On Day 4 (Thursday) as Dee’s crash-course money coach, we start to move into decision-making.
First, high-virtual-five on all the work you’ve done to date.
By now you will have a clearer picture of exactly where you stand.
As you continue completing your spreadsheets, you will discover more important data as well – the fine tuning.
Today, we move into a different mode: some decision making!
Part of the reason we can feel anxious and perhaps even out-of-control about our money in general, and debt in specific, is that we haven’t fully put ourselves into the drivers seat.
You actually do have control over the debt. The first step is to create parameters for the debt as it fits into your overall goals.
So, I’d like you and Chris to have a discussion and sift through the following:
1. What amount of debt are you willing to live with, simply paying the minimum balances, while you get yourselves fully up-and-running with your respective new ventures (ie., your business and Chris’s new career?)
Are you willing to go further into debt, if need be, to fund your business and get Chris established? Why or why not?
2. Does your debt bother you enough that you would consider withdrawing from your investment portfolio to pay it off? Why or why not?
3. If you receive unexpected money this year (and we usually do, in some amount or other) – let’s say, $1000 – would you rather put it against your debt, or use it for something else like a getaway, or something for your home?
Tomorrow, we’ll drill down further into this by taking a first stab at creating strategies to reduce the debt, IF that’s what you are ready to do.
Note: as a business owner, it’s perfectly respectable to hold off on debt reduction! Businesses very, very often survive on credit for the first few years of operations.
UPDATE: Dee’s Response
I am extremely motivated to transform my financial situation, but my brain hurts. My assignment for today was to make some decisions regarding the amount of debt I am willing to live with (continuing to just pay off minimum balances or sacrificing some creature comforts in order to make larger payments) and figure out what I’d be willing to do in order to bring that debt down (withdrawing from investments, using money we were gifted with, etc.) Transferring credit card balances to other credit cards with lower interest rates, rolling our line of credit into our mortgage, etc.,etc. Oh, and can’t forget to pay myself first. What to do? What to do? The great thing about this assignment was becoming aware of my choices. All of a sudden I didn’t feel quite so helpless.
I’ve come to the hard realization that the bank is not my friend. I am not “richer than I think”. The bank is there to make money…from me. Doing this assignment taught me that it’s up to me to decide how much.
Will we have to stop having fun if we want to get out of debt? No. We’ll just have to be innovative and creative in the ways we have fun. We’re certainly not the only ones in our circle of friends who carry debt and are living beyond our means. I hope we can come together and support one another on our journey towards financial freedom. Board game night, anyone?