Jan 31 2008

That guy is ‘drowning in debt’ … are you?


Have you seen this story in the LA Times?

I don’t know why Nathan Drake is smiling. His spending is out of control. It probably cost him his first marriage, and I don’t know if he realizes just how serious it is.

According to the story, Drake is spending $2,000 per month MORE than he makes. It’s easy to see how that will quickly become a problem.

He’s considering filing for bankruptcy, but the thing is, he’s not bankrupt. And, unless he changes his mentality, he will repeat this pattern of behavior.

Sure, he only nets $36,000 per year, and is in debt by about $52,000. That’s a mess, but it’s fixable, don’t you think?

From the story: "Only recently has frugality entered Drake’s budget. He moved from San Dimas to Whittier to cut his commute and save on gas. Because most of his cellphone use is for work, his employer agreed to cover his cellphone bills. And he and Jodi no longer dine out on crab legs."

Glad to hear they’re taking it easy on their dining.

He spends about $7,000 per year to maintain a pickup truck–a truck he "needs" so he can tow his share of a boat.


How about he sells the truck and sells his share of the boat? Clearly, he can’t afford either–so if he gives up both things (and gets a cheaper car and if he absolutely has to go boating…try renting one for a day)–he’ll quickly be able to get out of that mess.

That and if he stops using his credit cards.

That’s it! Not so hard, right?

Well, actually, it is hard.

It’s hard to change from a spendthrift mentality to a frugal one.

You’ll have to change your entire outlook on money, and life, actually.

He’ll have to go from thinking, "I deserve to have a boat and a truck to tow it" to "I deserve to be debt-free." Period.

He and his wife look like they’re taking some steps to improve their situation. After all, they’re seeing debt counselors and even agreed to be featured in the LA Times. That’s really putting yourself out there, and that takes guts.

I hope that he’ll be able to turn that ship boat around (and sell it, though he doesn’t want to).

Sometimes, people will tell me, "I want to be frugal. I need to be–we’re living on one income and I have a lot of kids." But nothing changes. It’s just words that they say. One of those things that they need to do someday (some other day, though, not today).

What are you waiting for?

Are you waiting for a pay raise? Income tax refund? Lotto winnings?

Don’t wait for those things. You’ll end up spending the money before you even get it, and you’ll just be further in the hole, even though you’ll be bringing in more money.

Instead, make a plan for every dollar. Make a tangible plan to change your ways and get out of debt. It won’t be easy. If you’re heavily in debt, you’ll have to sacrifice for awhile.

But won’t it be worth it in the end? And, isn’t that feeling, that debt-free status, worth a whole lot more than some silly boat?

Posted under Uncategorized | 15 Comments »

15 Responses to “That guy is ‘drowning in debt’ … are you?”

  1. I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Tim Ramsey

  2. Amen! Excellent post!

  3. We made our last mortgage payment in October, 2003, and have been debt free ever since.

    It’s not happily ever after, but yes that feeling is priceless.

    And losing the debt is just the start, for then you can save in a meaningful way.

    Thanks for an excellent post.

  4. This guy is not giving up his boat. You’d think someone who is that deep in a hole will take drastic actions. Not him, he’ll continue boating along the river. That’s crazy.

  5. Thanks, Tim!

  6. He’ll definitely have to see debt-free as some kind of status symbol. And as something enjoyable.

    At least he’s got a good rent, under $1000/month. That’s much better than having a mortgage or a more expensive place. So rent is less than $12k per year.

    I do wonder how he’s going to handle paying it all back. I mean, the majority is on credit cards. But I think once he gets in the mindset, he’ll find a way.

  7. I read this story earlier and I talked to my DH about it on my lunch break. Sometimes we stress over our money situation and how things are going, but I keep pointing out to him the positives. I am *so* glad that we never got into this trap. Well, DH did to some extent before I knew him, but he limited himself to squandering what he had and not what he didn’t have, at least. We have our mortgage, but never carry credit card debt and drive beater cars so we don’t have to worry about car payments and high insurance rates.

  8. I hate the whole “I deserve it” mentality. Even if you deserve something, if you can’t afford it, that should be the end of it. I think I deserve a trip to Hawaii, too, but unless I save my money, I won’t be taking that trip.

    You’re absolutely right that bankruptcy won’t help him unless he changes his thinking. I really hope he does.

    I think it’s time for a frugal revolution! We need to make frugality fashionable! :)

  9. I give him props for putting himself out there. He had to know people would jump on his back–and it has to be a little embarrassing to go public with that much debt. That said, you’re totally right. He’ll have to WANT to be debt free and want that more than the stuff he has. He and his wife are so young, so they can do this and still plan for retirement, but they’ll have to buckle down.

    great post!

  10. Kacie,

    A very interesting post indeed! One shouldn’t wait for a raise in income or a tax rebate or the like…you never know when you’ll be be in debts or when you’ll need money..money is so valuable that before one spends it extravagantly, he needs to give it a thought that one may need it someday desperately.

    Quite true that habits don’t change in a day. So, converting from being a spendthrift to frugal mentality isn’t that easy. The best thing therefore is to plan and budget so that while you earn, you don’t forget to save.

  11. I think some people just can’t get into the right mindset needed to get out of debt. Me, I want it so bad! I want to get rid of these stupid student loans. I watch Dave Ramsey and think I want to call in and scream “I’m debt free.”

    I agree though, it takes guts to post your situation out there.

  12. The thing about the “I deserve it” mentality, is – who doesn’t? Like, who “deserves” to live in slums? Who “deserves” to not have shoes? We are so blessed in this country and we don’t even appreciate it, we just always clamor for more and more. Greedy!

    ;) Sorry, went on a little tangent there!

  13. Frugality is becoming fashionable especially among people who are drowning in debt. Unfortunately they are espousing this lifestyle late and are forced into it, rather than embarking on the journey by choice.

  14. Great post, Kacie. You and I must be on the same wavelength. The day after you posted this, I wrote a very similar post, which Lynnae featured in her link roundup. In fact, that’s how I found your post!

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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