Debt Is the Enemy! This Is How to Stay Out of It
Living Spartan Sparse
COVID-19 has changed us. It’s shown us the value of family, as we are forced into closer quarters with each other. It’s made clear to us the importance of keeping our bodies healthy and our minds calm. It's also highlighted the contents of our bank account, for better or worse.
Long before King Leonidas’ 300 battle at Thermopylae, there was a father of Sparta laws, named Lycurgus. As per Lycurgus laws, each citizen of Sparta was commanded to live without debt. "Falling into a position of dependence involved a substantial loss of social status,” wrote Paul Christesen, a professor of ancient Greek history at Dartmouth College.
I know it’s not easy to hear, because so many of us have it, but debt is the enemy! Even before the pandemic, debt was crushing us as a whole, and as individuals. And now, the pandemic has poured salt in the open wound. Like many, I’ve seen this before. This kind of economic injury is far from new. I watched as my father lost everything in the 1987 crash. Then, in 1990, it was the Gulf War recession. Fast forward a decade and it was September 11th and the dot-com bubble. In 2007, it was the Great Recession. And now, the COVID-19 pandemic has impacted every person and crushed countless industries.
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Looking at how you manage your money can be uncomfortable, but it's absolutely critical. Take a look at your ecosystem, your non-negotiables, and the things you need, not the things you want. Ask yourself: What’s essential? Spend money only on that. Ruthlessly slice all other expenses. My ecosystem is my health, my wife and kids, and building 100 million unbreakable Spartans. This is where I spend money. ONLY here. Everything else is a want, not a need.
When the pandemic hit in late February, it felt like I was living a nightmare every day. I had to lay off 80 percent of my global staff. That was real shit. Families and good people would suffer, but it was what was needed to keep Spartan alive. Was it what I wanted? Absolutely not. But the need trumped the want. I knew that holding onto cash was crucial, and so expenses were cut.
The Big Reveal
In 2016, the Federal Reserve Board conducted a survey to measure the health of Americans’ finances. The question given to respondents: How would you pay for a $400 emergency?
The answer: 47 percent of them said that they would borrow the money or sell something. The stunning reveal? They did not even have $400 in savings.
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Our heavy debt load is the symptom of a much larger issue, one that we are all too familiar with: the pervasive desire for instant gratification. Jorge Le Man, a Brazilian billionaire, says that debt and bills are like fingernails. "They keep growing," he says. "You’ve got to cut them.” Americans want, and they want it now, so the idea of saving money and waiting is a nonstarter. We lost our tolerance for patience when we lost the busy signal. Now, it’s all access, all the time.
Improve Your Money Management Skills
There are only two ways to improve your monetary position: Earn more and spend less.
The formula for improving your money management skills isn’t rocket science. In fact, it’s easy math. Earn more and spend less! Finance guru Dave Ramsey suggests an old school method of getting by without piling on debt. Two words: Pay cash.
This pandemic has left us chock-full of lessons. One of them is that savings are important! You need a nest egg built up. Think about starting your savings account like you would a training program or a race. Start now and with something small and realistic, even if it’s just 50 cents each week. And go old school if you need to, with a literal piggy bank. Don’t make that money easily accessible once you put it away.
Also, check your ego. Don’t waste your hard-earned money on material items just to prove to someone that you’re working hard. How much you make is nobody's business. The sole purpose of making money is to live. If you’re spending it to somehow show your own worth and value, you’ll never feel good enough. So stop caring about what other people think, save your money, and have security for when shit gets bad.