There are more than a few opinions going around about what is the best way to pay off debt.

Psychology (or Mind over Money)

Those Dave Ramseyites (believing in the Dave Ramsey Debt Snowball method) are concerned with getting people to change their spending and money management habits by achieving ’small wins’ of paying off some bills right off. This appeals to those starting out with debt elimination, but isn’t the most efficient way to kill the bills. It concentrates on changing habits, at the expense of additional expense(s).

 Science (or What Makes Cents)

Once you run the numbers, the Highest Interest First snowball shows that money-wise, it’s the best for using your money to the fullest extent. However, the problem there is that once you get to the larger bills, it seemingly takes forever to pay off one. The psychological effects start to affect you;  "It’s taking too long." or "I don’t seem to be making very much headway." thoughts, start running through your head.

I’m There Now

This is the spot I find myself in now. I’m left with the ‘big’ bills (any bill that will take more than 6-8 months to pay off by itself), and it’s getting difficult to maintain the focus and pace. I’ve eliminated all the little bills already, and have switched long ago from the Dave Ramsey Debt Snowball to the Highest Interest First snowball. The problem now is keeping up the morale in these tough times.

When you see all the money go out and don’t have very much left over to do any living, it tends to cause disillusionment with the whole ‘get-out-of-debt’ process. Why suffer, scrimp, and save when you can spend now, and worry about it later. That seems to be the recurring theme with the American public in recent years;

Housing Bailout – Congress is passing a bill that will help bail out those people that decided to do the ARMed robbery of our mortgage system. Allowing them to stay in houses they clearly couldn’t afford, by guaranteeing them new loans with my tax money, and forcing the banks to write down the loans to more realistic levels. Reward for getting yourself into too much debt.

Bankruptcy Reforms – The new reforms addresses an issue where too many people were buying into the champagne and caviar lifestyle, and using bankruptcy as a ‘get out of jail free’ card. The huge push by the credit card companies and other banking/loan companies indicates to me that they were seeing too many bankruptcies. Another case of getting in debt and opting for the ‘easy-out’ solution.

I’m not saying that there aren’t deserving people in either of these programs, but the original impetus for these reform programs was caused by too many people living WAY beyond their means. My problem nowadays is that it seems like they’re getting rewarded for it!

Ok, Back to Earth

So when I look around and still see a stack of bills that suck out every penny of my paycheck each payday, it’s hard to keep the faith and carry on sometimes. Everyone else is living beyond their means without serious consequences (in many cases). Kids are young only once, and some things you can only do once in your life. Why not do them right and have a life.

Balance in debt repayment seems to be the name of the game for me nowadays. I have lots of incentive to get out of debt (blogging friends, the economy, retirement concerns, college savings, etc). but I’m starting to see just as many reasons to put off some of that repayment in favor of things that bring enjoyment to life. (Vacations, doing things with the family, fixing up the house, buying new appliances/clothes/stuff).

I know, a lot of you are already thinking, "Well, if you were already out of debt, this wouldn’t be a problem." True enough, but that’s not the case. Once I get out of debt it will be, but there’s a bit of time before that day comes.

New Focus – The ‘Laid Back Debt Elimination Snowball’

I’ve decided to come up with a new debt snowball method to try to integrate my desire to get out of debt, with my desire to live my life as fully as possible.

The Laid Back Debt Snowball goes like this.

Make two lists of all your bills you’re going to pay off. Order one list of all your bills by interest rate, biggest to smallest. Order the second list of ALL your bills, from smallest balance to largest.

Then, take the top entry from the Balance list, and add it to the top of another list.

Next, delete the entry selected in the balance list from the interest rate list, and take the top entry from the highest interest rate list and add it to the bottom of the combined list.

Continue alternating back and forth like this, until you are out of entries. When complete, you should have a list that gives you a combination of efficiency and emotional self-gratification. The efficiency, from killing the highest-interest bills, and the self-gratification from completely killing off a bill every so often.

It’s not a perfect system, but for those getting jaded by a just one-or-the-other approach, it might reinvigorate you to get rid of those bills.

I’m going to try this for a few months and see if it helps get me back to the ‘old debt-hater’ I used to be.

Do you have an alternate way to get rid of debt that you’d like to share? Leave us a comment and let us know!

I look back at my finances and I see a steady non-decreasing credit card usage record. From my first JCPenny’s card right after entering the military, to the dozen or so cards sitting in my sock drawer. They’re all there, haunting and tempting me.

I’ve come to the realization that I LIKE the convenience of swiping plastic rather than digging out paper. I like not worrying whether I have enough in the bank account before getting the capuccino, or filling up the gas tank. I like being able to time-shift my expenses.

I know, that makes me an Evil Person ® and I should turn in my PF bloggers badge.

I Wish I Knew How to Quit You

I’ve read about being debt-free, and worked at it, but the convenience of getting something now, and paying for it (and a little more) later is seductive. Why save up for that new television or computer, when by the time you get the money, they’ll be obsolete. Wait to get the furniture? But the house is empty NOW. What’ll you do if friends come over while you’re saving?

It’s very easy to fall into this self-inflicted trap. I and the wife continually do it in a seemingly never-ending cycle. Get nearly out of debt, get back into debt. It even seems like the ‘Call of the Card’ gets stronger, the closer to empty the cards get. After emptying various credit cards, you’ve triggered the Card Police to call you, offering various incentives and special rates to get you to back in. It’s kind of like a drug dealer calling because he hasn’t seen you in a while.

Ya Know It Could Be Like This, Just Like This Always

I’ve kind of resigned myself to living in some debt from now on. Since it doesn’t seem to want to go away, I figure it’s a matter of managing rather than eliminating the debt. Being at the point where all the cards are paid off each month doesn’t really cost me any interest. It’s that siren-song of "let’s put this bill off a month" that keeps tempting me back into my deeper addiction.

Even cutting up the cards and closing accounts doesn’t help, since that penalizes your credit record. With more companies using that credit record to determine job eligibility, insurance rates, and general trustworthiness, you’re stuck with having to maintain a good record, even if you don’t use credit.

I’m not independently wealthy like Dave Ramsey, so I can’t really afford to let my credit rating go to zero. When it does go down, I pay for it in other ways. I guess it’s better to just play the game enough to get by.

Truth Is, Sometimes I Miss You So Bad I Can Hardly Stand It

My goal now, is to deal with the addiction. Manage the debt, knowing that it will never fully leave. Even if I do pay off all the bills, the specter of my cards will haunt me, luring me back into the depths of credit card purgatory.

I’ll walk around like a normal person, no different outwardly than the other people in the crowd without credit cards, but my dark little secret will still be there. Dealing with the problem, a day at a time.

How are you dealing with credit addiction? Drop us a line and let us know.

… My wife’s family are all very successful, and because of that I think that sometimes it can get into a bit of the "who’s more successful than who" game. I tend to shy away from sharing with those competitive family members because I don’t want to get into the comparison game and start hearing the "if you did this you could be as successful as me" monologues.

This saddens me a little bit, that even though Pete and his family are doing very well by most standards, he still has to put up with ‘comparisons’ from the family. Just because he’s not AS successful as the in-laws, doesn’t mean he’s not successful. These kind of comparisons have always seemed particularly unfair to me.

Comparing Apples to Oranges

In my own situation, I’m much more successful that most people on EITHER side of the family, but I’ve always tried to not advertise that fact (except during one particularly intense family ‘discussion’ years ago) for this very reason. I don’t want comparisons to come up about me and my family vs. the rest of the family.

I can understand that parents want their children to do at least as well as they did, that’s just the American Way. What most parents don’t seem to get, until after they’ve already started ‘helping’ their children, is that it’s not a fair comparison or goal.

The parents have the benefit of decades more experience and time to have gotten to the position they’re in, but when they talk to their children, they conveniently forget that fact. Being successful in business, or acquiring any significant amount of wealth usually involves investing more than a bit of time. With the parents having the benefit of a couple more decades of time on their side they should be more successful than their children normally.

They also forget that THEY ARE NOT THEIR CHILDREN. Your child might not want to grow up to do what you do or be what you are. Is that a bad thing? From the children’s point of view, that almost immediately sets them up for failure. No one becomes a success overnight, and no one ever does it without experiencing some bad times in the process. I can remember some bad spots I went through that a little ‘help’ from my parents would have been sorely appreciated, but didn’t approach them (or even let them know about my problems) for fear of being diminished in their eyes. My home foreclosure, for instance, could probably have been averted with a couple of thousand dollars loaned to me by my parents, which I could have paid back. But that didn’t happen. I was too obsessed with my ‘reputation’ in their eyes to take that option. Foreclosure and financial disaster was preferable to my parents thinking I was a failure.

Making Sure Apples are Apples

I hope that I remember this when my own children get old enough to leave the house and strike out for their own successes, but somehow I doubt it. I want what’s best for my kids, and I want to save them from making the same mistakes I did, but I have to remember, the best lessons learned are from the things you do wrong, not the things you do right. I’d like to say that I’ll remember that when they start making their own mistakes.

What I WILL remember is that success is defined differently for everyone. One person’s lifetime goal to climb Mount Everest is another person’s wasted vacation. I doubt that Bill Gate’s kids will be able to define success by the amount of money they earn in their lives. They will have to decide different criteria for what makes them a success.

My own idea of success has changed as time goes on too. Money has moved from being a goal, to being a tool. It’s taken years, and it still isn’t complete, but my self-worth and self-image is not based on what I make or what I do, but who I am.

I’m still learning about that.

We’d love to hear your comments, please leave us your thoughts on the subject.

It got me thinking on the subject of family and finances though. Money wasn’t something that was discussed around my house, and we were STRICTLY told not to talk about the family’s finances with other people, not even other members of the family outside ourselves (Mom, Dad). I find myself reacting the same way with my kids even, and still wonder why?

We are the Product of our Parents

Being raised by a family that doesn’t talk about money, influenced me to be the same. It’s only in recent years that I have tried REALLY HARD to be open with our money/finances with even the close family. I try to get the spouse involved with the bills, investments, etc (with varying levels of success) and I have started early talking to the kids about money and handling it. I’ve also let them know how the family is doing overall, and how much we have saved, invested, and such.

Not so with anyone out the family. I’ve talked about money a bit with my in-laws but they don’t talk about money (in detail) either. I’m not ashamed of what I do or make, I do pretty well all in all, so why should it be such a taboo to talk about it.

I think it has to do with perceived social levels. What I mean is that even though we’re all family, it gives everyone a means to ’stack’ others against themselves. "Do they make more than me? Then I must not be as good/smart/lucky as them. Do I make more than them? Then they must not work as hard/be as smart/be as lucky as I am!" Even in close families, people tend to stratify or compare themselves against others.

What makes it worse in families is that the more familiar you are with someone, the more flaws and imperfections you know about. Knowing that Uncle John had a drinking problem after college colors your perceptions of him for the rest of your life, even if he’s gone on to be an astronaut. Finances tend to be the same way. You remember the time that such-and-such had to go on welfare, or so-and-so came to you for a loan to make a house payment. Too many people let incidents like that color their memories of someone that should be special to them.

The Dog Eat Dog World

It’s human nature to be competitive, but not all competition is healthy. We in the U.S. over the last 20 or so years have let the acquisition of wealth become one of the most important aspects of our lives. Whether it’s through the fear of losing a job (and losing that income, which I will never be able to get anywhere else?!??) or the climbing up the corporate ladder to attain the lifestyle of the ‘beautiful people’ (I need the 35,000 sq ft house with the 34 bathrooms!). Keeping up with the Jones’ has become a cultural Olympic event.

When that competition filters down to influence even our kids (need for designer clothes, new car, ivy league college, etc) it makes them perpetually unhappy at some level that they aren’t living in the lap of luxury like they ’should be’ and somehow it’s the parent’s fault for not providing what every other kid on television seems to already have.

Competition has to be tempered with good sportsmanship, even in the financial arena. Just because someone makes less money, or spends it differently (or out and out squanders their money) doesn’t make them someone to revile. Too many people nowadays don’t know how to handle their money, and because finances are a double-nought, triple dog deep dark secret, they usually don’t have anyone close by to talk to about it until it’s too late.

What Can You Do?

I think it’s safe to say that you can’t just go out and mail your net-worth statements to the family at large, but you CAN start being a little more open when talking about investing and finances in general. If you’re knowledgeable about stocks, bonds, real-estate, or other financial matters, let it be known that you can be asked questions. You might not be the most expert person on the subject, but you can point others in the right direction.

Most of all, work on not being judgmental with your family!! Things happen. Life happens. Not everyone goes through life without having a major catastrophe happening, or doing something monumentally stupid with their own money. Remember "Let he who has never sinned, cast the first stone."

Have you fought with family members over money matters? You can air your story with us and leave a comment on your thoughts.

While researching another article, I came across a rather heated discussion about where the line is drawn when being frugal. Too little, and you’re not saving money, too much and you’re a Miser.

At that point, an idea popped into my head. "Is anyone really a Miser anymore??"

mi·ser /ˈmaɪzər/ [mahy-zer] –noun

1.a person who lives in wretched circumstances in order to save and hoard money.

2.a stingy, avaricious person.

3.Obsolete. a wretched or unhappy person.

From Dictionary.com

Obviously we have our literary stereotype of Scrooge as an example, but can you truthfully think of anyone in recent times that you know of that fits this description? I can’t, and I know more than a few people that practice the frugal lifestyle. I’ve never seen anyone that really prefers the love of money over people, but maybe I just don’t hang around the right bunch.

What Frugal Means

The Frugal Lifestyle, to most of us, doesn’t mean a life of abstinence. We don’t eat watered-down porridge by a candle to save on food and electricity. We simply get control of our impulses to buy useless crap.

We in the United States are VERY lucky, even if we don’t realize it. Even the poor and homeless can find food (shelters). We have SUPERMARKETS the size of FOOTBALL FIELDS filled with food. And even for the lower income families in America, basic staples are within their means. Government assistance, charitable organizations, and food pantries all contribute to the upkeep of anyone that needs it.

Because of this good fortune, the United States has turned into the worlds most consumer-centric country. Enough isn’t enough. He who dies with the most toys, wins! So get to accumulating those toys, you good little consumers you! Media blares continually with ads of every type and description. The idea to ‘buy more’ being pounded into everyone’s head day-in and day-out.

There’s a growing tide of sentiment that says "enough has become ENOUGH". The age of Conspicuous Consumption is over, and it’s time to get the financial house in order. We’ve bought THINGS until we have no more room to store our THINGS. And the THINGS no longer even mean a THING to us anyway.

Living frugally is the scaling-back of desire, not eliminating it. Getting control of the runaway consumerism in the U.S. and defining what really makes us happy and content. Happiness is no longer defined by the McMansion and the BMW, those former status symbols have just turned into financial anchors around our necks.

What’s Best in Life?

Mongol General: Hao! Dai ye! We won again! This is good, but what is best in life?
Mongol: The open steppe, fleet horse, falcons at your wrist, and the wind in your hair.
Mongol General: Wrong! Conan! What is best in life?
Conan: To crush your enemies, see them driven before you, and to hear the lamentation of the women.
Mongol General: That is good! That is good.

Conan the Barbarian  – From IMDB

Everyone defines what’s important to them. It could be family, religion, personal growth, professional growth, or a whole myriad of other items.

To me, frugality helps me provide for my family, both in time and money. The finances stretch farther and are spent on things of lasting value, or memorable activities. A vast majority of the flashy toys kids get will either be broken in the first week or two, or will be forgotten by the same time. Time spent with your family on vacations, or playing games (together) form memories that stay a long time.

I have a question for the reader, if you would indulge me,

What’s Best in Your Life?

Leave us a comment and let us know.

Merry Christmas.