Why and How People Go Into Debt

Just the other day I had a conversation with a good friend. We were discussing him wanting to purchase a new “toy” that cost a few of thousand dollars.  For the past couple of years he and I have been supporting each other to be financially free. Free from debt, free from the fear of loosing it all, free from the pressure that financial instability brings.

Like me, he had a financial epiphany and realized that how he was dealing with money had to change. From that “eureka” moment he’s been steadily saving and has gotten totally out of debt. Several thousand dollars  saved later we were talking of how nice it is to have a buffer. To have some peace of mind that if we had an emergency that we would not die a week later for lack of not having any funds to buy our food or pay our living expenses.

As he was talking about purchasing his “toy” he said “I look at my savings and it just seems hard to make myself spend that five grand after working so hard to save  it!”

I interrupted him in his thought and said “that’s it.” In that moment I realized how people seem to so easily get into debt. It took a couple of years for my friend to slowly pay off his debt and to save a few hundred dollars a month. But incrementally, one dollar at a time, one debt at a time he changed his mindset to save money and to pay off all his debt.

Conversely, if you really think about it, accumulating debt is simply the reverse process. People get into debt by slowly purchasing things a little at a time. They look at their bill and at first it is just a few hundred dollars a month. They pay the minimum and then keep buying more and more “things” that don’t seem to have any value. After several months they are several hundred dollars in debt and then over a period of a year or two they have thousands in debt. For a while the minimum payment amount is very manageable from month to month.  But at some point the minimum payment becomes significant and becomes a shackle of pain and agony.

So incrementally debt becomes “normal” in the mind of the debtor.

Incrementally the debtor becomes enslaved to the cycle of paying a minimum finance charge that never pays off the debt.

People go into debt because THEY slowly re-program themselves to be inoculated to the pain and the reality that debt brings.

But like my good friend, WE CAN RE-PROGRAM ourselves to save and to realize that saving money is indeed a good feeling and a good thing to accomplish.

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