Owe? No! declare those discovering life after debt
It’s Valentine’s Day week and time for cheesy romcoms or, really, any movie with Tom Cruise in it. Also happening in my life is that I just returned home after speaking at the White Coat Investor conference in Phoenix, Ariz. The conference opened and continued with a surprising theme — debt. It seems like the world of personal finance has been co-opted recently by crypto and real estate syndicates, but this “back to basics” debt topic was a welcome reminder of the financial and psychological implications that we must constantly evaluate when it comes to debt.
So in the spirit of the conference and Valentine’s Day, “Let’s talk about debt, baby. Let’s talk about you and me. Let’s talk about all the good things and all the bad things debt can be.” Oh yeah, we are going there. Debt has its tidy little corner in personal finance, of course. We like to think that it stays in that corner where we put it. But the truth is that “Nobody puts debt in the corner.” Just as in Dirty Debting and the WCI Conference, debt prefers and feels it deserves to take center stage in our brains.
Take student loan debt. The Center for Retirement Research at Boston College found that 30-year-old workers had significantly lower retirement savings if they had loans of any size compared with 30-year-old workers with no student loans. So, the presence of student loan debt, not the relative size of it, impacted savings. With a strong, hunky lead, even a novice debt with little experience can mambo through the main stage of our brain and stick a stiletto through our ability to make a great retirement savings decision in our first job.
Financial columnist Michelle Singletary taught us her five steps to financial freedom in her keynote address: be cheap; be
careful with credit; be budgetminded; be an informed investor; be content.
On the second step on debt, Singletary was hauntingly blunt. “I see debt people.”
Despite her warning of the pitfalls of debt, she still gets daily reminders from readers and fans buried and desperate under the burden of it, akin to the 40% of Americans who carry credit card debt month-to-month. She revealed the joy and contentment in her life when they became debt free, including their mortgage, and simply wants people to get a taste of that version of freedom. After such a taste, they can choose wisely from there.
Dr. James Dahle of the White Coat Investor appealed to attendees to create a debt framework in their financial plans, concerned that people take on debt in many forms with little understanding of their own appetite and ability to handle it. He reminded us of the famous quote by J. Reuben Clark.
“Debt never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation … it is never laid off work … it buys no food; it wears no clothes; it is unhoused … it has neither weddings nor births nor deaths; it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, it is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it … and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.”
If Instagram were a movie star it would be Robin Williams in a movie called Debt Poets Society, urging them to “Carpe debtem. Seize the debt, boys. Make your lives ordinary.” The false notion that extraordinary lives should be curated, not lived for social media, means that all we have to do is swipe a credit card to buy that version of ourselves. But tragically what comes with that debt is often a surreptitiously ordinary life. Don’t get me wrong. Many people find contentment and satisfaction in an ordinary life. I certainly find myself longing for contentment and the ordinary over my past life of hustle and striving. But that’s by choice.
Debt can make people live the ordinary life via the “safe life.” Debt handcuffs us to a job that might not be right for us but that brings in just enough income to allow us to live our current lifestyle, plus satisfy the money owed from our past life decisions.
I met a physician at the conference who, in her 50s, lost her passion for medicine that had driven her to excel in medical school and training and in the first part of her career. Imagine how challenging that could be. She described it as almost feeling trapped in a decision to keep working. But that feeling dissolved the moment she and her partner coincidentally paid off the mortgage. For her, becoming debt free was like a miracle drug that opened her brain to new possibilities and allowed her to make the decision to retire early without fear or regret.
Speakers at the conference kept reminding us that this is not about the notion of “good debt” or “bad debt.” This is about finding the right debt for you. For some, I really believe debt can play a positive role in their lives and not prove to be a psychological barrier to living the best life they want to live. They can stare lovingly into debt’s eyes and say with so much honesty and tenderness “You complete me.” The love affair plays out in subsequent transactions, “You had me at ‘Just swipe here.’”
But for many without a debt plan who just keep pounding the table and insisting “I want the debt,” imagine me getting up in your face, staring you down from the witness chair, with cold dead eyes yelling, “You can’t handle the debt!”
I’ll be here all day, folks. Sarah Catherine Gutierrez is founder, partner and CEO of Aptus Financial in Little Rock. She is also author of the book“But First, Save 10: The One Simple Money Move That Will Change Your Life,” published by Et Alia Press. Contact her at sc@aptusfinancial.com.