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getting out of debt would be easier

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Unlike many people, I’m in the fortunate position of not having any consumer debt. I often use my credit card, but it gets paid off in full every month. I have student loans, but at the interest rate they are on, it makes more financial sense to pay them off as slowly as possible. I’ve never had a problem with overspending so a subscribing to a completely debt free lifestyle doesn’t have major psychological benefits.

With that said, I often feel that its easier to get out of debt than it is to start with a little over zero and just try to grow it. When you’re in debt, you have that initial target that you can motivate yourself for, getting to the stage where you have no debt. This means that you have an end in sight and when you’re struggling you can convince yourself that this is just temporary. By the time you get to being debt free, you are in the more frugal mindset.

In contrast, I don’t have any immediate goals for my money. I only want to be rich eventually so that I don’t have to stack shelves in my old age. Its hard to motivate myself when my net worth is so small. I’m trying to maintain a balance between saving and spending, but I don’t make a huge salary and what I can contribute seems pitiful, yet I feel slightly poor.

In short, it feels like I’m getting nowhere fast and I’m hideously tempted to put myself into debt buying stuff that I would love to have and then work my way out of it. I don’t do this, because doing this deliberately would rank as one of the stupidest and most ridiculous financial mistakes of all time. Still, at least I’d have a goal to aim for.

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8 comments for “getting out of debt would be easier”

  1. Plonkee, you are in your 20s do not be so hard on yourself. Most people don’t get on track until 30.

    Save 10% of your income and as you make more money ( and you will ) add another percentage and so on.

    My job has an added security short and long term disablity as well as Life insurance.

    Find jobs with those added benefits

    Posted by moneymonk | May 2, 2007, 8:42 pm
  2. I know that I should just be more patient. I think that I might reach my earnings potential pretty soon, and its not going to be that much more than I make now.

    I have some short-term disability through work and I also recently took out some insurance policies that will cover me in the event of disabling illness, but I still have a nagging fear that it could all go wrong.

    Posted by plonkee | May 3, 2007, 12:12 pm
  3. I think the best option is to set some short term goals. Make stuff up. It can be simple, like “don’t go out for lunch this week,” or it can be a bit more overarching, like “grow my net worth by x%.” Without goals we are all just floating around with no motivation. I have been there before but I’ve recently caught my second wind, primarily because I got interested in growing my net worth.

    I set a net worth goal for the year, and every time I spend a dime the thought goes through my head . . . “am I going to hit my goal?” It keeps me in line a little and gives me something to work toward every day. I am not in the red either, I’m in my 20s, and my salary is not on the fast track either. We have a lot in common. Setting an arbitrary goal has helped me stay focused, at least so far.

    Posted by Brad | May 3, 2007, 8:52 pm
  4. Thanks for that suggestion Brad. At first glance I think that I might have a problem with the arbitrariness, but I trick myself into doing things all the time using arbitrary means so it might work.

    Posted by plonkee | May 4, 2007, 8:18 am
  5. Just start with what you have now and set a goal to grow it by 10% or so each year. This way, you can roughly calculate what you will end up with and have a target for each year.

    I can help you set up a spreadsheet if you’d like. It will look similar to the one I have on my blog.

    Posted by Pinyo | October 24, 2007, 1:12 am
  6. Thanks Pinyo, I might take you up on it. I’m thinking about my goals again at the moment, the financial ones aren’t coming to me so quickly, but I’ve got a couple in mind for work.

    Posted by plonkee | October 24, 2007, 11:32 am
  7. With debts, you can plan your payoff and count down the months until you’re finished. Sensible spending and saving, on the other hand, is supposed to be a lifelong process. I agree that it’s much harder to maintain motivation when there’s really no end in sight.

    Posted by E.C. | May 16, 2008, 4:50 pm

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