The Secret Behind the Curtain

We recently introduced our kids to The Wizard of Oz. One of my favorite scenes is when the great and powerful Oz is outed. Until that moment, he's a larger-than-life figure with great power and status. However, there's a moment when Dorothy and her posse get a glimpse of what's actually going on behind the curtain. Turns out, Oz was leveraging technology to make himself look bigger and more powerful than he actually was.

"Travis, how do people afford to live like this?!?!" This is a question that I get at least once per week. I've been asked this question for years, but it's probably ramped up 4-fold in the last 12-18 months. At the heart of the question is a mix of frustration, bewilderment, and voyeurism. Regular people trying to navigate this difficult financial season can't wrap their heads around how everyone around them are buying nice cars, upgrading their houses, affording elaborate trips, and revamping their wardrobes. I often wonder the same thing as I look around and see the madness unfolding in every direction. How in the world do people afford this? Are they harvesting cash from their money tree? Do they all have ridiculously high-paying jobs? Do they have tens of thousands of cash saved in the bank or under their mattress? No, no, and no.

The answer is usually relatively simple. You want in on the secret? I'll tell you if you promise not to tell anyone. **Ok, this is my whisper voice.** Debt. Debt is the fuel bringing all this action to life. Debt is the secret sauce.

It's kinda like the great and powerful Oz. From the outside, it seems like everyone around us is freaking loaded. Unlimited money to do whatever they want. Cars, houses, trips, clothes.....you name it! Also, like Oz, they are using leverage to make themselves seem richer and more successful than they actually are. Except their leverage isn't technology.....it's debt. Debt allows people to afford things they'd never be able to afford otherwise. Debt is the key to (temporarily) unlocking all of life's trappings.

I insert the word "temporarily" because it's just that, temporary. At some point, the music has to stop. We've reached a point in our culture where credit card, auto, mortgage, and student loan debt are nearing all-time highs. The ride up the mountain is pretty fun while ratcheting up the debt. It's exciting, fun, and seemingly sexy. However, there's only so much slack available before it's time to pay the piper. That time is upon us.

People have enjoyed the ride for a good decade, and now they are about to be exposed like Oz was. I've seen behind many curtains over the years. Some of the best-looking curtains contain the ugliest messes behind them.

The curtain you're most jealous of? You probably don't want what's actually behind it. All is not as it appears. Remember, the shinier the curtain, the harder it's trying to hide what's behind it.

Recovering Alcoholics Don’t Live Above Bars

Over the past few weeks, I've spent time with several friends who are celebrating various sobriety milestones. Drugs, alcohol, and tobacco, to name a few. Each of their stories is remarkable in its own way. They involve pain, consequences, and redemption. Woven through each of these amazing stories are some general truths. One such truth is that the disease is never entirely gone. Each day, they risk relapsing. To combat this, everyone must set clear and non-negotiable boundaries about what they do, where they go, and who they interact with. Or, as one close friend in recovery puts it, "Recovering alcoholics don't live above bars." 

Let's shift gears to one of my clients. This couple spent the majority of their adult lives deeply in debt. They were especially susceptible to credit cards. However, after having their life, work, and marriage nearly ruined, they had enough. Rock bottom was hit, and I was called into the situation. 

What this couple did was nothing short of remarkable. They committed to a plan, practiced discipline, executed with aggression, and slowly (but surely) paid off every single penny of debt. Just the credit card debt alone was $75,000. Crazy, I know! They achieved a massive accomplishment, and their life transformed in many ways. 

Amid their debt payoff journey, I repeatedly begged them to cancel their credit cards. It was a point of contention between us, but I would gladly die on that hill. I'm not usually this firm with clients, but I could feel the risk. Here's what happened. While I was pleading with them to cancel the credit cards, they had other voices speaking into their life:

• "You'll be fine if you're just responsible with them."

• "Don't pass up on the free points."

• "Just pay them off each month." 

• "Just keep the lower interest rate ones."

• "If you cancel them, it will hurt your credit score."

Perhaps you know where this is headed. This couple continued to carry these little pieces of plastic with them. The same pieces of plastic that nearly ruined their life and sabotaged their marriage. The same little cards that caused so much pain and suffering. They were the equivalent of recovering alcoholics living above a bar. 

About 18 months after paying off all that debt, they hit a rough patch. Stress in the marriage, a few minor emergencies, and a few desires that needed to be scratched. Within months, they ran their credit cards back up to $50,000. Utter devastation. There's no happy ending here.....yet. That may come in the future, but today, it looks like a lot of pain, suffering, and relational stress. 

What's the takeaway? I think it's two-fold. First, we need to identify our weaknesses and protect ourselves from them. That may mean canceling credit cards, freezing our credit, or avoiding stores (or websites) that overly tempt us. Second, love people enough to be honest with them. This couple's loved ones absolutely screwed them. Let's be better for the people we love! They deserve it.

Celebrate the Wins

Like millions of Americans, this one particular couple has a ton of debt. Frankly, it feels overwhelming. It's the type of debt that feels suffocating and can paralyze you from even knowing where to begin.

However, unlike millions of Americans, this couple has a plan. More importantly, they have the conviction that their plan can and will work. One year in, and so far so good. They've already paid off a half dozen small debts and are moving on to some larger ones.

They are on a challenging journey, no doubt. Nothing about paying off a ton of debt is easy, which is why very few families actually do it. It takes discipline, patience, delayed gratification, and a whole lot of motivation.

Whenever someone tackles this sort of endeavor, I always give one particular tip. Celebrate the wins. All the wins. When you pay off a small debt, celebrate small. When you pay off a large debt, celebrate large. But always celebrate. Maybe it's dinner at a nice restaurant. Maybe it's a weekend away. Maybe it's a trip to the spa. Maybe it's ______ (you fill in the blank). But always celebrate!

It sounds counter-intuitive to spend money on wants when trying to pay off debt, but we need to zoom out and look at the big picture. If we stay 100% laser-focused and never celebrate, there's a high likelihood we'll burn out and possibly quit. This is an arduous journey, after all. Those little celebrations can be the refresher we need to keep fighting.

I think back to when Sarah and I were on our $236,000 debt payoff journey. It took us 4.5 years to achieve it. We celebrated every single win. If we hadn't, one of us would have broken down on the journey. The most noteworthy celebration was an amazing trip to Europe. Weird, I know. We were about 12 months away from completing our debt payoff journey, but we were exhausted. We were fighting so aggressively that we were practically burning ourselves out. That's when we decided to take drastic measures.

What ensued was a two-week trip to five countries, where we created lifelong memories. It set us back by about two months in our debt payoff journey, but it's just what we needed. One could argue we should have gotten out of debt first, but the counter-argument is that we might not have made it without that break. So, we celebrated!

This is yet another example of why money is NEVER about money. It's always about something bigger. If Sarah and I had stuck by the pure math and made it solely about money, we might have burned out and failed at our mission. Instead, we took this trip, made unforgettable memories, and successfully completed our $236,000 journey just over a year later. I will always love and cherish that story.

Always celebrate those wins! It may be the make-or-break in achieving your goals....and it's fun!

___ Months For the Rest of Your Life

Though I share a lot of stories on this blog and on the podcast, not all stories are created equal. Some stick with me, or dare I say, haunt me. One such story involves a couple I met with nearly a decade ago. This couple had been struggling with debt for the entirety of their marriage. You could cut the tension with a knife. The financial stress of the debt altered their life decisions and impaired their marriage. In short, they were miserable.

By the end of the meeting, I had created a clear, simple, and achievable plan to get them debt-free in about 18 months. It wouldn't be easy, but I knew they could do it. I assumed they would be excited about the prospect of freeing themselves from these financial handcuffs, but there was a silence in the room. After a few moments, the wife chimes in, "I'm not giving up 18 months of my life." "It's 18 months for the rest of your life! You'll have more than 50 years on the other side of the debt," I replied. She simply wasn't having it. They weren't going to cut back on their lifestyle.....period. They eventually walked out of the room, discouraged and defeated.

Five or six years later, I ran into them in public. It was the first time we had a real conversation since they left that meeting. When I asked them how things were going, they opened up about how things had only worsened. Not only had they not freed themselves from the debt, but they were in deeper and even more miserable. They both hated their jobs and felt stuck in many areas of life. They didn't want to "give up" 18 months of their life, but what they were subjecting themselves to was a far worse sentence than a little sacrifice and discipline for 1.5 years. I think about them a lot.

I was reminded of them a few nights ago when meeting an awesome young couple. This couple also has a bunch of debt. It feels intense, overwhelming, and life-altering. However, there's a different kind of energy about them. They are approaching it with determined excitement. When I said, "It's ____ months for the rest of your life," they responded with genuine excitement. What they are about to do will be so simple, yet so hard. But they are up for the challenge. Please pray for this young couple and their journey. I have a feeling they are about to write an amazing story. It will be a grind for this season of life, but that good work will unlock the next 60+ years in a way they can't yet understand. I'm grateful to play a small role in their journey.

Encourage the young people in your life. They need it, and they deserve it. They aren't victims of circumstance. They aren't condemned to a less-than-life. They aren't slated for failure. They just need to know it's possible.

When Responsibilities Collide

As expected, I received a ton of pushback after my credit card post a few days ago. The number one response I get whenever I discuss this topic is the following: people just need to be responsible with credit cards. Another version: Credit cards can be a useful and beneficial tool IF they are used responsibly. What does it mean to be "responsible?" Here's the definition:

Responsible: having an obligation to do something, or having control over or care for someone, as part of one's job or role.

This makes a lot of sense. When we use a credit card, we need to be responsible by making payments on time and paying back what we've borrowed. We have an obligation to do so. I'm tracking. I believe the vast majority of Americans understand this responsibility. When people pull out the plastic and swipe it, they are well aware of the obligations and responsibilities at play. 

Life is full of responsibilities. Paying the credit card bill is a biggie. There are a bunch of other critical responsibilities on the table as well:

• Pay the mortgage/rent

• Put groceries on the table

• Clothe our growing kids

• Maintain and fuel our vehicles

• Health insurance and co-pays for medical services

• Ensure we have working utilities such as water and electricity

So many responsibilities!

When life is going well, we find the balance between the many obligations in our household. Shelton, food, clothing, transportation, medical care, and a long list of other needs (plus hopefully some wants). 

But what happens when life doesn't go smoothly? What happens when the car breaks down and we need to repair it? What happens when a kid gets sick or breaks an arm? What happens when the furnace goes out and it's too cold in our house? What happens when we lose a job and the income associated with it?

The moment we face tensions in life, our responsibilities collide. People don't get behind on their credit card bills because they are being irresponsible. Rather, it's because they ARE trying to be responsible. If we have the choice between eating and not eating, we're pulling that credit card out. If the furnace is broken and our family is getting cold, we're using whatever means possible to get it working again. If the car breaks down and it's the only way we're able to get ourselves to work, you better believe we're getting that repair done. If the landlord or mortgage company starts asking for their monthly payment (or else!), we sure as heck will step up and make that payment. 

In those moments, we have choices to make. Difficult, painful, and often embarrassing choices. And as I always say, credit cards are the path of least resistance. Not to be irresponsible with debt, but to be responsible for providing our family's basic needs. 

Does that context change your perspective? I hope so. But if not, I still love you and am grateful for your willingness to read each day. 

The Path of Least Resistance

As a kid, I was fascinated by the section in science class where they showed images of how rivers changed shape over time. As sediment is carried and eventually dropped, the speed and direction of the water flow shifts, carving a different path into the earth. The water constantly follows the path of least resistance.

Human behavior is much the same way. Whenever we have an array of options in front of us, we're likely to select the path of least resistance. We can get out of bed, drive to the gym, and get a workout in......or just stay in bed for another hour. The path of least resistance. We can prepare lunch the night before work.....or we can just grab a sandwich at the deli next to our office. The path of least resistance.

This is one of the many reasons I suggest clients cancel their credit cards. This suggestion is often met with eye-rolling and a staunch defense that includes something like "I'm always responsible with it." These comments are typically combined with defenses revolving around the benefit of points, the fact they pay them off every month, the perception they are safer, and the fact they are building credit.

One problem. Eventually, the path of least resistance will come into play. Two families in my life are living this reality as we speak. I've suggested for years that both these families cancel their credit cards. One family doesn't even use them....hasn't for years. It's "just in case," and that's what I'm afraid of.

As I always say, credit cards seem like our friend.....until they become our worst nightmare. Fast forward a few years, and both families are facing financial challenges. It's a combination of medical, auto, house, and job-related situations. Both of these families handle their money relatively well. They've made good decisions and are going in the right direction. One problem, though. They still have active credit cards. Just like the sediment in rivers, financial challenges will cause us to seek the path of least resistance. After all, pain hurts. Stress sucks. Tension puts a strain on relationships. There's a simple way around all that. It's the path of least resistance. Out comes the credit card.

We're going to use it just this one time, though. Well, maybe just the things we need. Then it shifts to putting everything on there because seeing our savings dwindling is scary. But just this month. Next month we'll get on top of things and back to normal. Except the path of least resistance didn't actually make this better. It just dropped more sediment, causing us to push deeper into the path of least resistance. Fast forward a few months, and our reality looks much different. We went from the family who said, "credit cards are great if we use them responsibly," to another statistic. Tens of thousands of dollars in expensive debt, in the snap of your fingers.

My heart breaks for what these families are now dealing with.