Wednesday, September 13, 2017

Are You a Serial Debtor?



Getting into debt seems to get easier and easier to do.
That's how most financial institution make money off of the public, by getting and keeping them in debt.  These entities grow rich on fees and interest.

Take the big automakers.  It came out years ago that the reason they offer in-house financing is because they make the bigger profit not on the sale of the vehicle but on the interest they charge you to finance said vehicle.
Let that sink in for a moment......

With most banking institutions they only way they will give you "free" checking accounts is if you keep X amount of dollars in either your checking or one of their other financial products(savings, money market, cd, stock portfolios, etc.).  But then again, your checking account isn't "free" really, is it?  Since the bank has access to the money in your financial product to move around, lump it with other folks' money on deposit and shuffle it all around(as one big freaking pile of cash!)to turn a profit for themselves...something a lone investor/person with capital can't possibly do on that  massive level.


Businesses encourage John Q Public to go into debt in many ways because it puts money into their corporate pockets.
Corporations love debt and use any trick they can think of to keep you mired in debt.

Refinancing schemes are one way they do this.
Refinancing can be a great way to get out of debt.  If you can't handle the payments of your debt by consolidating and restructuring them you can A-make them more manageable for your income level and B-lower the rates in a refinancing plan.

But be very careful!

Yes, you can lower the rates but if you don't see the "extra" cash left at the end of your month(if there is any extra cash) as "extra" and spend it on wants.  You are just inflating your lifestyle and won't actually extract yourself any faster.  And if you use that "extra" cash to extend yourself into a new financing scheme(put something on time and use the "extra" cash for a downpayment)then you have just mired yourself further into your quicksand of debt.
Also, most refinancing schemes while they lower your interest rate also extend how long it will take to pay off that debt.  Don't fall for this ploy either.

The only way I would ever refinance a debt(if I had a debt and my back was against the wall)would be to get a 0% balance transfer credit card and move debt from one instrument to that one.  Of course all 0% balance offers do have an end date by which the 0% interest terminates and usually balloons up quickly to a large rate of interest you are required to pay on the remaining balance so watch out for that(and some refis also make you responsible for all the interest you thought you got out of IF you had paid the loan off before the 0% rate expired).  And don't EVER do a 0% balance transfer and then use that credit card to make new purchases!  If you do, you have just negated any financial good that transfer did you and you'll be in worse financial shape very quickly.

There are folks who don't "get it" at first, but then wake up one day and realize, "WTF!?! I am in debt and how do I get out?!"and make plans to extract themselves from said debt.

Most people "gets it" about debt at some point in their adult financial life.
But then there are those other folks.



You know.....the ones who get into various types of debt and then have an epiphany one day and get serious about extracting themselves from their predicament.
But they go overboard and tighten down their spending too much and start throwing all their money at their debt.
And then at some point they just can't stand not spending on something they "want" another minute because they are too restrictive and go off the deep end and go spend with wild abandon.  And usually this wild abandon period equates to buying something big like a car, a pool, an RV, a pricey cruise, etc.

And when they do this they usually undo any good their previous financial fasting has done them and then they are right back to the same level of debt as before or sometimes a larger level of debt.

Then the guilty or remorse or whatever you want to call it sets in and they severely tamp down their spending again and throw themselves into debt pay down and the cycle starts all over again.

I have seen a few folks online who fit into this category.  They cycle in and out of debt or cycle from moderate debt to massive debt to moderate debt but never truly get out of their debt.

Beyond their own self-defeating "get out of debt disorder" add in that emergencies happen that also need their ready cash at some point in the cycling and basically nothing ever changes in their lives beyond the change in the level of debt they are mired in.

They will never break the debt cycle until they deal with the deep seated psychological reasons behind their money/debt issues.  Some issues are easier than others to address but this type of serial debtor needs to take a good hard look at why they are in debt and can't get out.


Are their debts just too large to get out from under?
Do they not understand the difference between a need and a want?
Can they not say no to themselves or others when it comes to money?
Do they have no self-control with their finances?
Are they not mature enough to understand delaying gratification?
Do they need some rudimentary budgeting lessons?

And add a spouse or significant other who isn't on the same page with money, and the psychological games couples play about finances, and there is just more baggage to deal with to break out of this cycle of serial debt.

This ARTICLE may explain it better than I can.

It's never too late to face up to your finances and change how you deal with your money if what you have been doing isn't working for you.
Money is a great tool to get you where you want to be in life......IF you use it wisely.
Used recklessly and it can make your life a living hell.

Sluggy




24 comments:

  1. This statement applies to us. We are on opposite ends of the spectrum when it comes to saving. And its been how long now? 39 years. Exhausting. "And add a spouse or significant other who isn't on the same page with money, and the psychological games couples play about finances, and there is just more baggage to deal with to break out of this cycle of serial debt."

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  2. Outside of my mortgage, I am currently carrying additional debt, all related to my recent home remodeling, which brought unexpected repairs. Once you open up walls . . that said, there is a plan. This is temporary, I see the light at the end of the tunnel and have pinched back where I can in my budget to cover additional repairs with CASH and once I get paid this month, I will see $XX,XXX as a balance in my checking account for the first time since I bought my forever home. So addressing the aforementioned debt, saving for emergencies, saving for new medical deductible-all on a monthly basis as well as setting aside the full monies alloted monthly for every known expense that I is included in my budget. Retired, I have to live carefully, as I always have and well under my means. I am still able to save (before attacking debt and emergency savings), 28% of my take home. A good position to be in. Check with me in a year . .fingers crossed that all of the CC debt is GONE.

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  3. I've always found that people who give lectures such as this are delusional. You don't live in a real world. Proof positive: the link you provided is for paying customers only. Here's the free link: https://www.bostonglobe.com/business/2017/08/18/are-you-plagued-serial-get-out-debt-disorder/wavGG1ipObmyixMcssD6EJ/story.html
    If you lived in the real world, you would have known that. Not too many people I know had a husband who earned as much money as your husband did, nor could they ever save $27,000 a year or whatever else your preposterous annual savings goal amounted to. Most people don't even earn that much money in a year and yet you were able to save it plus you never went to work.
    I've been living debt free since 1987 and it ain't no picnic. How foolish and stupid to advise and tell people if you can't pay for it in cash then don't buy it. Or save up for it. Or whatever nonsensical other advice you're dishing out.
    You guys just started your retirement years? Give it a few years and then check back with me. You are going to be in for a real surprise once that steady paycheck doesn't come in. $5,000 for a vacation? Kiss those days goodbye. I live on $1500 a month. I dare anyone else to do that!
    The whole world and our whole economy spins on the benefits of credit. Houses couldn't be built, cars couldn't be bought and other human resources couldn't be accomplished without debt. Hospitals can't be built. Cities couldn't run. I've had it up to here with people like you condemming other people who utilize debt.
    Debt is a tool. Just like a hammer. You can either use the hammer to plug in nails to build a home or smash somebody's head in. Same with credit/debt. You can either use it wisely or not. But I would NEVER disparage anyone who takes out debt. They're doing the best they can.
    If you want to go borrow money to go take a cruise, buy a Mustang convertible or yes, buy an RV go ahead and do it! Because you know what, life goes by real quickly ladies and gentlemen. At the end of your life, all you'll have are your memories. NOT how well you paid your bills!
    Give me a break.
    Because in the end, what can they do to you? Material possessions and money mean nothing. Life is more important. So are your experiences, time with your family, memories of the good times.
    Fix up your house. Buy a decent car. Go on that vacation. Wear decent clothes. Eat good, healthy food. Live your best life ever.
    There is no guarantee that you will be here tomorrow. As most people in Texas and Florida have sadly found out. Their material possessions are meaningless. And as almost all of Americans are sadly finding out, now with the data breach from Equifax has unveiled, ALL your money is in jeopardy. 144million people's information has been compromised. End result: nothing is sacred. Nothing is secure. There is no guarantee in anything.
    Live your BEST life NOW.
    And if it means you have to borrow money to do it, then so be it. Be happy! Live well. And prosper!

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    Replies
    1. Cindi, I hope you will be blogging again soon. I learn so much from you.

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    2. I see and hear a green eyed monster:) Having traveled and visited Slugs and her Hubby several times , they are not unrealistic and live just like the rest of us. They are not fancy but very down to earth, Neither are they cheap and selfish, but very generous and giving. Slugs lucked out with a great guy, but he also lucked out with a great wife. They are lucky in the fact that they are both on the same page. Now do I wish I was Sluggy you bet I do, not for her money sense. But for her loving personality and her ability to survive lighting and hail on the high prairie.

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    3. What, Cindi???? YOUR words are delusional, not Sluggy's. At the base of her advice, I always get the message of contentment, a contentment she found (as I see it) through self reflection and choices. When you are content, you don't need lots of stuff/trips.
      If you can't afford to pay for "it" don't buy"it" is , always has been, and always will be the best financial advice ever. Either save for it, or do without. And, when you are content, the less of "it" you need. Her way works. I know this, because we are a one-income, debt free, two home family. I saved over 1/ 4 of my meager out-of-college salary through this tried and true method. I continued it through two-income no kids, and live it now with Dh retired. And no, DH didn't have a high-income job, just an o.k. one, he was a pilot, mine paid less when I left for good, but probably had more room for growth) Wealth is about what you can keep, not what you buy! If you can only be happy by buying things, (including experiences) maybe there's something not quite right in your choices, and it has probably nothing to do with finances. In my home, our memories are being made at our dinner table, in our living room, etc. And trust me, just because Sluggy didn't go off to a job, doesn't mean she didn't work! Again, I am willing to bet that, like me, she made sure her choices were in line with what would bring her contentment. For me, and homemakers like me, (college educated) that meant that if I married, whomever I CHOSE to marry would have to share our vision of a contented lifestyle.

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    4. I also see her tallons out! Geez! Sluggy's post was a simple message: live below your means. She and DH handle their income well, have done traveling, that was BUDGETED and saved up for. Why should a reader give 2 figs about how much Sluggy's vacation cost? Real sour grapes. Pfft

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    5. Cindi, you say you live debt free, so why aren't you using your own advice? If you think maxing out credit cards and spending all your money brings happiness, why aren't you doing it? I'm guessing you've ruined your credit by taking your own advice.

      Also, I find it deeply disturbing how happy you sound when you talk about the Equifax situation and how millions of people may lose all their hard earned money.

      You contradict yourself advising people to borrow and spend as much as they can: buy that car! buy those nice clothes! ... and then you say materialism doesn't bring happiness. Some of the things that bring true happiness is knowing you won't be forced to work until you die because you're stuck on the debt treadmill. And using your death (as you suggest) as the solution to absolve you of your debts is immoral. FYI: Most people are decent and make an effort to pay off their debts.

      You just sound so unhappy and miserable. I wish you good luck.

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    6. Cindi, your comment has been weighing heavily on my mind. My hunch is that it has absolutely nothing to do with how much Sluggy and her husband earned or that she didn't work outside the home, etc. I'm trying to read between the lines and I can't help but wonder if there is something else going on in your life, and that Sluggy, unfortunately, became the undeserving recipient of your pain.

      I feel that Sluggy's advice was sound. What her husband earned and how much they were able to save is, to an extent, irrelevant. What matters is seeing that money is a tool. Used wisely, among other things, it can create financial security. Used poorly (as in taking on debt), it can potentially cause a world of hurt.

      Only knowing you through blogging, there is no way of really knowing what is going on. What I do know, is that often times when someone is hurting, they quite often take out their pain on someone else. Much of what you have posted here simply doesn't line up with what you have written about in past blog posts. The abrupt end of yet another of your blogs is another reason I feel there is more going on than what meets the eye.

      If my thinking is wrong, I am sorry. But please don't use Sluggy as your punching bag. While there is nothing wrong about sharing an opposing opinion, intended or not, I feel your comment came across as more of a personal attack. I'm hoping you didn't mean it in that way. From reading your former blogs, I can tell that you are an intelligent person and also an excellent writer. Please use it for the positive!

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    7. A Dime At A Time, Denise (Sluggy) has absolutely no authority to issue out any financial advice IMHO. Especially from a person, who when her own daughter was going through a financial crisis with a home she was going into foreclosure from, Denise bought it out for her, paid cash for it. Tell me, what did Denise's daughter learn from that financial experience? That mommy and daddy will come and save you when you get into financial problems? Preposterous and absurd. I know for a fact that Denise specifically wrote this article to attack me personally and I am sick and tired of people like her telling me what to do.
      Credit and debt, when used respectively is a valuable financial tool and should not be pooh-poohed accordingly. People who use credit or debt to make their lives better should not be discriminated against. period! Most people do NOT earn good, decent salaries and sometimes they have to take out car loans, pay medical bills, make home repairs or buy new tires for their cars in order to continue to live and credit is their ONLY solution. Now, if people misuse credit foolishly, they should suffer by their own hands. NOT have mommy and daddy come and rescue them and then pontificate to the rest of the world what they should or should not do.
      If you want to take a vacation, cruise, buy and RV or whatever it is you truly want in life, if you can manage the debt, with my 66 years of life experience, I say go for it! And do it. Enjoy your life. Because in the end (and I'm reaching my own end soon) your experiences are all that will matter. Make your life better. Live better. Eat better and if you have to use a charge card, then use it! Just do it responsively AND if you don't then suffer your own consequences. Because there ain't no mommy and daddy coming to save YOU, like Denise's daughter. I understand most people won't 'get that'. But in the meantime, stop with the name calling or other derogatory hypocritical posts. It takes one to know one. Denise was very wrong in the way she 'saved' her daughter from financial ruin. The girl will learn nothing from the experience while Denise jeapordized her own retirement future. In other words, I would NOT give any credence to any advice from her.
      I discontinued my blog because I'm done with all this crap. I'm out having fun and enjoying the rest of my life in my RV that yes! I took out a friggin loan for. So shoot me! And yes! I took out zero interest credit card purchases to buy beautiful furniture for my gorgeous condo and guess what? I can handle it all quite nicely within my passive retirement income.

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    8. I would strongly suggest Cindi that you know what the hell you are talking about before spewed hatred on me. No my daughter was NOT going into foreclosure-the house was paid for, no mortgage. I didn't "bail her out". And I certainly didn't jeopardize my retirement when we bought the house from her.
      And yes, I use to work outside the home and no, my Hubs didn't make an inordinately high salary, ever. You don't know me at all, do you?


      And no, I didn't write this article to attack you personally. Either you are delusional or have a much higher opinion of yourself than any other of us do to think I'd use my precious time to attack you publicly or privately.

      The article was NOT specifically directed toward you or about you. It was informational, my view on debt, and about a segment on our society who, for whatever reasons, life their entire lives mired in debt.
      Like the article said Serial Debting IS a "thing".
      And as it obviously hit a nerve with you, perhaps you need to look within as to why.

      Feel free to not read my blog if you are going to go off on me or any of my other readers like that again.

      No one is twisting your arm to read my blog. It's sad that it's come to this between us but I haven't a clue what I ever did to you to deserve such treatment.

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    9. Wow I thought this post was for me now I am hurt, I am not important I will go eat a bakery item or two.

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    10. You didn't see me over here waving "pick me, pick me!" Now I don't know who was chosen! Lol No matter who, what, where, when, Sluggy still gave solid advice. I'm sure that many of us can learn from this post!

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    11. Cindi, for someone "so tired of all this crap"-why do you continue to read Sluggy's blog and admonish her? You come off as paranoid. Just troll along elsewhere in your RV. I actually was a blog reader of yours for a short while-not my cup of tea, and your own lack of relationship with your daughters is painfully coloring your perspective on the relationships that others have with their own offspring.

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    12. She really wants to push the "buying the RV."

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  4. Hi Sluggy, this is Chris. Great post, and I was happy to see you linked to the article by Michelle Singletary. She is one of my favorite writers, who I have followed faithfully for many years.

    Hubby and I didn't learn much from our parents about money, but I am trying to do better by our children. Luckily we are both on the same page financially, so that has helped us through the years. We only have mortgage debt now, but in the past have had car payments and student loan payments. We did always try to avoid credit card debt, so I think that helped us. I checked our mortgage, and as of this month we have paid off 49% of our mortgage. Woo hoo!!! We should be at 50% in the next month or 2, I will report when we make it. :D

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  5. Great post, Sluggy. I could see so much of myself in what you wrote. I'm happy that, for the first time in my adult life, I am finally "getting it" and will conquer the debt beast once and for all.

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  6. This is a great blog post, Sluggy! Monthly payments are a way of life for too many people. It would stink if you had to use your whole paycheck to make minimum payments to all your creditors and have noting left over to show for working hard.

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  7. I once dated a man who had a strange take on money and debt. He told me to get more snacks in a gas station than I ever wanted--just a coke was my desire. However, he complained I did not get more. Then, he insisted on going out to eat with every crisis, some of them his finances. I always resisted, but he said his cc debt did not matter because he was so behind on his other bills. THEN, he bought a $5K computer for making movies and music. He hated I did not have a laptop, too, and bought me a Dell for my birthday. I had a perfectly good pc and was horrified when I opened the gift for my birthday.

    Later, he complained I was the cause of his debt. Even later, he told me he had to get another cc to pay off the first, all because of me. He had been begging me to marry him, and I realized he wanted me to sell my home. NO WAY!

    He ended up marrying someone whose parents supported her and would support him. I think maybe these warning signs are there for those who marry someone who is in debt. Or, maybe two people who are spenders find each other and marry.

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  8. I am a reformed serial debtor, now I am a serial bakery treat eater.

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  9. it is a shame we are not taught economics when this is so important to know. I would vote we teach kids this over gym.

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  10. Good info. Lucky me I discovered your website by accident (stumbleupon).

    I have bookmarked it for later!

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