money mismanagement vs. scarcity
The big problem with debt is that it tends to keep us in an infantile state about money decisions, a paradigm that is very hard to overcome. Most of us, from our earliest interactions with money, have relied on the generous teat of some student loan, credit card, consumer loan, or even parental loan to justify our every whim and need. Pretty soon we lose the orientation of where money is coming from - we lose sight of the cause and effect reality of money:
- you earn it and it's there
- you spend it and it's gone
By losing that sense of urgency regarding money - and urgent it is, when you think about how all those people must feel when confronted with an unaffordable home - you lose the ability to prioritize expenses. The line between a real need and a whim becomes blurry. Why? Because you need to live in that space of urgency so as to have the discipline to not blow your money on random stuff. You need to be in that place where you say "oh my God, if I spend this money, it will be GONE" every single blessed time you pull out your wallet. You need to be scared, I guess: you need to think about your light bill and your rent and your family's Christmas presents and what will become of you once you retire every single time you hand $2 to a barista. And only by living with that constant sense of urgency can you even come to a place where you can prioritize your expenditures. You come to understand the difference between want and need.
You can't reach that level of financial clarity when living in a paradigm of debt. I say it's impossible, many people say it's impossible. My reason is because access to debt infantilizes you and allows you the luxury to live however you wish without having to daily confront that urgency. "Oh my God.. if I spend it... it's gone... Naw, what're you talking about? Buddy credit card will take care of me. And will keep doing so till the game catches up with me, but by then... but oh, that's right... thanks to Master Card I don't really have to think about all that, do I? Java Mint Frappuccino, please..."
The idea of choosing between a cup of coffee or a beer outing with friends with paying the rent might seem extreme, but it exemplifies the reality of cash flow. Every time you go to the coffee shop or bar you are spending a fraction of money that could go towards rent, a car payment, a new refrigerator, a savings account, a future vacation. By losing that urgency that should accompany every spending decision, you lose sight of just how much those little choices can add up. The 'needs' of today leave you broke to a future, way more pressing need. Then, in that future broke moment, you question all those 'needs' you'd indulged in that blew your budget.
I don't know about you, but I freely admit to suffering this disconnect between need and whim. For me, on a given day, I suffer at least 1 coffee emergency, most often due to wandering around town killing time between badly planned errands. And the more stressed I began to feel about, oh, money, and debt, and life, the more I needed that coffee fix - hopefully the sweeter the better. Somehow sitting in a coffeeshop blithely consuming $4 frappuccinos surrounded by a crew who knew nothing about my problems became a NEED during a recent moment of stress.
At some point this seemed ridiculous to me. I found myself scrimping on real food, necessary house supplies, and even clothes because "I can't afford it", even though every couple of days I would give Starbucks $4. So I did a little thought experiment:
What will $4 buy?
- 1 or 2 bottles of '2 buck chuck' red wine
- 2 containers fresh strawberries, in season
- half of a 7lb bag of fresh organic spinach at the DeKalb Farmer's Market
- a beer with friends I haven't seen in ages because 'I'm broke'
- one or more books on Amazon
- gas for the car
- if I avoid That Awful Store for 7 days, I've enough money to buy shoes or an outfit at Target or somewhere and replace these awful rags
- if I avoid That Awful Store for 14 days, I'll have $56... Hell, I'll be rich! The possibilities are mind boggling
I haven't been back for a Frapp since I did this. It is no longer a need.
I would invite anyone stressing about sticking to a budget to try the experiment out - it can be transformative.