30 DAYS TO BE A BETTER MAN: (25) START A DEBT REDUCTION PLAN

ROTTERDAM – The world is, at the writing of this post, 60,907,468,463,029 USD in debt. That’s 54,679,497,090,278,89 EUR. An interesting question is who we are indebted to, then. These figures, however, include national and international debt, which is not what we’re about today. 

Personal debt is becoming an increasing problem in some countries. Mortgage payments that cripple you when you find yourself in the wrong financial situation can lead to eviction. Creditcard debt has ridiculous interest rates few know about, and some people stay in the red most of their adult life with their monthly salaries relieving the debt temporarily every time they get a paycheck.

Then there’s student loans. I’ve got one of those, of course, not one as high as the debt an average college graduate in the U.S. piles up. Dem. Senator Elizabeth Warren has made it one of her causes. The federal government in the U.S. actually makes money off student loans (an estimated 66 billion USD between 2007 and 2012). The class of 2015 has an average individual debt of approximately 35,000 USD. That’s a lot of money.

To be very, very honest, that’s not really that much. Mine’s less than that, but not by much. And I have studied in a country where the annual tuition fee is like 2000 EUR. Granted, I did that for pretty much five-and-a-half years, but still. Then again, I’ve also been told that the annual tuition fee for Harvard is 70,000 USD. That’s twice the average student debt. Naturally, most of the students there don’t pay it themselves, I imagine.

As the Art of Manliness points out, rightfully so:

Debt robs you of these things. The interest from your debt is your captor, shadowing you wherever you go.

Russell Brand, comedian-gone-revolutionary wants to scrap all personal debt in this world. Mostly because in the end of the day, that world debt that we collectively owe, is mostly owed by us and paid back to institutions that are run by a very select group of individuals. Not even the 1% that got cursed by the Occupy movement, but more like the .1%.

Now, before you go off and say that’d be daft, he [Russell] does have a point when he says it’s not impossible or unrealistic. After all, trillions of dollars and euros and god-knows-what were invented out of thin air when the Great Recession hit in 2008. The “quantitative easing” he’s referring to in the video. Our governments pumped lots of that money into the financial sector, bailing out morally and financially bankrupt (PRIVATE) organisations that were responsible for said recession in the first place.

Meanwhile, in some countries, evictions have become part of regular life. A mortgage is supposed to help you on your feet, to provide you with property that is an investment. Instead, its payments have become the source of financial worry and anxiety for many people.

There are of course those who fight back, and some have been rather succesful. The new mayor of Barcelona used to be an eviction activist, for instance. However, very little is being done to curb in an overgrown financial sector that does not actually produce anything useful. They are trading thin air. Imaginary stocks valued by money that does not actually exist. Money in itself is already arbitrarily assigned value, imagine dealing with money that isn’t actually an arbitrarily assigned piece of paper. It’s a number somewhere in a system. It’s not fucking real.

However, this complaining about macro-level processes leaves the individual a bit unwanted, I think. After all,

there are few things more emasculating than excessive debt. A man should strive to be as self-reliant as possible. To be able to stand on his own two feet. To be able to plan for the future without being hobbled by the past. To be free from the shackles of dependencies. To live without another man looking over his shoulder.

Being in debt isn’t a nice feeling. We all have had that feeling at some point or another, even if it was just 20 bucks from your friend. You feel like you owe someone something, and that does not correspond well with the illusion of independency we all so ferociously fetishize. If anything, it gives that nudgy feeling of someone having power over you. And as a man, you cannot let that shit happen.

Now, the Art of Manliness has a debt-reduction plan going. I am not really in the position to do much about my student loans anyways, so I gave it read and I am going to move on. It should correspond with the budget *we* supposedly made a while back.

Option #1: Pay Off the Debt with the Highest Interest Rate First

Paying off your debt with the highest interest rate first makes the most economic sense. By tackling the loans that are costing you the most in interest, you can save yourself money in the long run, and you might be able to pay off your debt faster. Follow these steps to begin reducing your debt this way:

Grab a piece of paper and list all your debts in order from highest interest rate to lowest interest rate. Usually your highest interest rates will be on credit cards and car loans, and your lower interest rates will be on student loans.

Focus on paying down the debt with the highestinterest rate. Take the debt nut that you just calculated out and direct as much of it as you can towards paying down the debt with the highest interest rate.

Continue making minimum payments on the rest of your debt. You can’t pay one creditor at the expense of others or else you’ll wind up in deep doo doo.

Once the debt with the highest interest rate is paid off, start putting the money you were paying on it towards the debt with the next highest interest rate. When that debt is paid off, start going after the next highest interest rate, and so on until it’s all paid off.

Option #2: Dave Ramsey’s Debt Snowball Plan

One debt repayment plan that’s popular with folks is Dave Ramsey’s “Snowball Plan.” Here’s how it works:

List your debts in order from lowest balance to highestbalance. Don’t take into account the interest rate. We’re just focusing on the balance of the debt.

Allocate as much of your monthly budget as you can to paying off the debt with the lowestbalance.

Once the debt with lowest balance is paid off, you add the dollars that had been going to that debt to what you’ve been paying against the next lowest debt. Each time you pay off a debt, the amount you can apply to remaining debts is a little bigger. Thus, the name “Debt Snowball Plan.”

The benefit of the debt snowball plan is psychological. By having success paying off small debts first, you’ll receive instant positive feedback that can encourage you to continue paying down your debt. The drawback to the snowball method is that you’ll end up paying more in interest than you would if you went after the debt with the highest interest rate first. However, if the idea of paying off a $10,000 credit card bill seems too daunting, go after the low hanging fruit by paying off the $2,000 bill first. It will hopefully get you started down the path of reducing your debt.

Man-meter: I get this one. Being indebted isn’t very manly. Just wait until you got yourself a mortgage though..

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One thought on “30 DAYS TO BE A BETTER MAN: (25) START A DEBT REDUCTION PLAN

  1. Pingback: 30 DAYS TO BE A BETTER MAN: BOYS WILL BE BOYS (Concluding Remarks: part II) | thepoliticalnarrator

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