Okay, so maybe I am not the best person to answer this given that I never had any debt, like at all(!) But there are plenty of people out there who are in debt and wants to get out of it, and occasionally I also get the random question about it, so I figured I should give my take on it.

So here’s my take on it:

In my mind all personal debt is bad. It is hard for me to think of any case where debt can not be avoided. Therefore to me, being in debt implies having chosen to spend unearned money rather than chosen to be free. At some point, a person in debt made a deal that in exchange for some trinket like a car, a new TV, a Big Mac menu at McDonalds(*), they would work it off in the future.

Often the trinket becomes uninteresting or worthless quite fast. Much faster than the debt which is still there. The prevailing attitude is to make a similar deal in exchange for more future work. Ultimately the person ends up with a lot of things in the present while owing a great deal of work in the future.

A person in debt need to realize on a visceral level what debt means. It means future obligations. Obligations means a loss of choice. Instead other people, the lenders, get to choose for you. They get to choose that you should work when you would rather not. While you have the full choice and risk of what kind of work you, you do not have the freedom not to work. There may be a wage separating the debtor from the lender making the relation less personal, but the person in debt is still a slave to someone in the sense that his work and by implication his time, that is, his life energy is owned by someone else.

Thus I think debt is a moral issue and that being in debt expresses certain morals.

The first step towards getting out of debt thus means changing one’s values. This is VERY hard or very easy. Some people are capable of saying “Hey, I was wrong, and you were right”. Many are not(*). A person may use various methods for getting out of debt which interestingly all are associated with snow, snowballs, snowflakes, snow avalanches… I’m not sure why that is, but why break the tradition?

(*) If anyone can solve this problem, there’s a Nobel Peace Prize in it for you.

Introducing the Debt Snowman.

The debt snowman is a menacing paternalistic dude that follows you around and looks over your shoulder. When you want to buy something, the nagging debt snowman wants to know why you are spending money on yourself, when you still owe money to someone else. The debt snowman wants to know why you are ordering pizza rather than giving the money to the lender so he can order pizza. After all, at some point, the lender made a sacrifice for you by not ordering pizza so that you could spend the money instead. Now it is your turn to not order pizza and give the money back. The sooner the better.

I am Jack’s conscience.

The methods for getting out of debt are the same as the same as the methods for getting wealthy or reaching early retirement. Continuously increase earnings. Continuously reduce spending. The debt only adds a moral urgency. After all, if you have no debt, slacking off and taking it easy is okay. If you have debt, you can not afford not to run, it’s bad karma.

Originally posted 2008-08-29 18:13:02.