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Avoiding Debt Regret

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Avoiding Debt Regret

“Well, we can’t have people over if we don’t have couches.”

Just a few short months after we got married we packed up everything we owned in a small Uhaul and moved to Atlanta, GA so my husband could attend GA Tech for grad school. The only furniture on our moving truck was our bed, a side table and two hand me down bookcases.

At first I was so desperate just to find a job that furniture was the last thing on my mind. ¬†After awhile we got settled, made friends and wanted to start inviting people over. ¬†The only chairs we owned were computer desk chairs and otherwise we sat on the floor. ¬†I really wanted furniture. ¬†At the time I wasn’t a “Thrifty Little Mom”. ¬†I was a “young contemplated spender”.

We did what anyone else living on a retail and grad student income would do. ¬†We went to the furniture store and got a $0 down, 0% interest loan for a year on couches! ¬†If only my future self could talk to my past self… ¬†Since I can’t, maybe I can help some other adults in avoiding debt regret by giving you some food for thought.

4 Ways to avoid debt regret

1. Evaluate Needs Vs. Wants

  • What humans need are water, food & shelter. ¬†If it doesn’t fall into one of those categories YOU DON’T REALLY NEED IT, you want it to make life easier in some way.
  • When you decide to go into debt, borrow money or get loan evaluate how much you actually need the item right now.
  • Could you wait 6 months and pay cash for the item?
  • Could you buy it used?
  • If you lost your job tomorrow, would you still able to make the payments for this item or would you just stop paying it and start letting the interest compound against you?
  • Future Money Isn’t Real Money- Be honest with yourself and try to remember that you can’t see the future. ¬†That’s why you can’t let your financial decisions be based on money that technically doesn’t exist yet. You can plan based on what you expect to be paid but you should be cautious about buying stuff based on what’s not in your account yet.
  • Mortgages-¬†If it’s a mortgage, find a house that you can actually afford that suites your families needs. ¬†In other words, if you lost your 6 figure job, could you still make your house payments if you have to take a job that paid less money? ¬†That way when you find the right house, you can go ahead and put in an offer without worry or doubt.

2. Cars

  • Depending on where you live and how you get to work, you may need a car.
  • Reliability- The biggest debt mistake I think people make when buying cars is deciding that they need a new car fresh off the dealership lot for the car to be “reliable”.
  • I’ve seen plenty of “new” cars go right back in the shop just weeks after purchase.
  • Buy Used- Don’t be afraid of buying used cars but don’t just buy on a whim. ¬†There are things you should do when buying used. ¬†Clark Howard has a great article breaking down how to find a good used car on his website here.
  • Don’t Buy Under Distress- 1 year ago I bought my first car. ¬†Up until that point I had driven my sister’s hand-me down Geo and then her Escort. ¬†I literally drove the Escort until it wouldn’t physically move anymore. ¬†The problem was, I didn’t really think that day was coming as soon as it did. ¬†So when it did, we had to run around trying to find me a used reliable car in our budget. ¬†We had not really been saving specifically for a car. ¬†Though we had enough money, our savings account took a big hit when we wrote the check for my Carmax Honda. ¬†We chose Carmax instead of an independent seller. At the time, we just wanted to get me a car that we knew would work, with a warranty, without wasting too much time. ¬†That probably wasn’t the best deal we could have gotten if we had planned and saved a little better.
  • Pay Yourself Car Payments-¬†After those shenanigans I ran across a video on the Dave Ramsey website titled, Drive Free, Retire Rich. ¬†The video title intrigued me so I watched. ¬†Now, my husband and I have started planning for the day when my car will need to be replaced and instead of making payments to a dealership, we are making a car payment to our savings account each and every month so the next time we need a car, the cash will intentionally be there and we can plan a lot better. ¬†Check out this video on Dave’s Site.

3. Sleep On It

  • Sales people are trained to “sell” you something.
  • Furthermore they are trained to seal the deal in some way before you ever walk away from the pitch.
  • Therefore the best thing you can do, no matter how good the deal is sleep on it.
  • If a salesperson warns you that they won’t offer you the same deal the next day you need to walk away immediately. ¬†If they want your business bad enough they better be willing to wait. ¬†I literally had to explain this to a guy trying to sell me a gym membership. ¬†When I said I needed to talk to my husband he threatened that the price would go up if I waited and I told him that was the stupidest thing I’d ever heard and walked out.
  • Before going into to debt, go home and really let it settle. ¬†If you feel a sense of great anxiety or worry about the debt, it’s probably not the right time or not the right item.
  • If you wake up confident that you need the item then take your purchase idea to a trusted friend who has their money together. ¬†(see below)
  • If you find that you often get pressured into buying things, check out my post on How To Escape a High Pressure Sales Pitch.

4. Seek The Advice of Trusted Friend, Spouse, Mentor or Financial Adviser

  • When you are thinking about taking out a loan to buy something, run the idea by a person in your life who has their finances together.
  • Don’t go ask your buddy who is in debt up to his eyeballs.
  • Ask someone who knows how to manage money about their opinion on your purchase.
  • You are seeking wisdom from someone else but it doesn’t mean you have to follow that advice. ¬†It just means that you are getting feedback from someone who makes wise financial decisions as you try to make one yourself.

Everyone probably has some sort of regret associated with money. ¬†I’ve had my fair share of hindsight moments. ¬†In the end, the key is to move on from the past and make better, more thought out choices in the future. ¬†Do your best to pay off any debt you have so that you can live life with some financial freedom. ¬†Financial freedom leads to a more peaceful, less anxious life. ¬†Less Debt = Less Regret.
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How To Avoid Debt Regret