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by Paul Kindzia in Happiness, Personal Finance
December 8, 2021

I often talk about the importance of following principles in life.  Well defined principles that we believe in assist us when we need them the most.  We need principles when we are making significant decisions.

Our own principles act as a compass that always points to our true north.

I can tell people about my financial principles such as living below our meansinvesting prudently, and eliminating debt.   I can encourage others to adopt them as their own because I believe in them and because I get to see what happens when people break them.  That’s how I created the principles in the first place.  They are based on my own experiences working with people and seeing what works and what doesn’t.

The wonderful part of my job is that I get to see what happens financially behind the front doors and behind the closed curtains of households.  I get to see the successes and the failures.  Those experiences have shaped me over the past 25 years because I take measures to mimic the successful components of others into my own life and this also allows me to eliminate those things that have destroyed or created problems for others.

Now hear me out on this next part because it does entail a bit of psychology and human behavior.  Sometimes when people call an advisor and say, “I need money to buy something that is going to make me happy” and the advisor says, “I don’t think that is a good idea,” the person immediately jumps to the mindset that the advisor is doing it for their own self-interest or eliminating all of the happiness and fun in life.  These are not my true intentions.  My true intentions are to get my clients to experience the most joy and happiness in their lives using the financial resources that they have available to them.

The principle of debt elimination is something that most people get confused about because of the way the human brain is wired.  The human brain is wired in such a way that we become the person that we are based on all of the habits and behaviors that we previously exhibited.

We become hardwired with patterns that re-create the same CHOICES that lead to the same EXPERIENCES, which lead to the same FEELINGS and EMOTIONS.

Those all add up to our personality and our “self” as a person.

None of us have the luxury of living multiple lives at the same time and then going back and reliving the one that turned out the best and happiest.  That is not possible.  Most people in our society have financial behaviors that revolve around consuming and spending at a pace that is most sustainable by using debt.  We start out early in life with minimal debt and over time we just keep piling it on, never really eliminating it but more managing it at what we think are tolerable levels.

Debt is nothing more than front running income to buy something right now rather than waiting for it when we have actually earned the money.

Debt ends up making us pay more for goods and services because of the interest expense and the lost opportunity cost with the capital that was spent on prior purchases.

Since we are not able to live multiple lives, most people will never experience the life of being debt free and truly financially independent.  They can’t because they are hardwired to keep re-creating the same financial behaviors which have been based on the previous use of debt and the life of just going from one debt payment to the next and staying on that debt merry go round forever.

I can tell you with certainty that people are much happier and remarkably less stressed without debt once they get there.  When I help people pay off their homes, I can tell you what they don’t say afterwards.  They don’t say, “Kindzia you dumb-dumb, I really miss making those monthly mortgage payments.  I miss getting the statements in the mail.  I miss having to constantly work so hard to come up with that extra income to keep paying for things that I bought.  I miss knowing that if I stop making the payments, the bank will come and take away my house and cars.”  They don’t say this.

Debt elimination does lead to a conundrum of sorts.  We are either going to experience discomfort due to using discipline that is required to pay off the debt or we are going to experience discomfort due to regret.  But one way or another, we are going to feel some discomfort in life.  So, we must choose.  Is it going to be from acting with discipline or is it going to be from living with regret?  I can tell you what leads to longer term happiness and that is by far discipline.

An important step for me is to get people to imagine what it would be like to be debt free.  This requires some visualization because I’m asking someone to imagine a scenario that they have never really experienced for themselves first hand.  They don’t really know how things would be different because they have never even thought about debt free as a possibility.  They have no idea how things could be different.  People are hardwired to their past.  People with debt and high housing costs relative to their net worth are only used to living in that state of being.  They have never experienced the alternatives of being debt free.  They don’t even know what those alternatives are or what the possibilities are in their future life if they were to become debt free.

They also never challenge themselves and wonder why they are constantly striving for more acquisitions to be happy but always seem as if they just need something else to be content.  This results in the person experiencing some inner conflict that they cannot put their finger on.

That is a difficult part of being an advisor.  I cannot make someone feel what it is like to live debt free unless they are debt free.  But they have never been debt free.  Most people have always had high debt levels and they are so used to having so much of their paycheck going towards fixed costs that they don’t really know anything else.

They are running debt software that keeps repeating and they are hardwired to keep running that same software.

One exercise that I try and get people to do and encourage you to do is to imagine the different kinds of experiences that you could have if you no longer had all of those debt service payments.  Make a list of things that you enjoy doing.  Now image having the money that has been going to debt payments and using it on things that you enjoy or perhaps on entirely new experiences.  Imagine spending the money on new hobbies, new trips, new adventures, new restaurants and enjoying the new time on your hands.

What people don’t realize when they have these debt burdens are all of the possibilities that they pass up on.  They don’t even know that these possibilities exist because they never gave themselves a chance to experience those things.

When I tell people to get out of debt, it’s because I want them to live a life filled with all kinds of new possibilities.  I want them to be happier.  They want to be happier as well, they just lack the perspective I have because they don’t get to see as many situations as I have seen regarding the use of debt.

  • I get to see people live much happier lives, sleep better every night, reduce their daily stress which all leads to better health just by being debt free and do you know what I’ve concluded?  That it is better.

  • I get to see people control their time more when they are debt free and do you know what I’ve concluded? That it is better.

  • I get to see people enjoy new experiences, pursue new hobbies, meet new people, and spend money in new ways and do you know what I’ve concluded? That it is better.

Most people don’t know what they don’t know and certainly can’t see all of these possibilities because it isn’t even in their mindset.  They tend to just keep repeating their current life over and over again in a rut that deep down just doesn’t feel exactly right which is why they keep pursuing other material things to add to the collection (along with more debt).

People will stay conflicted with this concept because they start to grasp some of the upside of being debt free, but they revert back to the familiar which is usually along the lines of, “That debt free thing sounds great.  I’ll start on that as soon as I buy this item with more debt.  Because then I will be happy.”  But as we know it doesn’t work like that because throughout their lives, they have made so many past purchases yet never evolved to the next level.  They don’t really live by the principle of eliminating debt.  To them, that’s just a good idea to live by starting tomorrow or perhaps the next day.  Rather, they will keep making the same choices based on the same habits which will lead to the same behaviors which lead to the same experiences and result in the same feelings and emotions.  They never break out of the cycle.

Finally, I can take two paths with clients.   I can shrug my shoulders and say, “Who cares.  It’s not my money and it’s not my life.”  I could let that person keep repeating the same life experiences or I could take another path which is to lobby hard, to lead by example, to persuade them, and tell them with confidence that there are additional possibilities that are out there that lead to wonderful things.  But the only way to experience those wonderful things is to choose that alternative debt free path which is unfamiliar and uncertain and provides discomfort when applying the discipline.

I know from experience that those who reach the alternative are glad that they did it.

Good habits lead to good behaviors.  Good behaviors lead to good decisions.  Good decisions lead to a good life.  Live by principles and choose wisely.

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These are the EXACT same steps I used to PERMANENTLY get rid of my mortgage, student loans, credit card debt, and auto loan debt.

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