Why Some People Don’t Pay Off Their Debt
If you’re on your debt destruction journey already, or you are adverse to debt in general, the title of this blog post may have baffled you entirely. What do you mean some people don’t pay off their debt? If in fact, you speak to your friends or co-workers, you will more than likely find some who are perfectly content in paying only the minimum balance on their debt – or none at all! I thought we could take a look at why some people don’t pay off their debt.
Guys, it is hard to pay off debt. Especially if you are starting out with a huge amount of debt, and a small amount of income, kids, a stressful job…adding a debt payoff journey to the mix just feels impossible.
You look at people who are on their debt free journey, or the people who aren’t in debt and you think to yourself, “well that doesn’t look like much fun at all” – because you see them making their food from scratch instead of going out to eat; getting the bus to work instead of driving a car; carrying their own flask of coffee out with them; having friends round for food and drinks instead of going out for a night on the town; not buying the latest gadget; never going for a day out shopping; not watching TV all evening after a normal day at work – but they don’t see what we see.
We see…lovingly making food from scratch for our families at a fraction of the cost; reducing unnecessary transport costs and your carbon footprint; drinking a reduced price drink that still tastes just as good; having the best nights with friends where you can actually hear each other without having to shout over the loud music and getting to have real, meaningful conversations which leave you feeling so happy; seeing through the endless need for consumerism – always wanting ‘more, more, more’ when what you already have is enough; finding hobbies which bring you joy and hopefully a little bit of a profit as well; working, hustling, every day to get rid of the debt that is preventing you from reaching your dreams.
It is hard. It is hard in todays society because we have been brought up in – and are surrounded by – people telling us that we need to buy more things to be happy.
Happiness is the ultimate goal for human beings, and this is exploited by large companies who try everything that they can to convince you that you need to buy clothes to be happy, you need to buy the biggest house that you can get, fill it with ‘stuff’ and then you’ll finally be happy.
But is that true? If that were true, surely that would mean that every wealthy person in the world would be the happiest person in the world? Surprisingly, there are many people who are deemed as rich, who are extremely unhappy.
There have been studies which show that the happiest people in the world often tend to be in the poorest parts of the world.
The reason for that? Because they don’t want more. They are content with what they have, and this in turn leads to joy.
When people ask me how to save money for something that they want such as a deposit for a house (nothing wrong with that, I want a different house myself!) – whenever I mention the word “budget” it’s often met with a response like “Ooo no, I don’t need to budget”, “I work hard for my money and I want to spend it how I want”, or something like “I’m doing fine financially so I don’t actually need a budget”.
The word “budget” strikes fear into the heart of people, because it is thought of in their mind as being the same as being on a tight budget. You’ve all heard that phrase I’m sure “sorry I can’t do xx I’m on a tight budget” – so they think that having a budget means you can’t do anything, ever.
Budgets are amazing because they show you how much money you have, what you pay out, and how much you can pay on your debt. The reason that people don’t want to budget is because it is hard to face up to the cold hard numbers that you cannot argue with.
Paying off debt is hard – I can testament to that.
When I was paying off my debt, I worked a lot. I already had my daughter and my Uni studying, as well as an evening job, but I added another part time job to it and also some ways of making extra money on the side. Now I love blogging, and I could do that all day every day – but the rest of it? Happy to see the back of it!
I worked hard, I never spent any money, I felt left out, I missed out on things, I felt like no-one understood what it was like…but it was so worth it, I can promise you.
You won’t be alone either – there is an amazing debt free community over on Instagram, and there are people who are documenting their way out of debt on their blogs like this one.
Debt is debt is debt. Any debt is not good – paying the minimum payment will be no good to you in the future when something bad happens such as losing your job and you are unable to pay the minimum payments any more.
The thing is as well with debt, that it tends to escalate. If you miss one payment, you’ll likely get an extra fee on top. Which you also won’t be able to pay. And on and on it will go.
Paying off debt will enable you to achieve your true financial goals.
They are unsure of the best way to do it
Sometimes people can get a bit embarrassed that they are unsure how to do something regarding their finances, but I always say that we do not know how to do something if we are not taught how.
If you have never been shown how to budget, meal plan, invest, save etc – how are you going to easily know about it? You will have to learn for yourself, which is what myself and other personal finances blogs are here for too – to guide you through that learning experience.
I was recently reading about a study that was conducted whereby they asked people to tell them in which order they should pay off an example type of debt. Interestingly, only 3% of the participants chose the best option mathematically speaking.
This is another example of how dealing with money is down in large part, to our psychology. We have feelings and emotions regarding money, and we may not make the most sensible decisions when it comes down to it.
If you are currently in debt, I recommend that you write down all of your debts, the amounts, and the interest rates. Your first goal will be to reduce or remove those interest rates.
There are a few ways of doing this – one being to do a balance transfer to a 0% card. I did this with my debt – but please make sure you read the T&C’s as you will only have a certain amount of time to pay it off within.
Another option is to ring the provider and let them know that you are paying down this debt, and ask them if they will reduce the fee for you.
No-one else is doing it
I promise you, there are lots of people who are on their debt free journeys. You can certainly feel alone, especially if those close to you are not in debt or don’t talk about it (as there are many who keep it to themselves) but you aren’t alone.
If your friends are in debt, then you can start on your debt journeys together. It will be good to have someone close to you who will understand what you are going through and you can support each other.
And if your friends don’t want to pay off their debt? Direct them to some personal finance blogs that motivate you, and hopefully it will have the same effect on them. For some reason we find it hard to take advice from those close to us, but we are happy to take it from a stranger!
When you are debt free, you will understand why it was important that you pay it off. It feels like a long, hard slog – and it is – but the view from the top of the mountain is worth it. It’s like you’ve been carrying a heavy load on your back but you didn’t realise how heavy it was until it was removed.
The way that I have always looked at paying off debt and not spending anything in general is, do I want to have my hard-earned money, or do I want a large corporation to have it?
An example could be you are paying £100 for your electricity bill each month. If you do a comparison, you may find that you can pay another company £50 to do the exact same thing. Now would you rather give the company the £100, or would you rather give the other company £50 and keep £50 for yourself?
It’s easy to just pay the minimum balance required
Unfortunately, banks make it ever so easy to stay in debt, by making sure that they keep the minimum payments low. This makes people think that their debt is at a manageable level, and they are happy to pay the small amount each month, without really realising how much extra interest they are paying over time.
Interest is a killer – and because it’s generally shown in percentages, it can be difficult to work out or see exactly how much you are paying extra each month, or even year. Debt can take years to pay off – do you really want to end up paying hundreds for one McDonalds meal?!
Being debt free is one of the best feelings in the world. If you aren’t that bothered about paying it off, or perhaps have your head in the sand a bit, you don’t realise how much it feels like a weight has been lifted off your shoulders once the debt has all been paid off.
The benefits of paying your debt off? Financial freedom is a big one – you are unlikely to achieve financial freedom if you have a ton of debt to pay off. Do you really want to be working every day for the rest of your life in a job you hate just to pay the bank more and more money each month?
Or would you rather have that money for yourself to follow your dreams, start your own company, move house, go travelling, do whatever brings you true joy and happiness?
We don’t like to think about this – but if something bad happens, you are going to want as much money as possible. I’m talking about a job loss, a family member death, a car accident – you have no idea what will happen in the future, but by having no debt you will be setting yourself up in the best position possible.
What do you think – why don’t people pay off their debt? Are you on a debt payment journey?
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