The Relationship Between Debt and Fear
Most of us have experienced it, that sinking feeling that wakes you up in the deep of night, completely stressed and afraid because of a poor money decision. Maybe you blew your rent money on a big night out. Or maxed your cards and the interest is about to go through the roof. Maybe there was that thing you desperately wanted (car, boat, other toy) that almost immediately lost its cachet as the bills piled up and you stopped using it.
By now all of us have seen that recent research that showed a majority of Americans cannot get their hands on $400 in cash on short notice. That one freaked me out, and $400 is not that much, in fact it would not get you out of a serious money emergency. If you’re there or have been there, let’s look at this. I’ve been there and came out on the other side but it was not pleasant. At least not in the beginning.
The burden of uncertainty
For me, the amount I make was not always relevant to the amount I have had. In my best six figure years, I often had less money than when things were tight, workwise. And, in hindsight, I honestly cannot tell you where it was going. I just upped my spending as my salary went up. It was total foolishness.
This lifestyle of living paycheck to paycheck, even when you make good money, is pretty crazy. Add in the fact that I have no kids and my girlfriend at the time was also making good money. But I was constantly stressed and drinking and eating in expensive restaurants all the time as a form of self-medication.
That’s a vicious circle. Here’s how I broke out of it.
What didn’t work
First, for the record, I have a whole shelf of books on investing, personal finance, getting organized, etc. I have kept spreadsheets, organized my files multiple times, and tried other things to break my financial incompetence. But I wasn’t dealing with the real problem.
When I entered spending in those spreadsheets, I didn’t like seeing a certain pattern in cold black type, so I dealt with it by not dealing with it. Not much of a strategy, ignoring the reality and just going on as though everything was just fine.
But one day, in a burst of clarity I realized that if I needed more than a thousand bucks for an emergency I’d be in trouble. I didn’t like being one of those people in that research study I mentioned earlier. So I did a realistic evaluation for once. And it was pretty scary, not to mention humiliating.
I’m not exactly sure what my trigger for change was
It started when I signed a lease for an expensive loft apartment in a newly developed building. It was a bit of an impulse thing that would raise my living space costs by 75%. The apartment I was and still live in was in a great area in an old building once considered luxury. But that was back in the fifties when it was built.
These days the kitchen is small and lacks some basic amenities. The new place had a beautiful kitchen, laundry in the unit, 14’ beamed ceilings, etc. All the mod cons. But it was actually smaller, square footage-wise. I went over these differences constantly as I made my choice.
Some practical part of me emerged, got nervous, and I backed out of the lease. And breathed a sigh of relief. I had realized I did not need that new place, not enough to considerably hike my monthly cost of living. This began a cycle of small changes, cutting things here and there.
In hindsight, I gamified this process. I looked at my spending and started trimming things like streaming services (saving as much as a hundred a month!), some of my dining out, etc. And I started shifting the money into investments and watching them add up in little increments.
I went a little further. I had a leased car whose lease was expiring. I considered buying it because the buyout was a great price for a car with really low miles. But those miles were so low that I realized I was only driving about 300 miles a month. I work at home and, as I mentioned, do not have kids. So I turned it in and did not replace it.
Fortunately Lyft and Uber made it to my hometown right around that time. I use these services all the time and have never spent more in a month on them than my car cost me. Not even close. And I am walking a lot which I love and is very good for both the body and soul.
I went from almost no savings to $20k in the next year
I did not go on an austerity budget. I just eliminated some expenses that I rarely took advantage of. I’ve never looked back on those bigger choices (car and luxury apartment). My travel preferences are trains and staying with friends when possible. I get books from the library and do not buy processed food. I shop at our big farmer’s market year round where shopping is actually fun and costs a fraction of the big grocery stores.
I still go out a lot but often eat before I go out. Because I work at home, this luxury provides me with the social interaction I need after being alone all day. This past Covid year accelerated all this frugality by essentially forcing us into austerity. But it was fun watching the numbers in my accounts pile up.
The big shifts
First of all, no more waking in the night stressed about money. In fact, no stress about money at all. I had not realized how much my prior habits had created stress until I dealt with it. With less stress came less self-medication and less spending as a form of self-medication.
I spend more time deciding bigger purchases, comparison shopping online. I’m a serious cook and love the challenge of making a great meal from inexpensive ingredients. I did add a few more streaming services back in during Covid but will be reevaluating them on a regular basis.
I was always a good tipper but I upped the ante during Covid because those small amounts weren’t that big a deal any more. I just know what my service industry friends are going through, including those Uber drivers.
I love watching the incremental gains and knowing I have a cushion that grows. I got to this late in life but it still works. If you start at a younger age, it will change your life, believe me. When the time comes I will spend the money and give it away. That’s a good feeling. In fact it’s all a good feeling.