Disappearing debt little by little

Let's talk about debt.

As I said, we still have it. We're still paying off debts to the IRS, the State of California Franchise Tax Board and student loans. And we have a long way to go. That debt weighs heavily on us every day. It's suffocating. And usually when I think about it I feel a mixture of apathy and failure.

*Sigh*

Not very inspiring. Quite the opposite, actually.

So I'm talking to my good friend Darchelle the other day about this debt and she offers another way to look at it. The conversation goes something like this:

Me: (whining) It feels like we'll never be out of debt!

Darchelle: But you have less debt this year than you had last year, right?

Me: Well... yes. (a light bulb goes off) Actually, we haven't accrued any new debt in over two years.

Darchelle: How many people can say that?

And scene.

No new debt
It's true, we haven't accrued any new debt in 2 years.

For the last two years we have been living a cash life.

And it is so rare that we actually acknowledge the triumph in that. We're usually too busy beating ourselves up for the debt we still have. But Darchelle was totally right. We have had less debt each year for the last two years. And if we had managed to hang onto our house, there's no way we could say that. We're moving in the right direction.

It's hard to see the progress because it's not tangible. Because we have nothing to show for our success in chipping away at our debt. That's precisely the point-- having nothing to show. But it's precisely what makes it such a challenging mental game. We're wired to have things to show for success.

Being debt-free... that's not visible. It's not tangible. And it's so slow. We're also wired to want everything now. Now. NOW! Instant gratification. Such a curse.

I mentioned this to Bob the other night. I said, do you realize that we haven't accrued a penny of debt over the last two years? He said that hasn't been the case since he was in college. Or was it earlier? I can't remember now. The point was that it had been a while. Bob got the triumph.

It is a triumph. To go from living most of your life accruing new debt year to year to breaking that trend. Intervening in the upward climb of what we owe. For two solid years. That intangible pile of money owed has shrunk. Maybe not perceptibly. But it has grown, not bigger, but smaller.

We've completely altered the way we live. It's not glamorous, but it's totally aligned with our goal of financial freedom.

Life without credit cards
Because we live a cash life, we have to budget and save before we spend. And once it's gone, it's gone. No more spending.

I haven't had a hair cut in months because there isn't any room for it in our budget. And I've been making do without winter boots in single digit temps in Chicago because we don't have the cash for a new pair. (I'm using thick wool socks in my rain boots for the brief moments I'm outside and it's been working. But I do really want some warm winter boots and curse myself for selling the pair I used to own in the Estate Sale.)

Thankfully, and of most importance, our main NEEDS are taken care of. We have a roof over our heads. We have heat. We have food in the refrigerator.

Hand-me-downs have saved us in regards to Malcolm. Almost everything for Malcolm has pretty much been handed down or gifted to us by the wonderful people in our lives. The rest was purchased at Goodwill and various thrift stores.

We're constantly distinguishing want vs. need. And it gets easier each day. Easier too because we simply don't have the room for wants. We do very well with what we have.

Of course, that doesn't stop us from wanting from time to time. We're human. But it does stop us from spending. And that's key.

Where there is room for improvement: Budgeting.

But for now, I'm going to raise my glass of water in a toast to having less debt this year than last year. And less each year that comes until we work our way all the way down to zero.

Disappearing debt little by little. It's a triumph worthy of celebration.

And thank you, Darchelle, for helping me get that!

Salud!

Debt is Dumb

Our credit rating is on a respirator. It's barely holding on for dear life. It's useless, actually. Just lays around all day in a hospital bed under a morphine spell. We don't even visit it anymore. It doesn't recognize us.

Debt did it. Debt killed our credit rating. Our debt. No one else's. Our inability to stay on top of our debt, to be more specific. You know how this goes.

Many months ago we began to prepare ourselves for the death of our credit rating. It's inevitable. We agreed that it would be okay. We never want to be in debt ever again so not being able to use credit is a way to not be in debt, right? We don't need it. Cash will be our king and we'll never use credit again.

This may sound like an extreme over-correction not to mention impossible. Indeed, there are stories about people declaring bankruptcy and a few months later the credit card offers start arriving again. So it's not like we'll never be able to get a credit card again... it's that we don't want to take that chance.

You're supposed to use self-control. You're not supposed to carry a balance. That's when you get into trouble. Yes, yes, we know. But why is this so much easier said than done? We had zero credit card debt before we bought our house. And then... and then... well, mistakes were made. The balance ballooned and the rest is history.

Debt, one could say, is dumb. We're not stupid, so how could we be so dumb?

In "Walking Away from Credit Cards" on CNN.com financial expert, David Ramsey, says this about that:

"Debt is not a tool; it is a method to make banks wealthy, not you," says Ramsey's Web site, where users can find blunt advice on how to deal with creditors and develop sound money habits. "Debt is dumb."

The article then goes on to quote Brad Chaffee, a finance student of Charlotsville, Virgina who thinks:

"I think if we just use cash and debit cards, it's a much better idea," he said. "Credit cards are too risky, and when something does happen to you and you have a bunch of debt -- like for instance when life happens to you, you lose your job or whatever it may be -- you've got all this debt in your life, whereas if you didn't use credit cards and you didn't use debt, then you might be in a little better situation."

We agree.

Walking Away From Credit Cards - CNN.COM