why debt stinks life doesnt just stop so you can get out

April 28th, 2008

Why Debt Stinks: Life Doesn’t Just Stop So You Can Get Out

Reflecting on the events of the past week, I’ve been thinking about the fact that every time it seems we get into a good rhythm of paying off debt, and are poised to make significant debt repayment progress, something seems to get in the way. That is not at all to say that we don’t make progress despite that, but the fact remains that we seem to get sidetracked right on the verge of significant progress. When we were on the brink of paying off our credit card debt, my car’s engine completely died and had to be replaced, which actually put us into even more debt for a very short time and delayed the credit card payoff by over a month. And now, when we were poised to hit our debt with a extra paycheck/stimulus check double whammy, the furnace decided it’d rather have that money.

Which leads me to my latest observation on why debt stinks. Life doesn’t just stop or go on hold and wait for you to get out of debt before throwing any curveballs your way. When you’re in debt, and working diligently on getting out, your “extra” money is earmarked towards that debt, so when something happens that will set you back financially, you either may not be prepared for it, or it may set back those debt elimination plans significantly.

The other side of that, is when these big things happen, I find myself thinking about how much closer we’d be to being out of debt if only we had that money we spent on unexpected expenses available for debt reduction. All told, including the upcoming furnace replacement, since the start of this blog we will have spent probably close to if not over $10,000 on unexpected repairs and other expenses of that nature. That total equals almost half of our remaining debt. Without those setbacks, our debt might be approaching four figures right now. However, our increased financial awareness and responsibility has left us able to handle these setbacks without completely going under, which is more than I could have imagined a year ago. But still, if we didn’t have significant debt we’d be in a better place to prepare for life’s inevitable surprises.

Life doesn’t just stop. It goes on, things happen, and you have to roll with it. And when you’re in debt, you have to decide between how much you want to devote to getting out of debt versus how prepared you want to be for unexpected expenses. And whatever you choose as that balance point, somewhere you’re taking a risk. We’ve consistently chosen to risk more by saving less versus holding back the debt repayment. So far, we’ve been able to manage that, but for how much longer? It might be time to reconsider that strategy before timing doesn’t work out on our side.

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16 Responses to “Why Debt Stinks: Life Doesn’t Just Stop So You Can Get Out”

  1. The debt to savings game is defiantly a fine balance. Personally, I’m a big pay the debt down, save less person. But I did stock away a pretty good emergency fund first.

    Keep up the good balancing act!

    Q

  2. I find that a change in perspective helps tremendously when dealing with those unexpected expenses: instead of thinking of how much further out of debt you would be had “it” not happened, be thankful that you had the financial savvy to be prepared!

    Summed up: Change “Every time I get some money saved up, something happens to take it away from me” to “Thank God I had some money saved up when that happened!”

  3. What you described is called life…real life is full of ups and downs and bumps in the road. Some bumps are harder to get over than others, but it can be done with time and patience.

    Keep on dreaming and working towards your goal.

  4. Whew! Ain’t that the story of all our lives!

    It certainly does seem like every time you turn around, there’s some fine surprise of a bill waiting for you. The big unexpected hits are the ones that can do you in, whether you have an emergency fund or not. Four or five grand is a big hit on an emergency fund, even when you’re not fighting a debt.

    A new unit may save a lot on the power bill, though. That may leave more in your cash flow to put toward paying down the debt.

  5. The best advice I can give anyone is to stop adding more debt. Many people are cavalier about using a credit card or taking out a loan to get that new TV. If you can completely stop adding new debt and you keep paying more than the minimums on what you have there is light at the end of the tunnel.

  6. I approach this problem a whole other way. I believe your budget should prepare for these surprises (by averaging them into each month). They will usually occur but if, by chance, they should not you’ll have a nice surprise on your hands.

    I don’t believe the unexpected are really unexpected. They’re just annoying.

  7. I look at it that way too – and things like home improvements and car repairs are saved for a bit at a time in our budget.

    However, both recently were much larger than I ever expected right now. I don’t budget $300/month for either at this point. “Unexpected” means you didn’t expect it ;)

  8. @ Historic Stitcher – but that is why this is called why debt stinks :)

    I am happy that we’re able to deal with this without going further into debt. But I have to acknowledge that there is part of me that’s greatly irritated right now. :)

    However, with the car I was just terrified and upset, so irritated is an improvement. 2 quotes down, one to go… yippee

  9. I totally understand!

    We’re not in debt (besides the mortgage), but “life” also aggravates my saving attempts! I think I’ll be able to save $x from our next paycheck, and then we have a wedding gift to buy, a home improvement tool to buy, etc, etc. *sigh*
    :)

  10. This post is so timely! I’m facing a possible labor strike in the next three months, yet my recent goal has been to throw any additional money at my cc debt.

    Now, I’m considering whether it might be a better idea to strengthen my emergency fund in the short term, and pay the minimum on the credit card. I’d rather have the cash in the bank if I have to strike, rather than running up the credit card again.

  11. I think Finally Frugal has hit the nail on the head: that you have to constantly pay attention and shift strategies according to what’s going on in your life. That’s just the way it is. PaidTwice, sounds like that’s what you’re doing, too!
    Home ownership, by the way, ain’t all its made out to be: there’s always something… (as Roseanne Roseanna Danna used to say)

  12. In the past when I’ve tried to get out of debt, I always did the “empty my savings accounts and throw penny at the debt” thing, and then life would happen and I’d still be deeply in debt and then with no savings. When I started following Dave Ramsey’s program, the idea of saving up $1000 and sticking it iin the bank somewhere seemed almost foreign, but I’m SO glad I did it. As Dave says, it’s sort of “Murphy Repellant.” I’ve got more than $1000 sitting in there now (I continue to contribute a small amount to it monthly because I like seeing it grow :) ) so I feel ok about throwing every extra penny towards my debts because I know I’m covered if (almost) anything comes up.

    Oddly, I’m finding that I have a real aversion to using that money. I like knowing it’s sitting there in case a “real” emergency shows up. More and more, I’m working irregular expenses and “surprises” into my budget and they’re just ceasing to be problems because I usually have cash set aside for various things I know will happen.

    As others have said, I think there’s a flexibility to budgeting and debt repayment and it sounds like you and your hubby are finding creative ways to be flexible while continuing to make progress.

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