On Debt and Disney Movies...
Happy hump day to all! I had the distinct honor of guest-starring on his Superfied Radio Show on Bree-FM! We talked about love and life and money (or lack thereof). It started as a text message chain and before I knew it, I was on the air! Before and in between being on live, Alex and I were talking and catching up, since it has been a while since talking, and while on live, we discussed many things, a few of which were not related to any other thing we talked about. I was credited for single-handedly boosting the listener count by 10%! One thing we talked about specifically was debt in America, which was a subject in roytheboys last entry. I had a response here to what he said in that entry, and it is behind the lj-cut!

Response to roytheboys entry asking about peoples' thoughts on debt in America.

1. We live in a society of free enterprise, and a byproduct of it is the inevitable creep toward companies telling us we need whatever it is they're selling for instant gratification. Thus ours is a society that focuses on solutions that can be purchased for four easy payments of $19.95
2. Because of (1), people will rationalize borrowing money they don't have to buy products they don't need. In our society today, it is perfectly alright (in fact encouraged) to spend money now and pay it back later, where even two or three generations ago, this wasn't the case.
3. Also because of (1), companies that provide debt have realized that it is quite lucrative to offer credit to more than just creditworthy individuals. Also just a generation or two ago, it was essentially impossible to get credit (thus the old axiom that to borrow money, you have to first prove you don't need it.) Now, credit is offered to us in the mail when not even asked for.
4. Combine the ease of finding credit with the "high five, boob tube and instant pizza pie" mentality, and is it any surprise that Americans now owe more than they make?

How does one end the inevitable spiral of debt? First, I think, one has to ask yourself this: Do you really want to get out of debt and start keeping money for oneself or even saving so that someday you can stop working? If you can't answer that, you're not ready to get out of debt. This is because the only way to actually end the cycle is to sacrifice, and live on less than you make for as long as it takes. The problem with that is that it is much easier for most people to just make minimum payments on everything indefinitely than to actually pay it down.

Just ask someone if they'd pay $60,000 for a $30,000 car, and I'm sure they'd laugh in your face. But that's precisely what they're doing if they signed a 60-month plan with 18% APR. Most people will either consciously or unconsciously push that fact out of their minds and focus then on the monthly payment (I believe the proper term describing something like this is cognitive dissonance.) It is this type of rationalization that keeps people paying just the minimums and keeps finance companies and banks making loads of money.

This is why sacrifice is required. The decision to get out of debt requires that one be willing to spend less, eschew the thrills and comforts and consistently do what is required to get out of the hole. A monthly budget is needed to see where money is going, and all necessary expenses need to be outlined on paper before it's spent. Don't go out to eat or go to the movies every weekend. Take on overtime or a second job if needed. Focus on paying off the debts, and when the debts are paid off, be sure to not take on new debt. It is not going to be easy or fun, but it can be done.

I guess the big question is why resort to this? Why make all these sacrifices to dig oneself out of a hole when it is perfectly okay to just make payments in perpetuity? Quite simple: if you're not making payments to someone else every month, you can keep the money for yourself. You can save the money, invest it and allow it to grow. What would it be worth to know you can retire comfortably or retire early? You can save up cash and buy things outright instead of paying twice the cost in monthly installments for years. More importantly, you will be truly free and independent. If you had money saved, you'd be able to weather anything that might prove devastating to others. Think of it like this: Imagine what one could do with the money saved if one didn't need to pay it out. That, to me, is quite simply the best reason to not be in debt.


The car is still broke, despite consistently spending 1-2 hours a day trying to fix it. If I can't get it fixed soon, I am considering selling it as-is on craigslist. Any takers for a 1990 Honda Accord with a broken wheel hub?

I know I didn't mention Disney movies here. Pinocchio. There. I mentioned Disney movies...