the future.
Joe, this is awesome, as usual. I’ve really never looked at our debt that way before, so, thank you for that! Working now to overcome our hurdle so we can reach our goals. 🙂
Green Money Stream
This is definitely a more positive and more productive way to look at it. Our only debt is our mortgage but we’ve always had a “goal” to pay it off. This post provides a better perspective – I like it!
You’re right, Joe, getting out of credit card debt was never our end game, but only a short term goal – or as you said, a hurdle. I’ve agonized for almost 5 years now realizing just how much our bad spending habits and debt has hindered us from achieving the financial and life goals that we dream about. Now that our credit card debt hurdle is behind us, we can focus on continuing to better our lives, and making those dreams come true.
Never thought of it that way! We’re not in debt anymore and have no plans to head down that road again. Our goal now is to live a life we’re happy with while saving a lot.
The Phroogal Jason
How we frame things in our minds are so important. I’ve been pushing lifestyle goals as a clear motivator in achieving financial success. I hear people as well tell me their goals is to pay off debt or send their kids to college. I keep digging and asking, “No really what do you expect to be doing once that is done?”
I like this approach on paying off debt. It’s a hurdle and stop making it a goal.
John S @ Frugal Rules
This is brilliant Joe! It’s so simple, yet can completely change the way you attack something like debt. When I was working on paying off my debt it wasn’t until I saw what it was holding me from and what I truly wanted that I really got serious and made substantial headway.
I agree getting out of debt is not the end goal but financial freedom is. That being said, becoming debt free is such a huge hurdle you have to make it out to whatever you feel will help you break that barrier. As I move closer and closer to becoming debt free, my way of thinking about personal finance changed. Once I’m debt free the “war isn’t won” so to speak. Great article!
Great post and hopefully motivation to look beyond the debt. When you have a mountain of debt to deal with I suppose it can be difficult to look past that to a time when a large portion of you funds aren’t going to payback past spending choices. When you are in the middle of paying off debt the task in front of you can seem almost insurmountable. On the other hand knowing what you’ll be able to accomplish in your “after debt life” may make it that much easier to stay on track during the debt payoff. If you have nothing to look forward to but a zero balance, will that be enough?
Rather than paying off debt, we’re working madly toward paying off our mortgage and building our retirement funds, to the exclusion of virtually every sort of nonessential spending. We still run a very tight budget, but the funds are now being set aside for our future rather than reducing debt. And we’re perfectly happy with that trade off. Our clear vision of our life in early retirement makes every extra mortgage payment a measureable step toward that goal rather than more money sent to the bank and not blown on some tempting but nonessential purchase today.
We have our normal spending plan that we follow, and track where every penny goes. But for fun we also have our retirement budget laid out with funds clearly allocated for travel, hobbies, concerts/theatre tickets, sport and art class fees etc etc. Occasionally we tweak the list of things we’re looking forward to, just to make sure we’re building our savings to a level that will support all the things we want to do, but mostly it’s a nice reminder of all the things we have to look forward to.
Gen Y Finance Guy
I recently made a goal to pay off my mortgage before I was 35 years old (in 7 years or less). We bought the house in 2014 and had already saved almost $300k by moving out of Orange County (California) about an hour inland where the cost of living was significantly lower. Not only did we save about $1,500/month by making the move, we literally felt a sense of relief, like we had just exited the rat race. All while maintaining our standard of living (we could increase it if we wanted to).
All this to say that since the move our mindset has completely shifted financial independence at a much earlier age than we ever imagined. We are high earners and late last year I was obsessing about the prospects of paying of the mortgage because of the options it would give us to pursue only those things that brought joy to our life. I sold my wife on the dream of being able to go and stay in Italy for a month at a time if we didn’t have a mortgage to worry about.
I did the math and realized in the next 7-years we would make a minimum of $1.4M between the two of us. That means our $350K mortgage would only be a small 22% of our gross. I know people that pay up to 50% of their gross towards amortizing their regular mortgage over 30 years.
So really our goal with getting out of mortgage debt (the only debt we have) is to buy more freedom with our time and increase our cash flow.
Fantastic. I agree: getting out of mortgage debt isn’t the goal at all. Because there’s a much bigger goal you won’t climb back into debt later…..
Hmmmm…. I agree with this but for us it’s a little bit different – the debt we are hustling to pay off is STUDENT DEBT (already paid off the credit cards! zero debt there – hooray!) but because financial independence is really our “end game” we are still putting in money to our 401k’s and also are starting a Roth in the meantime. Once the student debt is gone, it’s my dream to max both of those out every year, for both of us if possible. I have to say, it helps my ego a little bit every time I click “pay” on a $1000+ loan payment to say to myself “THIS IS A GOAL!” but I get what you are saying.