FIREd: Debt – Begin With the End in Mind

BEGIN WITH THE END IN MIND

A personal note on debt… 

Recently, I have had a lot of discussion with several peers on debt. I am not a debt expert, thankfully, because I never had a taste for it. When I signed up to go to medical school, I looked into every avenue possible to graduate with the least debt as possible! The path I took is merely an example; not prescriptive. Do life and enjoy life as you please! I’m not sure that I could recommend food poisoning due to eating out of date green beans from the local food pantry.

Today, the average debt of a since college graduate is $37000, the average <35 year old household is $82500, and of the 73% of Americans who DIE WITH DEBT, the average balance is about $61500! Think about that number for a second… yeah… it is CRUSHING. Never mind those who pursue further education can easily rack up 200-500K in student loans.  My father warned me wisely (and frequently) when I was a youngster, that I would be responsible for paying for the bulk of my education, and that I should not waste time even as a 12 year old to work towards this end. How would purchasing this education be possible? Military service? Public service? Winning the lottery? Academic or sports scholarships? Eating dirt? A miracle!??!

I learned about a principle called desperation. Have you ever felt desperate? If you are carrying more than $0 in net debt, you are DESPERATE my friend. Even if you do not feel it. If you want the freedom and the soaring finances that allow you to do and serve as you please, you must realize you are desperate if you are worth less than nothing! Lose the hubris bro. I find most people listen and try to change, but there are some scoffers out there…

“You can’t have any fun in life if all you do is pay off debt”

“I’m in 550K of student loan debt. Why wait 10 years to buy a 500K house since I can afford the monthly payments”

“If I want to live any life at all, I can’t afford to pay off debt until the end of my career”

Are you actually living? You are ensnared; Broker than broke. It is an emergency!

What if you get married, have some kids, then get injured or you have a child with expensive medical needs? If your financial portfolio is worth less than 0, your ship is sunk. It is hard enough for the average working person to survive life’s curve balls with good health and average expenses. A pile of debt and one life misadventure could land you on the street. 

I learned this desperation from the age of 12, working on a farm for $2/hour, cleaning toilets and mopping floors for $5.15/hour, buffing and painting cranes for $7, flipping burgers for $7.25, then working in telecommunications for $8/hour with a side gig on weekends doing landscaping/brick laying for a whopping $10/hr. Then I went to college. I learned that after 6 years of stashing these intermittently earned wages, keeping virtually all the birthday money and Christmas money I had ever received, I still could not afford college. I had to get creative. These efforts simply were not enough, but I learned not to spend. If going out to eat for $20 would cost me 3 hours, I had better make it count.  

Desperation drove me to volunteer time tutoring high schoolers, painting, and working in construction, demolition, and roof building. I needed experience to get the job, so I volunteered to learn. Before long, I had jobs in construction/demolition ($12-32/hour), science research ($8/hour), and eventually tutoring ($24-50/hour). Working these ‘gigs’ throughout 8 years of college and med school helped me tread some water while I was drowning.

I share this personal history for the purpose of demonstrating some important principles:

  • Never pass up an opportunity to learn! Read, Read, and Read. How many wealthy people do you know that don’t read up on their own field and other fields beyond it?
  • Learn the value of your time. When you spend money, it is a transaction of your time and freedom. 
  • People watch. If you are not advancing as much as you want to, go prove you are better than the next guy. Get the higher grade. Work the extra hours. Ask for responsibilities above and beyond your day job. Do you think the wealthy want to give scholarships/grants/raises to people who show up to work late, show no initiative, and eek out every last minute of their lunch break? No. The wealthy givers got where they are by investing in success and will only continue to do so. 
  • Stop Acting Rich – Act like a broke person. Drive a $5000 car, buy discount groceries/coupon, rent exactly as much space as you need and no more, stop eating out, buy second hand clothes, stay-cation, move in with family or friends, pick up a second job, and live on a budget – your training wheels for success.
  • Find a role model. Don’t make excuses that you can’t be like them or that you don’t have the opportunities. Everything I listed above pales in comparison to the work ethic and savings habits of several role models among my family and friends. In fact, I do not have any wealthy [real] friends who were not once poor.
  • Be at peace with who you are and where you are in life once you have a clear plan to get out of debt. Adults devise a plan and do it. Children do what feels good. Life is not fair and it never will be. There will always be people who got more scholarships, higher paying jobs, wealthier parents etc.

Count your blessings and avoid envy.

“Gratitude is a predictor for success. Celebrating other’s successes is a recipe for success. Bitterness, envy, and jealousy are predictors of failure.”
– Dave Ramsey

Visualize your debt as a mountain sitting on top of a precious treasure (Financial Freedom). Your income is the size of your shovel. Your effort is every penny you DON’T spend. You could have a lovely shovel but that mountain is not going anywhere without a comparable mountain of effort. Live not within but below your means and then dig even deeper!

Embrace this mindset. Then you are ready to get out of debt.

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