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The Danger After Debt Freedom

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My life has been a roller coaster over the past 10 months or so. I went from a happily married homeowner to a single guy with an unfinished house and a bunch of empty rooms, not to mention some newly acquired debt from the settlement. It’s not at all how I imagined my life, but I can’t travel back in time so my focus has been on the future and the successes that are awaiting me. One of the most relieving successes isΒ that I’m about to get out of debt again! At the end of this month I’ll once again be debt free and I’ll have more cash flow than I’ve ever had before (thanks to my increased earnings by writing articles for others)! But, with my increased earnings come many dangers…

The Danger of Debt Freedom

I have been thinking about this debt freedom day for quite a while now. Over the past 6 monthsΒ I have been living an incredibly simple life – all because I just wanted to rid myself of this debt and move on with my life! Over this period of time, I have no doubt been tracking my progress toward paying off the debt, but I have also been thinking about all of the great things I can do once my debt is gone! Here’s a quick list:

  1. Go on a tropical vacation
  2. Experience a Detroit Tigers baseball game
  3. Buy a baby grand piano
  4. Buy an Eames Lounge Chair and Ottoman
  5. Buy a desk and furniture for my office
  6. Hire someone to repaint my house
  7. Hire someone to re-shingle the house
  8. Get all new windows
  9. Buy a new triathlon bike
  10. Take golf lessons

I absolutely love this list, and it would be awesome if I would get to do all of these things, but there’s just one problem. This list of only 10 products/experiences is going to cost me $20,000! While it would be great to have the freedom to purchase all of these things, is it really worth $20,000?

Since I have been burdened with this debt, I feel like I’ve been trapped in my own life. Every day something comes up that I would love to do, but I have to ignore the fun and tell myself, “Derek, you owe a debt. You can do this fun thing after it’s paid.” I felt very responsible when I said this to myself, but then all of the sudden I realized that my list of “must-haves” is going to cost me over $20,000. Something isn’t right with my mindset.

When I’m Debt Free, I’m Going to…

I always used to cringe a little when I hear people say this phrase because I was uncertain of their motives. If they have a single reward set up for themselves once they pay their debt, then that’s perfect. You need to do that. But, if they were thinking like I am now they can quickly head back down into the spiral of debt. Before I “reward” myself with any of the items on this list, I need to step back and review my long-term goals – one of which is paying off my home loan. Guess what? None of the items on my Top 10 is going to help me do that. In fact, by not doing them, I’ll get closer to achieving my long-term goal.

What are you going to do when you achieve debt freedom? Are you keeping your long-term goals in mind?

Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

41 Comments

  1. Might sound boring but I am just going to continue my life. My debt situation was very specific and will (hopefully) never happen again. So far so good.

    • Do you ever feel like you’re spending more than you should though? I feel like I’m prone to spend more because I’m not worried about my debt payments.

  2. It is true that not doing these things will let you put more towards paying off the house, but depending on the shape of your home, some of these may be necessities rather than luxuries. If they are cosmetic, then your logic holds. You’d rather see if blue than yellow, architectural shingles would look more modern, etc. But if the roof isn’t in good shape, then you could face damage to the rest of your investment. Same with the paint. Painting and roofing are expensive, but in addition to paying off your home, you’ve also got to preserve your original investment. And the more you put off some of those tasks, the more expensive and difficult they become.

    • Great points Portia. The roof is in so-so shape, but will most likely last another 3-4 years. The house does desperately need some paint though, so I think I’m putting that at the top of my list (plus, the neighbors keep asking me if I plan on painting my house anytime soon….big hint there!! πŸ˜‰ ).

      • Unfortunately the homeowner’s insurance company can send an inspector any time (with notice) and if they feel your roof needs doing they can force you to do it. My roof was not leaking and I had finally just gotten out of debt when they decided to mandate that I get the roof completely redone to keep coverage. Sigh, back to trying to get out of debt again.

        • Ugh…. I hope that doesn’t happen to me! I think they would definitely give me the ‘red sticker’ for my roof. I have gotten a quote though, and it would be less than $5k, so not quite as painful as your experience.

          • That’s a great price! Must just be for shingles, not a full tear-off?

          • I don’t really recall actually. I must have a few layers of shingles up there, and they scouted it out pretty good, so it was a quote for whatever they thought was necessary. I’m sure I’ll find out soon when they need replacing. πŸ˜‰

  3. In short, I’ll most likely retire since I’ll be around the age of retiring about the same time.

    Caveat: If I can start generating income outside of my day job since I received a 10% paycut, I’m only going to direct that into savings/investments since we are putting a lot of focus on that part of the equation.

    • Retirement huh? That sounds nice. As a side-note, have you ever thought about the mental shift that you’re going to have to make since you’ll essentially be surviving on a lump-sum of money rather than monthly earnings? I just can’t imagine that at this point, which is why I’m attempting to create passive income with rental properties, businesses, etc.

      • My husband has definitely found its a ‘shift’ getting a singular monthly pension payment vs. getting paid every two weeks. He feels flush for about a week, lol…

        • Haha! I think I would too! That’s a long time to wait for a paycheck! I’d probably live super frugally in the beginning of the month, just out of fear that I might run out…

  4. Depending where you live, you can see the Detroit Tigers game first…
    Find a new desk on craigslist or IKEA

    • Already bought some tickets! πŸ˜‰ And as for the desk, I have been hunting Craigslist, but just haven’t struck gold yet.

  5. I am about to become debt free (yay me) and I have a list about that long too. The reality is I will sit down and just figure out what I really need and then what I can save for. I don’t have to do everything right now, after all, but I think we feel like since we have money now, we can go out and just start all over again. Reward ourselves. Not me, ever again. πŸ™‚

    • Congrats on becoming debt free soon! Hopefully you don’t have to become debt-free twice like me… πŸ˜‰

  6. Ha! The estimates for windows for our house ranged from $15k to $75k–for VINYL, not wood and fiberglass. (We went with the $15k because they were, unbelievably, WAY better quality.) Our roof would be another $10k. So I figure your list is letting you off light at $20k. πŸ™‚

    • Wow. Maybe I underestimated. Either way, I’ll be going through this list very slowly and finding as many deals as possible!

  7. My husband and I became debt free in December; we also had a significant change in financial status last year because he retired, so we had already made ‘adjustments’ to our rather carefree spending ways. As soon as we got out of debt I did a few things: 1) set up separate savings account to put my property/school tax monies into – we always had it escrowed so it was almost hidden, now that I know I’m going to need rather large chunks of monies twice a year, I felt I needed a place to put it! 2) each paycheck a chunk of monies fairly equal to our debt gets split between a ‘savings’ account, and a ‘mad money’ account. When the savings gets to $5000 dollars it gets moved out to a cd or something else so its out of my line of vision. The ‘mad money’ is for the other things that come up in life, including vacations and home repairs. The fence around our property evidently had been rotting out and we didn’t know it until we had a really bad storm, and it started to fall down in several areas. As much as I hated doing it, it had to be replaced; installing a new fence is like buying underwear; you have to have it, but really? does it have to be so expensive? $9000 later I have a lovely new fence that I was able to pay cash for, because i had my ‘mad money’ account. It was a lesson I will continue to follow. Hopefully the next chunk will be for a nice vacation! You have to allow yourself that, otherwise what’s the point of working so hard?

    • Good point Nancy. Spending is not necessarily a bad thing, but it can’t be excessive and it must be rationalized. Don’t worry, I’ll take a vacation someday. πŸ™‚

  8. Derek,

    Go on the tropical vacation. I think that if anyone could use it right now, it’s you. I’m sure you saw Mr. Money Mustache was in Hawaii for like, 5 weeks and managed to spend very little. With your savvy, I’m sure you can find some sort of similar set up. Seriously, take the break. I think it could be good for you. Sometimes it’s worth the cost.

    • That definitely sounds nice. The only thing is, I definitely don’t want to go on a lavish vacation by myself. I think I might hold off until I can find someone to go with me. Then I’ll work on getting the nicest vacation possible for the cheapest price. Now that you mention it though….I do have distant relatives in Hawaii… πŸ˜‰

      • I suspect once the word gets out that you are single you won’t have to wait long to find somebody to go πŸ™‚

        • Awww. What a nice thing to say! I was actually just telling someone how I wasn’t one of the ‘cool kids’ in high school, but it seems like I’m in high demand now! I’ve already had to fight off some women, which is still very strange to me, but anyway, yes, I’m sure I could find someone to take a trip with me. πŸ™‚

  9. I thought about the same things as you did when I was about to pay off my last credit card. I was getting excited thinking about all of the things I could buy. Then I remembered what I had worked so hard for over the past years and realized that I needed to be responsible with my money. Make it work for me instead of me work for it.

    • Great comment Grayson. I think I will treat myself to a few of the things on the list. After all, some of them are necessities. But, I will still be quite cautious with each expense and will always look for the best deal, even if I do have $10,000 camping in my account.

  10. I think there’s always a happy medium. If you are out of debt, but afraid to spend anything, that’s not a fun way to live. If you are out of debt and still saving to retire early and live life as you want, that’s not so bad. I kind of do both. Look at things I want to see how much value they add or will they make me money later. Tropical trips would certainly count as added value, and you really don’t have to spend a ton to go on vacation.

    • Thanks for the comment Kim. Definitely makes sense. I’ll definitely permit myself to get some of the things on the list, especially if they add value to my life (which I need to understand isn’t always monetarily calculated). But, I want to be sure that I’m not reckless with my money just because I’m out of debt!

  11. Seems like so much of staying in the safe zone of debt freedom depends on being honest with yourself about certain weaknesses and habits. Great work!

    • Yep. Very true. I’m aware that I want all these things, and they aren’t bad things, but I need to keep myself in check. Do I really need a piano? No, but perhaps I could reward myself with one if I hit a certain personal or financial milestone. That makes it even more fun to buy once I achieve the goal, and it keeps me from just going out and buying stuff. πŸ˜‰

  12. I get this way with musical equipment. But then, like you mentioned, I remind myself of more important places to put my money. We still have to pay my wife’s med school debt, but from there, it will be the house and then real estate investing, then further increase retirement then college funds for kids. I feel like my list will be around for quite some time that I won’t be too tempted to squander anything.

    • I think I’m pretty similar to you Greg. I’ve wanted this baby grand piano for some time now. Not sure what it is, but they sure are beautiful!

  13. 1.Go on a tropical vacation
    You can go to the caribbean for pretty cheap…Mexico/Dominican Republic/Jamaica. Also if you’re comfortable with signing up for credit card deals, can go for almost free
    5.Buy a desk and furniture for my office
    Like Barb said…IKEA, craigslist, etc
    10.Take golf lessons
    I don’t know about where you are but here in NY, they sometimes have groupon type deals for gold lessons that are pretty cheap.
    But as for your main premise…definitely agree, shouldn’t get into more debt as a reward for getting out of debt.

    • Love it. Thanks for the tips!

  14. If you weren’t so focused on becoming debt free might you have already purchased a piano on credit or taken a few trips and added to your debt load. By paying off your debt you are now in the position to pay with cash for those fun things. Just make sure you keep yourself in check and think you have to spend all of your extra money just because you have it. Start thinking about things that will break and need replacing in the future like a car, stove, refridgerator, computer, printer, dishwasher, the list can go on and on. Create savings for each of these items and put some of your extra cash away for these kinds of items and enjoy the rest.

    • Exactly the advice I would give myself. Thanks!

  15. Hi Derek – as a new reader to your blog I though I’d just leave a quick comment here to say I’ve been reading a few posts and enjoying them very much. Cheers! Shaun

    • Glad to hear it Shaun! Pretty soon I’ll have my forum up and running and we can converse a little more freely. Stay tuned for that. πŸ™‚

  16. Hello Derek,

    Firstly it is imperative to stay away of new debts. Period. There are other ways to acquire your long list. As you already are in a decent business just have a little patience and do the list things one by one. Instead of being obsessed of the long term objectives you could easily enjoy every single day by living without acquiring. You don’t have to posses in order to be happy, do you?

    • Thanks for the comment Alex. You are absolutely right! I don’t need to have a bunch of stuff to be happy. I’m a pretty simply guy. I am, however, tackling the list one item at a time. I’m starting out by filling my empty office with a desk, a rug, and a chair. I’m actually sitting in it right now and loving it! πŸ™‚


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