Debt & the Illusion of Happiness
Men have always had a unique relationship with money. For centuries, men have been the providers. Their role was to work hard and support their family, often through difficult times and long hours. Many of those more difficult times are behind us, however, men still face unique challenges when it comes to money.
Society still places much of a man’s worth on how much money he makes and what symbols of status and wealth he displays to those around him. The advent of social media has only pushed this pressure into overdrive. In the race to acquire more, we sacrificed actual wealth for the appearance of wealth. In short, we drove ourselves into debt trying to keep up with the success we perceived in others.
Men In Servitude
Too many men have become indentured servants of debt, working harder and harder to pay off money they’ve already spent for things that brought little (if any) fulfillment. And to top it off, many men still feel a strong pressure to be the providers, convincing themselves that their primary worth as a man is in how much money they can make.
I think some of this is due in part to our innate biological instincts. Wealth, after all is a symbol that suggests power, confidence and security, all of which are highly desirable traits in the sexual marketplace.
A man who has a sense of his own personal worth doesn’t need to flaunt symbols of wealth in order to project those qualities. But most men don’t have a strong sense of self-worth and substitute genuine confidence for the appearance of confidence. So out comes the credit card to buy that fancy new watch, shoes and suit, and now he feels confident.
In his rich new clothes, he looks like a man who has it all. But because he hasn’t developed a self-worth that’s genuine, the feeling only lasts so long before he needs to find something else to give him that sense of power again.
The False Promise of Debt
Debt promises us quick satisfaction. Why work hard and save up for that expensive new watch when I can just use a credit card and pay it back later? Why wait an extra six months to be able to afford that new smart-tv when I can just put it down on plastic and have it now?
That convenience is all well and good in theory, but banks and merchants know that most people aren’t aware of how much they’re getting ripped off through interest charges. You think that watch cost you $1,000? Well if you pay it off in 1-year it will cost you about $1,200 in money and 12 months in time. A fair price for the convenience?
At first glance this doesn’t seem so bad, but the problem is most people don’t use their credit cards just for one purchase, most will carry a rotating balance of credit, meaning you could potentially be paying interest on that watch for the rest of your life.
Banks know this. It’s how they make money, by guaranteeing themselves long-term indebted servants. Credit card customers are the bank’s cash cows.
Is All Debt Bad?
Debt, in and of itself isn’t necessarily a bad thing. Borrowed money put to good use can be productive and earn you a return. For example, sometimes in order to build a business that has a lot of overheads (like starting a restaurant) you need to raise capital in order to be able to make money later.
This isn’t the kind of debt I’m talking about. Borrowing money and investing it wisely can lead to later returns. Although this has inherent risk, so if you don’t absolutely need to borrow money, I’d stay away from it because there’s a real chance that it doesn’t work out the way you’d hoped.
This happened to me, I once borrowed about $10,000 and poured it into a small startup business that never made a dime. I was stuck paying back the debt for another 7 years.
So even this kind of debt has it’s risks and you should think very carefully before borrowing, but borrowing money and simply wasting it on toys, clothes, trinkets, groceries and dinners; you should absolutely avoid like the plague.
This kind of debt is poison, plain and simple.
The 3 Steps to Breaking Free of Debt and Building Back Your Self-Worth
The first step to breaking free is to examine yourself. Take inventory of the things you’ve paid for with borrowed money.
- Did it add anything meaningful to your life?
- Would you have been just as happy without it or if you simply saved up for it?
- What has it cost you in terms of money, fees and charges?
- What has it cost you in terms of time? How many of your working hours are spent paying back money for those things?
- What has been the opportunity cost now that you’re living on a reduced disposable income?
- What has been the cost to your lifestyle now that you need to keep up with your repayments?
- Was it really worth it in the end?
The Second step to breaking free is accepting your reality.
- Boys blame the world for their problems – Men take responsibility for their choices.
- Boys avoid the promises they regret – Men honor the obligations they’ve made, even if they regret their decisions.
- Boys hide when they’re scared – Men face their challenges head on, even the ones that scare the shit out of them.
The point is that avoiding your financial problems only makes them worse. Man up and look at your problems head on, accept them, deal with them.
If you need help, reach out to someone who can give you financial advice (there are free financial counselling services available if you can’t afford an advisor).
The third step to breaking free is to act. Start doing something (anything) to start turning your ship around.
1) Create a budget, work out your in-comings and out-goings, and make sure that your out-goings aren’t exceeding your in-comings each month/fortnight/week, etc. Your budget doesn’t have to be anything fancy, there are plenty of free templates out there you can use, but sit down and work out how much you’re spending.
2) Make a list of every bill, subscription, repayment and service you pay for each month. This includes loan repayments, insurance premiums, phone and internet, gas, water, electricity, Netflix, gym memberships, everything you get charged for on a consistent basis. Note down what day of the month the bill is due and have this list somewhere that you can easily reference it against your monthly budget. You should never have any surprises, you should know exactly what’s coming out ahead of time.
3) Have a separate account for your bills. Now that you know how much you’re getting charged each month, create a separate transaction account for your bills, and make sure there’s always enough money in this account to cover the bills for the month. If you have a debit card for this account, only use the card for bill charges and don’t keep the card in your wallet. Put it in your drawer.
For you spending you’ll have a separate account with a separate debit card. Now the trick is; only keep as much money in this account for what you can spend guilt-free. Don’t try to guess how much spending money you have left to use, keep your spending money in a separate account so that you can easily check how much money you have left to spend.
4) If you’re spending more than you’re earning, you either need to increase your earnings or cut your expenses (or both). Look over your list of expenses and order them in priority of necessity. Electricity, gas and water are more of a necessity than your gym membership or online subscriptions, so if you need to start cutting expenses, you’ll have to consider cutting down on some of the luxuries. You have to live within your means, there are plenty of ways to enjoy life for free or at lower cost, but you have to stop the leaks in your ship, otherwise you’ll find yourself under water.
5) Start saving. Start putting money into a high interest savings account every month. I can’t emphasise enough the positive psychological effect that this has on you. When you live paycheck to paycheck, that’s the psychological equivalent of standing on the edge of a cliff and hoping there isn’t going to be a strong gust of wind today. Once you start saving, stress and anxiety that you didn’t even know you had starts to dissipate, and your overall confidence and sense of well-being starts to stabilise.
Aim to save at least 10% of your gross income, but if you can’t manage 10% just yet, start where you can and build it up over time. The more you save, the better you’ll feel and the more freedom you’ll start to enjoy in your life.
6) Start paying more on your debts if you can. People don’t realise that paying down debt early is a form of savings. Paying just an extra $50 or $100 a month may feel like you’re paying more, but you’re potentially saving yourself hundreds, possibly thousands of dollars in interest charges over the life of your loan. You’ll also save time by getting out of debt early and putting the extra money into savings and investments.
If You’re Feeling Stuck
I know what’s it like to feel overwhelmed with financial stress. I also know how paralyzing that stress can be. If you’re suffering from ‘analysis paralysis’ and just can’t seem to start taking action, then you might just need someone to help you navigate through the emotional mine-field and get you to a point where you feel confident enough to tackle your challenges.
If you think you might need some help working through your challenges, you can find out more about how coaching can help you here.
There’s some amazing resources out there. I’ll list a couple below that I think you should check out (these are not referral links and I receive no remuneration from these links).
Mr. Money Mustache – Early Retirement Through Badassity (Blog) – This blog documents the journey and advice of a man who went from no savings, to retiring with his wife in their thirties with a combined networth of 1.1 million in investments. You can watch a news segment on his story here.
The Barefoot Investor (book) – One of the best practical advice books I’ve read, and it’s written for Australians so it includes good advice on superannuation as well. Simple and practical.
Minimalism – A Documentary About the Important Things (Documentary) – I watched this with my girlfriend and we were immediately drawn in by the idea of minimalism. It’s not about depriving you of ‘things’ but of letting of the things that bring no fulfillment to your life. The documentary is currently available on Netflix as of this writing. There are also several books written by the creators which I have yet to read.
The 4-Hour Workweek: Escape the 9-5, Live Anywhere, and Join the New Rich (book) – One of the first books I ever read in the area of unconventional living. This book has some of the best advice on maximising personal efficiency and freeing yourself from the rat race.
The Joy of Not Working: A Book for the Retired, Unemployed and Overworked (book) – A book that challenges the very nature of the 9 to 5 and encourages the idea of mini retirements through out your working life.
You’re Broke Because You Want to Be (book) – A confronting read if you’re up for it. Larry Winget doesn’t pull any punches, he’s upfront and brutally honest for the type of person who needs a cold, hard dose of reality.
The Total Money Makeover: A Proven Plan For Financial Fitness by Dave Ramsey (book) – Many people agree that Dave Ramsey is probably one of the best authors when it comes to the topic of personal debt. From what I’ve seen, some of his investment advise isn’t that great, but if you’re having trouble getting out of debt, this is a great place to start.
The Richest Man in Babylon (book) – One of the best books on personal finance basics I’ve ever read. The writing style might be difficult for some, as it’s a personal finance book written in story form set in ancient Babylon, and the author has taken to a sort of Shakespearean-style of English. But if you don’t mind this, it’s regarded as one of the best books in the world on the topic.