Good things are often the hardest to do.
I had recently married, had an engineering job with a large company, and had a house.
Yet, the mountain of debt that I carried with me from my early years of adulthood still ruled my world.
It seemed that my coworkers were in much better financial shape than I. OK, I didn’t know that to be true, because we never talked about money at work. However, I assumed my peers were much better off than me because they could spend freely on lunches, cars, boats, etc.
My wife and I had been paying off debt, including credit cards and student loans, for about three years. The balance barely seemed to move downward.
Perhaps you are struggling to pay off debt and turn your net worth into a positive number.
This period in your financial journey is critical, and you probably feel like the effort is pointless at times.
I nearly gave up on my financial goals shortly before the tables turned and the slow slog started to open up.
Keep your mind and heart in the game. Read: The Slog Is the Hardest Part in Any Journey
A quarter-century later, I’m grateful that I didn’t give up. I feel it’s important to share that there is hope, even when you think there is none.
Those damn Jone’s
Instead of focusing internally on my journey, I was guilty of observing the people around me.
I ate ramen and drove a little truck with no air conditioning in Tampa, Florida. My cohorts were eating out for lunch every day and driving fancy cars.
It’s easy to let yourself become jealous of people around you. This is especially so when you are living a life of deprivation.
Deprivation and goals with little progress made me feel hopeless.
I needed to live a low-cost life to have any chance of conquering my debt. I knew that was true. However, barely seeing the needle move after years of payments was disheartening.
I longed to drive a car with air conditioning, and one particular ride home nearly pushed me over the edge. Tampa is famous for 5 pm showers. Nothing beats an hour commute home from work when it’s 92℉, raining, and you have no air conditioning.
I nearly drove to a dealership and borrowed more money to get a new car.
I’ve had an unhealthy obsession with cars throughout my life. My car decisions have impacted my financial journey. But had I given in at this crucial period, the results would have been devastating.
Even though I wanted to have the nice things my peers had and felt like my debt would never go away, I somehow held firm.
Defeating a scarcity mindset
I was so close to giving up, and I now know that a scarcity mindset was the root of the problem. If you look at life and see the pitfalls, you likely have a scarcity mindset. This condition makes controlling your impulses more difficult, and you are less likely to put off gratification for a later date.
At the time, I knew nothing about mindsets. I only knew that I had a ton of debt, making me feel inferior.
I hated that feeling.
I knew that adding to my debt would make digging out even more impossible. We had been paying for years with little to show. Adding more debt to the pile might turn into a life sentence of indebtedness.
If you can look at life with a plentiful mindset, you have a much better chance of reaching your financial goals.
Reading about others’ challenges and successes helped me change mindsets.
The day that our debt began to shrink rapidly also helped my mindset. We were beating that high interest.
Learn how to use credit cards the right way. Read Win by Being a Credit Card Deadbeat
Compounding interest changes everything.
It took years to win the debt battle. The journey wasn’t easy by any means.
Those years were a battle against the compounding interest effect.
Compound interest is the interest you earn on interest. This can be illustrated by using basic math: if you have $100 and it earns 5% interest each year, you’ll have $105 at the end of the first year. At the end of the second year, you’ll have $110.25.
— Investor.gov
Compound interest feeds your debt, and many forms of debt have exorbitant interest rates. This is why you can pay your debt for a long time without making much progress.
Once we won the battle with debt, we started saving that money instead of making payments.
Soon the compounding effect was helping us instead of impeding us.
Read: Financial Independence Is Not a Mythical Goal
It started slow, but our net worth started to move north at an increasing pace within a few years of saving.
Keep hope alive!
– Rev. Jesse Jackson
You might find yourself feeling hopeless about your financial future. Giving up on your plans is the easy way out, and it will ensure that you will not reach your goals.
A financial journey is arduous, and you have to want to change your course to succeed. Those who quit will never see the upside and will be relegated to a life of money problems and the stress that comes with it.
I faced debilitating debt and thought of giving up on more than the occasion I wrote about today. There were days when it seemed impossible.
Ultimately, I stuck it out and kept diverting money to pay off the debt. We kept eating ramen and driving around in hot cars.
The choice wasn’t easy.
A bank would have gladly loaned us more money and helped us seal the fate of a debt-ridden life.
If you feel crushed by debt and the lack of progress, know that there is hope. The journey isn’t easy, but the other side is much better than a life sunk by debt.
