Hey, Frugal Farmer friends!! I want to welcome my blogger friend, Brian, from Luke 1428 today. He’s got an awesome post on debt payoff today that I think you’ll really find helpful.
Earlier this summer, my family and I took a weekend excursion to the Bahamas aboard Royal Caribbean cruise lines. We were fortunate enough to walk into an incredible offer Royal Caribbean was pushing where the third and fourth occupants of a cabin sail free. For a family of six already looking for a short getaway, that’s an offer not to be passed up.
For those who have never been on a cruise I would highly recommend it. And when you go, consider upgrading to a balcony room. Lounging with the calm ocean breezes in your own private zone is one of the most relaxing experiences around.
Balconies are about peace. They produce it because there are no distractions, unless your kids are screaming on the balcony next to you. Perhaps some playful dolphins catch your eye for a moment and there is the occasional enemy cruise ship passing in the distance. Mostly though, there is nothing there to distract you. It’s only water and sky for as far as the eye can see.
I’ve felt this same type of peace in other life situations…hiking through a forest…staring at a campfire…exploring a cave…reading a good book. There is something about attaching a singular focus to one thing that calms our minds and brings clarity of thought.
Those with debt issues – and I’m talking non-mortgage here – need to apply this lesson. Distractions are the death knell to paying off debt quickly.
Debt Payoff Distractions
What could draw your attention away from staying focused on paying off debt quickly? Just about anything…
…your satellite TV bill,
…taking a vacation,
…going out with friends,
…insert your weakness, passion or hobby here.
Generally speaking, these are not bad in and of themselves. But don’t tell me you are focused on paying off debt with intensity when you continue to eat out three times a week, subscribe to the highest cable TV package and take multiple vacations during the summer. You have other priorities at this point and paying off debt quickly isn’t one of them.
Here Is Where It Gets Tricky
What about your financial plan? Can the destination of the money you receive each paycheck distract you from paying off your debt? Is it possible to become confused about where the money should go and in what quantities?
For example, should someone with massive debt be putting money aside for their kid’s college at the same time?
What about saving for retirement or investing in the stock market? (Noooo! We can never stop that, right?)
Or something with even more short-term practicality – saving for a 3-6 month emergency fund?
Again, fully funded emergency funds, college tuition and retirement are all vital elements to focus on in a financial plan. The question is, when I have massive amounts of debt to pay off, should I stop funding those temporarily in order to focus solely on paying off the debt? While perhaps unpopular, I believe the answer should be “Yes.”
I’m big on step-by-step processes that help me accomplish goals. They really help me stay focused. Peg A goes into slot B before it can be connected with piece C. One step at a time so no details are missed and the project is successfully completed.
Perhaps that’s why I was so attracted years ago to plans like Dave Ramsey’s Seven Baby Steps. It gave me clarity of thought and peace of mind knowing what to accomplish in the successive stages of a financial plan. Otherwise I would have been all over the map trying to figure out how much money to put here, there and everywhere. My focus would have been on investing or college or retirement instead of getting out of debt.
That wouldn’t have resulted in peace for me.
The Pushback and the Benefits
The big controversy with this of course is that it feels as though a person is missing out on time when they could be saving and investing. Once time is gone, it can never be made up. And the more time we delay in investing, the further behind we could actually get in growing our wealth.
I’d argue that a short-term departure (1-3 years) from allocating money to those activities is worth it to rid oneself from the stranglehold of debt. It’s OK to lay those aside for the moment to singularly focus on the debt payoff. Once that payload of debt is gone, there will be excess money to save, invest or put towards whatever you want.
We recently experienced this in our house earlier this year as we paid off our mortgage early. The excess money that is now coming into our monthly budget can be moved in greater quantities towards investments. And it’s given us freedom to make life choices not available to us before, like my decision to become a stay at home dad.
The psychological benefits of being debt free are enormous. It’s really something you have to experience for yourself to truly understand. My advice would be to get intense and focus on the debt solely until it’s gone. There will be time to save, invest, deal with college, retirement and the mortgage later. You’ll feel more at peace and be better equipped to handle those steps of your financial plan with no debt to shackle you.
Would you stop funding savings and investments to pay off your non-mortgage debt? What helped/is helping you pay down your debt quickly?
About the author: Brian Fourman is a former private school personal finance and Bible teacher now turned stay at home dad and blogger. His hobbies include rental real estate, running, cooking and sports. In his down time, he loves hanging out with his four kids and hearing his wife talk about all the cool things CPAs do at work. You can check him out providing encouragement and inspiration on his blog at Luke1428.com or by connecting with him on Facebook, and Twitter.