There’s no shame in slowing down a little bit once you get out of debt, but there are so many people that take their foot off the gas completely! And sometimes they even start driving in reverse and dive back into debt! Why is this? And what steps can you take to stay motivated after getting out of debt?
Why Do People Go Back Into Debt After Getting Out?
You’d think that once people rid themselves of their debt, they’d vow never to go back in, but it honestly seems to happen more often than not. So what on earth are these people thinking? What is it that drives them back into debt?
1) It’s a Habit
It’s incredibly easy to buy stuff you can’t afford, and when you’ve done it all your life it’s crazy difficult to kick the habit. With the media swirling all around you, telling you . . . → Read More: How to Stay Motivated After Getting Out of Debt
It seems like it was so long ago, but I still remember that day as clearly as if it were yesterday. It was a mild day in mid-December and I just received my bi-weekly paycheck. With this payment, my bank account was bolstered to an amount $1,500 greater than my last remaining debt, the $14,799 home loan. It took just one click of the mouse. I was completely debt free.
An immediate smile was drawn onto my face. The final weight was lifted off from my back. I was now free to live the life I chose, rather than the one I handcuffed myself to. That day marked the end of my debt payoff and the beginning of my wealth creation. I just knew that from that moment onward, my life was going to be so much better.
Related: How I Paid Off My Mortgage in One Year
Completely Debt . . . → Read More: I’ve Been Completely Debt Free For 2 Years Now – What’s Life Like Today?
No one wakes up one day and decides to go on a spending spree, ready to max out all their credit cards at once. While that might make a good reality show, it’s not the reason Americans owe $12.12 trillion in debt.
We can argue about “good debt” versus “bad debt”. But the truth is most Americans owe money month after month. And it’s dragging down our ability to build wealth.
Our own family owes a variety of debt. We’ve got credit card bills, car payments, and student loans. It wasn’t done lightly, but from a sense of necessity (real or not).
So why are so many people in debt? It’s because they react rather than prepare. They know they should be saving for a rainy day, but the sky sure looks clear right now! There’s no sense of urgency without an emergency.
Just as we study history to . . . → Read More: 5 Things That Throw People Into Debt (and How to Avoid Them)
Dream with me for a moment. YOU have absolutely no debt.
Your car payment is forgiven, your student loans are no more, that medical debt is wiped clean – heck, even your mortgage is completely paid for!
How much extra money do you have now?
Car loan = $400 a month Student loans = $600 a month Medical debt = $100 a month House payment = $1,200 a month
If you were completely debt free, you would have an extra $2,300 a month.
What Could You Do If You Had No Debt?
Alright, so now you’ve got $2,300 a month coming in. What would you do with it?
1) Take a vacation every month
If you had no debt, maybe you’d start the vacation of the month plan. For $2,300, you could go just about anywhere AND stay in a pretty decent hotel to boot.
2) Save . . . → Read More: What Could You Do If You Had No Debt?
Moment of honesty: I created this list of habits that make or break a debt free journey pretty easily. Can you guess why?
Because it’s MY list. I’ve messed up on each one of these items at least once. ::cough:: Definitely more than once.
Over the last several years, I’ve developed some stronger habits, which ultimately led to my husband and I getting out of debt when I was 25. However, living a life of debt freedom doesn’t end with a paid off credit card. It’s a lifestyle.
In order for my husband and I to stay strong on our debt free journey (since we’re back in debt with our first mortgage), there are some habits we’ll need to keep practicing. If you’ve been down this road, then you know what I’m talking about.
8 Habits That Make or Break a Debt Free Journey
The following is a list of . . . → Read More: 8 Habits That Make or Break a Debt Free Journey
You are a rat in a wheel. You wake up early, scurry to work (among the masses on the highway that inevitably slow you down….every….morning), run around like a chicken with your head cut off while you’re there, you trudge home, somehow get a meal together for yourself, crash in bed, and then do it all again the next day.
But, when the end of the month comes, you have no more money than when you started. You keep running around, working as fiercely as you can, but your savings never increase, you can’t afford to invest in your retirement, and you’re feeling more and more drained with each passing day.
You want off this ride, and understandably so, but no one can tell you how…until now.
Related: Who Owns Your Paycheck?
8 Ways to Escape Living Paycheck to Paycheck
Life may seem bleak, but believe me, . . . → Read More: 8 Ways to Escape Living Paycheck to Paycheck
If there is anything that had a powerful effect on how I handled money, it was becoming a parent. When are the stakes ever higher than when your decisions and actions directly influence the most precious people in your life? The irony is, I learn just as much from my kids as they do from me. That is why I’ve put together a list of ways parenthood will teach you about money.
4 Ways Parenthood Will Teach You About Money
If you already have kids, then you know the truth: We appear to the world as teachers, but when it comes to life with kids, we’re students.
Parenthood offers free, daily lessons (whether you want them some days or not) in things like:
Patience Problem solving Intentional living The ABC’s according to Dr. Seuss Mending ailments How to communicate feelings How to talk your child out of watching anymore Caillou . . . → Read More: 4 Ways Parenthood Will Teach You About Money
Do you think it’s possible to truly feel financially empowered while you’re living on a small income? Does more money equal more power over your own life? I would argue that it’s never that cut and dry. The breakthrough in my financial story wasn’t the day I doubled my income. It was the first big shift in my mindset.
Broke Vs. Poor
“Being broke is a temporary situation. Being poor is a state of mind.” – Mike Todd
When my husband and I agreed to transition from a dual-income to a single-income family shortly before our second child was born, we lived on $36,000 for the next year. Sure we were glowing with adoration for our newest bundle, we were out of debt, we had an emergency fund, and we were glad to have one parent at home full-time with the children, but living each month on $1,600 . . . → Read More: How to Feel Financially Empowered on a Small Income
Getting out of debt sucks.
I’m a math nerd, I like depriving myself of stuff, and I really like to live simply…and getting out of debt still sucked.
BUT – it was one of the best things I’ve ever done.
In case you don’t really know my story, here’s the sequence of events:
Graduated from college, had $18,000 of student loan debt Got married (yay!) Together, we paid off the $18,000 and built up an actual net worth Got divorced (booo…), kept the house, and therefore was thrown back into debt because I owed my ex $22,000 of our equity Paid off the $22,000 in 6 months (whew!) Paid off the remaining $54,500 on the home mortgage in just 12 months!
In other words, I’ve been in debt, got out of debt, was thrown back into it, and then came out of it faster and stronger than ever. . . . → Read More: The Absolute Best Tool For Getting Out of Debt
Many of our grandparents were born between 1910 and 1925. This is what Tom Brokaw dubbed “The Greatest Generation” when America was developed and defended on the backbones of its hard-working citizens. Anyone with silver hair, no matter their birth date, has spent an entire lifetime making choices and reaping consequences. It is our choice whether or not we will learn from our grandparents’ experiences and advice. That is why I’ve comprised a list of frugal habits I’ve learned from watching my own grandparents as a child.
It only just dawned on me that I’ve been learning from their example all of my life even though they’ve all passed on.
Even my grandpa “Big John,” who passed away from a heart attack when I was four, left a legacy in his community as a reliable and trustworthy man others looked to for business advice. Things like that, 25 years later, . . . → Read More: Grandma’s Top 10 Frugal Habits That Were Right on the Money