How To Pay Off Debt? – Part 1 – Mindset

Are you Deep in Debt?  It’s Okay, I’ve Been There.

I was $60,000 in debt, I was being evicted from my apartment where the electricity had been cut off, I had surrendered a car for repossession, and I was getting calls from debt collectors daily who felt the need to belittle me in our conversations over the phone.  A phrase ran through my head often during this time, “I never want to feel this way again!”  It was Summer 2007.  About a year prior, I had left a lucrative job as an Engineer because I was so miserable that I had begun to have thoughts of suicide.  While leaving that role had helped me recover physically and mentally, my financial health was in the toilet.  At this moment where I was being evicted, I had been working as a Personal Trainer for 2-3 months.  Building a career and a sustainable income from being a trainer was going to take time that I didn’t have.  I had taken on debt without considering the implications on my future options.  In doing so, I had relinquished the ability to experiment with a career like Personal Training because I needed money immediately.

In thinking through a plan to climb out of the hole I had dug myself into I realized that I needed to change the way I thought about money.  Up until this point, money was something that I took for granted. I knew I would make a relatively high income as an Engineer and I assumed that having lots of money would somehow solve all my problems in life.  Not only did money not solve my problems, chasing money seemed to create huge problems.  This was so counter-intuitive to everything that I had learned in my life up until that point.  In retrospect, I was beginning to realize that money was only as good as my ability to use it wisely with clear intentions.  I had to develop my understanding of how money was connected to my time and, more importantly, my sense of freedom in life.

Why does, Time = Money ?

I paid off all my debts in August of 2010, 3 years after joining the US Army.  In the years that have followed I’ve come to the conclusion that understanding the direct link between time and money is extremely important.  How we utilize our energy over time (action over time) is what determines the quality of our lives.  This is important because most of us will have to work a job for a good portion of our lives in order to have money to live in the modern world.  Even if you yourself don’t have to work for money because of investments or inheritance, someone had to work for that money and someone still works at the financial institution that houses that money.  Either way, energy expended over time is what is required to produce income: 

( Energy/Time ) = Money

An individual can only recover energy through rest and recuperation, which takes time.  Time is never recovered.  Therefore, in a real sense, when we spend money we are spending a resource that we can never recover in the time it took to earn that money.  The point of this mindset is to help us develop the urgency and intentionality needed to use our dollars in the most effective way possible.  When I went to college I took on debt without spending any time to think through what I wanted my future to look like or what was most valuable to me.  I was just following the culture: take out student loans, get a car loan, use credit cards, everybody does it.  That debt cost me the freedom to experiment with a career in fitness at the time.   

Every dollar we spend represents time that has already passed.  When we take on debt, every dollar of that debt represents future time that is now spoken for.  One can choose to ignore the fact that they owe someone money but pretending to be ignorant doesn’t make it go away.  I also have to believe that trying to ignore calls from debt collectors, late notices, and, the worst, trying to avoid car repossession are all things that take a toll on someone mentally, emotionally, and physically.  I didn’t want to live that way which is why I took responsibility for the mistakes I made and began the work to become debt free.  

Hopefully all of this is sobering to you but let me also point out that energy over time (action over time) is what creates anything positive in our lives: it forges strong relationships, it creates and maintains physical health, and it can create a pathway to meaningful work.  When we mismanage money we create a situation where we have to work more for more money to make up for losses. Sometimes working more isn’t an option, in which case the financial mistakes we make become more insidious, putting more pressure on a relatively fixed income stream.  Lack of a buffer for emergencies makes our lives financially precarious.  This can steal precious time and energy not only in the form of working more hours but also in the form of mounting anxiety/stress from chronic financial pressure.  This is time and energy that could’ve been used to create positive outcomes in other parts of our life.

What does debt do to your mental, emotional, and physical health?

$60,000 of debt seemed massive at the time.  Especially to a 24 year old kid who had walked away from a high paying job the year prior (I might add, to the utter disappointment of people like my parents and girlfriend at the time).  Another phrase I would say to myself often, “How did I get in this mess and how the hell am I going to get out?!”  The first step to calming myself down was getting a clear idea of whom I owed money and when those monthly bills were due.  There have been several times where I’ve sat with an individual or couple to talk through what it looks like to work their way out of debt.  Each time it seems as though people have gotten good at avoiding this first step.  The odd thing is that they know the debt is there and they’ve even been vulnerable to admit they have an issue by asking for my help, but they still don’t really want to look at the numbers in full detail.

When I’ve talked to these people in the past what we often end up doing is talking through how they’re feeling in the moment.  There’s a real mental and emotional toll of carrying debt chronically, without a real plan to get rid of it.  I think it’s valuable to acknowledge those realities as part of the process of getting honest with ourselves.  Remember what I said in the beginning, “I never want to feel this way again!”  Think about the following:

• Stress costs physical energy.  Anxiety around financial uncertainty in the future can create shallow breathing, elevated heart rate, and higher blood pressure.  This general depletion of energy also severely hampers one’s motivation to do things like exercise or cook.  Ironically, I’ve seen people spend more money going out to eat than if they cooked simple meals at home and part of the reason they go out to eat is because of stress around money.  People that are stressed about having too little money go spend that money on calorie rich food that adds weight to their bodies that are not being challenged with regular exercise.  The lack of energy and general lack of self confidence then play back into the need to self medicate with spending and food.
  
• I’ve also seen where people are having financial problems but feel pressure from friends and family to participate in social gatherings that involve spending money:  gifts for various occasions, restaurants, vacations, drinks at the bar, etc.  People don’t want to reveal their financial struggles to friends and family because they feel they’ll be judged.  At the same time, trying to keep up with friends and family is creating more anxiety around money and maybe a resentment towards those individuals who don’t even know that you’re struggling.   I won’t even get into the many arguments and divorces that have arisen from couples struggling in their finances.
  
• Our relationship to work is very different when we have to work versus choosing to work.  Furthermore, when we have to work because we are carrying lots of debt there’s an even greater pressure on that paycheck.  It’s very simple:  there are options that we don’t even consider when we have lots of bills to pay.  My favorite example of this has always been leaving the military.  When I left the service, not only had I repaid all my debts but I also had a relatively large amount of money saved.  Whether I stayed in the service or got out, it was going to be a choice based completely on whether or not I wanted to continue being a soldier.  I saw other soldiers who didn’t want to deploy anymore and didn’t enjoy the job anymore.  But they re-enlisted because the bonuses were big and they had large lifestyles to support:  multiple houses, cars, and motorcycles.  It must suck to feel you have to risk your life or sacrifice your best years in order to keep your stuff.

When people are afraid to look at the numbers or when they’re pretending like everything will work itself out, I try to help them understand the costs they’re paying in their sense of freedom and overall well being.  For most people these things aren’t as urgent as getting evicted or having your car repo’d, and, in a sense, that’s the problem.  For most people debt is a burden they carry without immediate consequences.  Its effects aren’t felt in weeks or months, they’re played out over years.  One has to be able to conceptualize what that accumulated time has the potential to take from you in terms of costs that go beyond money.

What keeps you motivated to pay off debt?

When I try to talk to people about money it’s always been difficult to get them to understand that I’m coming from a place of love.  It’s a taboo topic.  We’re not supposed to talk about it, we’re supposed to have it figured out because we’re adults, and sometimes people feel as though budgeting is an assault on their freedom.  The first two things I understand because in American Culture we aren’t taught anything about money in school and the media teaches us that a high income solves all problems and fulfills all desires.  With budgeting I think there’s a belief that people who budget are nerds that don’t have any fun and everything is about pinching pennies.  I’m sure this is true of some people but budgeting and freedom are not mutually exclusive.  

Of course it’s hard to express self discipline when you have no vision of what that discipline will get for you in the future.  For me, I HATED the idea of owing people money.  Once I felt the sting of eviction, debt collectors calling, and the embarrassment of a repo’d car, I was done with debt.  Never again would I feel that fear, shame, and anxiety that came with being worried about how I was going to dig myself out of a financial hole.  

Over the last 10 years of trying to be my own boss I’ve been a very frugal spender in efforts to extend the amount of time that I have to try and make a business work.  People have often misconstrued my frugality as not wanting to enjoy my life.  This couldn’t be further from the truth.  I haven’t come close to having my own profitable business.  But I have no regrets and I’ve never felt the need to escape my life because I enjoy it.  Enjoy doesn’t mean without difficulty.  Enjoy means I’m pursuing activities that are really important to me.  I only have to work part time at a job that is very low stress which allows me to put tons of time into writing, speaking, podcasting, fitness, martial arts, and athleticism.  Not to mention getting plenty of time with my wife, my family/friends, and being able to handle chores around the house.  

Am I a tight wod?  No:

• Every 2-3 years I’ll Spend $100 dollars on Boxing Gloves
• I have $100 Shin Guards
• My Martial Arts Gym Membership is $150/month
• I recently spent $200 on Free Weights for my Birthday
• My Xero Shoes cost $100 each (I have 2 Pair)
• I buy lots of Organic Food
• My Wife and I had our Wedding Ceremony (Just the 2 of us and the Official) in Belgium last Year and we Honeymooned in Europe – A few Thousand Dollars.

I’m a Security Guard.  My wife is in the 3rd year of a small business she started.  We don’t make lots of money. I don’t work more than 36 hours most weeks.  Most times when I get paid I forget that it’s payday.  Whereas back when I had no budget, I probably spent every other week gritting my teeth until payday.  These days I don’t spend lots of time thinking about money because my budget does that for me.  I’m able to do some nice things because I use my money intentionally to build the life I want to have.  When I have unexpected bills/emergencies I don’t freak out because I have funds set aside for these things.  

I had a friend once who scoffed at me everytime I wanted to talk to her about money but had a meltdown every time she had an emergency because it would derail her finances.  To her, budgeting was like actively destroying her own joy and creativity.  To me, she walked around with constant anxiety and fear around money and this was actually stealing her joy and probably taking years off of her life.  I guess people live in that state for so long that it feels normal.  Also, lots of people get by for years without having the financial reckoning that I had.  I fell on my face in front of everyone and it sobered me up quickly.  

Yes, in the beginning you have to tighten up to get out of debt.  You’ve relinquished your options in life because of impatience and a lack of creativity.  This is what I realized when I was deep in that hole.  In the three year process of getting out of debt I realized with each dollar paid, I was reclaiming my time and reclaiming my ability to choose the life I wanted.  Things and money don’t motivate me.  Physical challenges and helping others improve, is what drives me.  Getting out of debt and learning to spend money wisely has allowed me to spend more and more of my time doing both of those things.  

The more I look into the future and envision my athletic potential and the impact that my writing could have, the more I recognize that self discipline with money will keep me on that path.  I can spend 2-3 hours at the MMA gym 2 days a week because I don’t have to work 50 hours a week.  I can spend time reading, writing, and exercising everyday because my energy isn’t drained from the pressures of a higher paying job because I don’t need more money.  (Not that there’s anything wrong with making more money or having a more demanding job.  It’s just not part of my vision.)  

In my life strategy, money is one tool of many that helps me design life the way I want it to be.  Keeping my vision of life at the forefront of my actions is a large part of the motivation to continue to master money rather than be a slave to it.

Words of Encouragement

When I was a soldier in the US Army I went to Airborne School after basic training to learn how to parachute out of airplanes.  The Sergeant Major who led our instructors briefed our entire class and made some profound comments about fear:

“It’s perfectly natural to be scared of jumping out of a perfectly good airplane.  I’m not asking you to not be scared.  I’m asking you to concentrate on your training in order to overcome your fear.”

Debt can be a very scary thing and many people ignore it because they’re afraid that the amount they owe is insurmountable.  When confronting reality it’s okay to be scared of the number itself and all its implications.  I was definitely scarred when that $60,000 was staring me in the face.  But I focused on the freedom I wanted and the way I wanted to feel.  I used that feeling of fear to push me towards the experience of life that I wanted.  With laser-like concentration, I dug my way out of that hole.  If you’re in debt, I believe you can too.