Debt Management: The 5 Ws (and one H)

the five w's.
The Five Ws by Jasmine Harris on Flickr

Managing debt is a big deal. Let’s not pretend otherwise because if you’re up to your eyeballs in bills and debt, the last thing I want to do is give you false hope. So, there you go. It’s hard work and it’s hard work that takes a long time. Personally, I’ve been involved in working on my own debt management for years, but it’s been the last two years since my separation and divorce that I’ve actually felt some control over it.

That being said, it’s had its pretty exhausting and stressful moments. And sometimes I get so fed up with the whole thing, I just want to ring up every card I have and say to hell with it all.

I don’t.

But I want to.

During one of my more recent money meltdowns, a lot of people made some excellent points. NicoleandMaggie, who are so wise, made this comment that has especially latched onto my brain:

“An important thing to think about is WHY pay debt down. You pay debt down because the interest rate is a drag on your finances and you’re better off when that is gone because you get to keep more of your money. It isn’t a race or a moral issue. There’s no reason to be preached at about it.”

I wish I had the words to describe what an eye-opening statement that was. It was like my eyes had been washed thoroughly and polished with some Windex for the first time in 30 years. It was like turning on the high-beams on the dark road of life. It was like… ok do you get the idea or do I go for more melodrama?

Anyways, since that comment was made five months ago, it’s been festering in my brain. And I haven’t actually addressed it. But this weekend, I saw Mysti’s post. And it felt so damn familiar. Everything stripped to the bare bones and it not being enough and all you want is just a little something nice and cheery because everything else sucks to pieces.

I remembered that post I made and I remembered the awesome comments and I thought it was way overdue to really sit and think about the 5 Ws (and one H) on my Debt.

Who will this affect?

Most directly, me. I pay almost $700 a month in debt payments (car, student loans, and credit cards). This is about a third of my take-home pay. It’s depressing have to allocate that high amount of money to what is mostly things of yesterday.I’m a control freak. Having control over that amount of money would make me feel a bit more secure.

Indirectly, it affects my parents as they hold some of the debt I carry. I hate that I owe them money.

And of course, it hurts my loved ones when I’m stressed and bummed and not smiling or cuddly. On a longer view, it could hurt my kids because I’d rather they inherit money from me instead of a whole lot of nothing.

When would you like to be debt-free?

This one is hard for me because of so many variables. I know my car is paid for next summer. After that, I get hazy. I want to pay off my parents so badly but the two credit cards I have left have insane APRs. I’d like to say I’d be completely debt-free before 2013 ends. So if I can’t be awesome like Nikki, maybe I can be Debt-Free by 33?

What are you willing to do?

I’m willing to track expenses and build good budgets off of them. I’m willing to identify large expenses ahead of time and save money for them. I’m willing to clip coupons and shop sales. I’m willing to curb impulse buying. I’m willing to take surveys. I’m willing to take books out from the library instead of buy them. I’m willing to watch the internet instead of cable. I’m willing to shop around for cell phone services. I’m willing to shop around for everything. I’m willing to keep the ac at higher temperatures longer hours, yell at my kids to turn off the lights, and keep the toaster and coffee maker and microwave oven unplugged. I’m willing to sometimes wash plastic baggies. I’m willing to pack lunch most of the time. I’m willing to cook more often. I’m willing to take advantage of free education and take classes to improve my money-making potential. I’m willing to not shy away from collecting child support.

I’m not willing to be absolutely miserable. I’m not willing to let my children go hungry or wear clothes is too small and too tight and too dirty. I’m not willing to delay medical treatment. I’m not willing to make a lot of stuff like makeup and cleaners and things. I’m not willing to go crazy with guilt when I purchase something. I’m not willing to monetize the blog (yet). I’m not willing to open another credit card and take on more consumer debt. I’m not willing to take on an extra job that will take the time I have with my kids from “some” to “none”.

Where are you getting the money from?

Well, there’s my paycheck from work. And now that things are finally in place, there’s Child Support. There’s also the occasional money gift. And there’s always money from little side ventures like merchandising, mystery shopping, survey-taking, and swagging. Oh, and coupons and ExtraCare Bucks.

Why do you want to do this?

Mostly, it’s a psychological issue. A lot of my debt is directly related to the Ex. Getting rid of it feels like getting rid of one of the few remaining remnants from our chaotic relationship. I also hate being in debt to anyone, much less my parents. I just feel like I’m too old for that kind of crap. Lastly, I feel like debt ties me down and restrains me.

The car, for instance. It drives me nuts I owe money on this car until next summer. I could be putting money into fixing it up or I could be putting money aside to completely replace it but with the debt, I can’t do anything other than pay it off. It’s also the reason I highly doubt I’ll ever buy a house again. Been there, done that, epic fail. My current rental situation is what dreams are made of but if it ever turns into a nightmare, I can easily get out of it no harm, no foul. Same thing applies if I decide I want to retire in China.

And of course, there’s the simple tangible aspect of having more money under my control and having the knowledge of what to do with it all. I am insanely frustrated with the fact I now truly understand money management and investment and can’t do any of it because my money is all tied up in the mistakes of yesteryear. I have three kids. I want them to feel secure and I want their futures to be somewhat solid. Not to mention, I have a lot of living to do (god willing) and I’d like to have the money to do it with.

How are you going to do this?

Well, I write about it a lot. I do this for two reasons: my perspective and your perspective. A lot of what I write is the equivalent of therapy. I can’t tell you how many times I’ve started a post with a problem and finished it with some sort of idea of a solution. And that’s before you all chime in with your brilliant suggestions! It’s for this reason I read so many personal finance bloggers. Of course, it’s hard to find exactly one I relate to perfectly, but that’s the beauty of it too.

On the technical side of it, it’s simple: I’m going to keep spending less than I earn and then use the surplus wisely– bulk up savings and pay back debt. And when I’m all done I’m going to buy a Lamborghini.

Kidding! Just making sure you’re still awake.

What about you? Have you ever thought about your 5 Ws (and one H)?


20 thoughts on “Debt Management: The 5 Ws (and one H)

    • No it wasn’t painful at all it was a big a-ha kind of thing! Thanks for all of your constant support. See they may have needed Three Wise Men to check out the whole star baby Jesus mystery but I only needed Two Wise Women to get through the mystery of my debt.

  1. The reasons I do it is so that my paychecks have meaning…that each paycheck is a little bit of forward progress…not treading water or worse…losing ground with every passing day.

    The stress of feeling trapped by anything really makes me want to vomit. It can be a bad relationship or trapped by a job or debt..Freedom is the name of the game and debt is definitely a form of slavery I can control and do without.

    Great reflection on self.

    • I have to tell you, I absolutely love getting to a payday with a balance that is neither zero or negative. I think I only really achieved this status in the past year or so. Then I lost it, then I got it back. I just work hard to not lose it ever again. The peace of mind that comes with that is priceless. I know it’s so hard to convey to those who don’t have it. But once you taste it, forget it. There’s no going back. At least not if you can do anything about it and you can usually do way more than you think!!

  2. You know when I bought my motorhome, I paid for about 1/2 of it on my LOC. The money was there in stocks but I didn’t want to sell any of them to buy it and had been looking so long for just that one at a decent price. In a way it was kind of a stupid move or timing but man, I would have put Dave Ramsey to shame or made him proud or something with my gazelle like intensity in paying that thing off. Picture the debt standing in front of a pit and me looking like Leonidas in 300 (or maybe his wife) saying “This is SPARTAN!!!” while I kicked it into oblivion. $25,000 and in 6 months it was gone. Please note that I tend to be very mono-focused and more of a sprinter than a marathoner and wouldn’t recommend that most people do what I would do cuz I’m kind of crazy that way. I like things just DONE.

    Check and see if you can find this book: in your library. I read it years ago and it’s more along the lines of finding ways of enjoying your life a bit with your spending while you’re getting out of debt. Not saying that you are one, but I think it’s a much better plan than Ramsey for people who do have problems with emotional spending or wanting to indulge themselves because it makes you kind of save for those things too. Sometimes these things will just give you one tip or two that help. If you can’t find it, I can try to remember more of the gist of the plan.

    • Thank you Jacq! You’re my numero uno book recommender so yours get high priority on my list. I actually think sprints are great– they’re short though. Sometimes there are people and/or situations that just don’t allow for a short sprint or even a medium one and there’s where I feel for them. I’ll definitely check out the book if I can find it. If not, I’ll happily pester you.

  3. You’ve done a great job on breaking down you ‘W’s. The formula for getting/staying out of debt is simple- spend less than you earn. Doing it can be such an emotional experience though.
    If you haven’t already I would recommend reading ‘Your Money or Your Life’.

    • Yup. I think that’s what’s so maddening to people. It is, on paper, so easy and obvious. But it isn’t a black and white experience for most. Everyone’s got their tools and tricks. I know I’m always changing things up to stay focused and to stay motivated and to keep at it. Some work, some don’t. Yes, I read it. I liked it but would like to re-read it when I’m more independent.

  4. Great post! I had this talk with my husband a while ago. Except for one thing, we have our finances under control. The one thing that is not is his student loans debt. He wasn’t the smartest financially-savvy person 8 years ago (before I met him), so he did a Masters in Journalism, acquiring a $71K debt in the meantime. As you might imagine, there is no way he will make enough money to pay it back on the short term. So far, we are paying down the minimum (around $255 a month). He asked me if we shouldn’t limit ourselves in our daily spending in order to be able to pay it sooner, with less interest. I thought about it. The fact is, we could probably afford, if we are really frugal, to pay $600 a month. But it would still take 15 years to pay it back. Honestly, I’d rather pay more interest than I should and have that manageable debt for the rest of my life, than be frugal for 15 years in order to pay back the debt sooner.

    • See, this is the sort of thing I’m talking about with the sprints and the marathons. And I’m with you on it even though I know that lots of people in the personal finance world would lose their poop over this kind of thing. But it doesn’t matter. It’s money. Not morality. I think people inject morality into money in varying degrees. I get a little wary when people start letting terms like “irresponsible” and “wasteful” around spending choices. Personally, I don’t care what you do as long as your actions line up. If you’re an over-spender, ok be an over-spender. That’s your money, your priority. But don’t be an over-spender while saying you’re all about paying back your debt and being frugal and fiscally responsible.

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