Escaping Debt But Not the Guilt

Picked up the phone in my above-garage office – something I almost never do. (My time there is meant to be devoted to writing fiction.)

A lady on the line first asked for K and then for K’s husband. She told me we were past-due on a cable bill.

“But we don’t have cable,” I told her, feeling a little victimized. “We don’t even own a television.”

“You have a computer, don’t you?” she asked.

“Well, sure. We’ve got a number of computers.”

“This is in reference to your Internet charges. Your account is delinquent.”

Had K missed a payment? Or was she fighting some perceived infraction by the cable company? In either case, it made me feel guilty. Not a little guilty, but like a kid caught with his hand in the cookie jar.

“Well, gee,” I stammered. “I don’t actually pay the bills.”

“Right,” she said. (I could almost see the eyes rolling.)

“I swear. I mean, I pay the bills that come to the office. Or, rather, my assistant does. Maybe you’d like to call her?”

“Let me just give you a number to call,” she said. Tell them your wife’s name and they will be able to help you make whatever adjustments are needed.”

“But I don’t need adjustments,” I pleaded. “I’m financially independent. I write books on the subject!”

“I’m sure you do,” she sighed. (Eyes rolling again.) “Just make the call, sir.” And then the dreaded dial tone.

It’s been a long time since I carried any debt. More than 20 years. Paying off my mortgage and every other monetary obligation my family had was my first financial priority after I started making a lot of money. I paid off that mortgage – it was for something like $600,000 – about two years after the day I decided to get rich. (I tell the story of what happened that day in Automatic Wealth.) Six months later, I had zero debt.

You can get rid of your debt if you want to. And you don’t have to deprive yourself to do so. I’ve always been a big spender and I’ve never been able to break that bad habit. So when I decided to get wealthy, I realized that the only way I could defeat debt was to earn a lot more than I was spending.

And that’s what I did. I quadrupled my income in 12 months. And I tripled it the following year. As my income increased 30 times, I kept on spending (in fact, I spent more than ever), but I didn’t make the mistake of increasing my spending 30 times.

By limiting my spending growth and letting my income growth ride, I was able to pay off my very significant debts in a relatively short amount of time. Since then, I have put an increasingly larger portion of my income into investments. And they, in turn, have grown in equity and produce income of their own. All this income goes back into savings.

I am still an extravagant spender by my own standards – but compared to what other people with my net worth spend, I’m a hardcore tightwad.

You can do the same, regardless of what kind of financial situation you are in now. You can enjoy the spending you are doing now … and go on to pay off your debts and create a sizeable net worth of savings.

It all depends on a single objective: making the commitment to increase your income. And not a little. Drastically.

In fact, in Message #1618, I suggested that you make this one of your New Year’s resolutions. I told you that there are two ways to go about it. And I said that you can (and should) do both at the same time: (1) Make yourself more valuable to the company you work for, and (2) supplement your salary by developing multiple streams of income.

If you want to know how to do both of those things, read Automatic Wealth.

And that will solve your financial problems forever.

But there’s another kind of problem that it’s not so easy to solve – especially if, like me, you grew up poor.

When that lady from the cable company spoke to me this morning, she made me feel horribly guilty about an overdue bill that was almost certainly a mistake. There was no logical reason for it. Yet this triggered the same feeling of worthlessness in relation to money that I had as a kid:

Your family is poor.

Poor means debt.

Debt is bad.

You are an inadequate human being.

It’s easier to get out of debt and get rich than it is to shake those deep-rooted negative thoughts about yourself when you owe money. Getting wealthy is about getting free of debt. Getting emotionally healthy is about getting free of the guilt.

If I had started working on the guilt when I started working on getting wealthy, I’d be both healthy and wealthy today. But that’s okay. I’m working on it now.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]