Are you Nickle and Diming yourself to Debt

I was recently reflecting on the reasons that people walk through my door. Of course, they come to me because they are experiencing some type of financial hardship and they need advice. But I wanted to look deeper. What was the cause of the financial hardship. Of course it is the build up of debt that is causing the pain and the sleepless nights, but I wanted to go deeper…

That led me to reviewing the most common “causes” of bankruptcy. Generally speaking, it’s the “straw that broke the camel’s back” that leads someone to pick up the phone and call someone like me – the divorce, loss of job, ongoing illness, business failure etc.

But there is a common cause that goes much deeper than that. A need to live beyond our means. A reliance on credit to make ends meet. And we justify the heck out of our actions and we beat ourselves up until we are black and blue when the Debt Reeper comes a-calling.

There are, in my humble opinion, two types of spenders.drying money

The “lavish spender”  who is obviously living a life beyond their income ability. You know the type, you see them taking trips, buying toys, living in that too-big-of-a-house for their means, driving that too-fancy-of-a-car (or cars) and you wonder how they can manage all of that knowing that they don’t have a six-figure-income job.

And then there are the “Every Day Joe spenders”. These are the bulk of credit users, no fancy trips, or big expensive cars, they just spend a bit more than their budget allows on everyday stuff: groceries, ordering pizza, weekend trips, a 12-pack every weekend, nights out, etc. Not that there is anything wrong with indulging now and again, but if your cash flow doesn’t support it, and you are slowly building up a pile of credit, the future payback may outweigh the present perceived benefits. In essence, they are nickle-ing and dime-ing themselves to Debt.

I should have said “three” types of spenders, because there is also the “frugal spender” who priority budgets – pays their bills first, ensures they have enough for monthly necessities and only spends what they have left, which in some cases is nothing. I don’t see those spenders in my office too often. Mostly they come in because they incurred debt with a “lavish spender” or “Every Day Joe spender” and are helping them clean up the mess.

Related post: Who is the honest but unfortuante debtor?

You can justify anything if you really, really want to. The inner dialogue might go something like this…”We deserve it. We work hard. Our kids should have a better life than we do. I will pay it back when….I get a raise, get my tax refunds, work overtime, etc. etc. etc.”. It is a dangerous way to live. And although sometimes, some do wake up, see the mountain of debt growing, and buckle down before it get’s to mountainous, many do not, and it comes crashing down around them.

happy face coins

Related post: Warning: Use optimism with Credit Sparingly.

It is the “Live Now, Pay Later” mentality. And it is taking it’s toll on households. ‘Cause payday is coming and it (excuse the lack of grammar Ma) ain’t going to be pleasant.

My purpose with this post is not to scare you to death (ok, maybe there is a little of that) 🙂 but to have you stand back, take notice, and decide what profile fits you. If you see debt building behind you, then sit up, take notice, and develop a plan to get a handle on it before it takes over your finances. The warning signs are there, you just have to notice them.

Wishing you, great! financial health.

mam sig

Mary Ann Marriott
aka Doctor Debt

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