‘Extreme’ Personal Finance Has Its Downsides

Most decisions in life begin with a major event.  A major event that triggers an emotion within you that moves you to do something.  A majority of decisions dealing with personal finance and debts are made when you reach the point of no return.  When you simply can’t take the situation you are in financially anymore.  It is a visceral feeling of helplessness that drives a decision to change your life.

Some people, like me, decide to dive head first into becoming debt-free.  We do as much research as humanly possible.  We read every article in existence and look at every debt-free program on the internet.  What do you think they see?  They see programs that tell you to throw all of your extra money at your debts, don’t go out to eat, live on beans and rice, etc.  These programs are known as “extreme” personal finance programs and, damn right, I was all-in when I started out.  I wanted these debts paid off and I wanted them paid off as quickly as possible.

I made my monthly budget and had it don to the dollar.  I zeroed that budget out and knew where every dollar was going.  I did have some money budgeted for eating out and some entertainment, but that never really happened.  I always felt guilty because that money should be going toward my debts.  I would turn down invitations from friends and colleagues, including my boss, to go to lunch.  I was like a bulldog with my money and the gatekeeper of the finances for my family.

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Let me tell you what the outcome of this was a few months into my debt-free journey.  Beside the fact that I was getting edgy and grumpy because I couldn’t spend any little amount of money, my family was literally ready to rebel against me.  Not that my wife didn’t want to pay the debt off.  She was definitely in this game to win, but the tight restrictions were causing almost just as much tension as the debt was.

My colleagues, boss, and friends understood my goals to a point, but they were not in the same mindset.  They just wanted me and my wife to come out with them when they went out.  It didn’t matter if we ordered filet mignon or a grilled cheese.  When I kept turning everyone down, it came off as very stand-offish.  This, subliminally, could have cost some friendships or a promotion at work if my boss was not the type of person that he is.

I also noticed that I became more obsessed with the actual idea and process of paying the debts off, then with the actual reasons of why the debt was there in the first place.  Most programs are so focused on the immediate every dollar goes to paying off debts and then investing.  Cool, I love it, but how do you live on a daily basis and change the habits you had that got you into the debt?

That is almost like going on a crash diet to lose a bunch of weight quickly.  Once you lose it, you don’t know how to eat on a daily basis.  The program was not designed to be sustainable for a lifetime.  “Extreme” personal finance helps you lose your debt “quickly”, but may not be sustainable for a lifetime.  You need to change your existing financial habits and develop new ones.  You need to change your feelings about money and how you use it.

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I am not saying that “extreme” personal finance is bad.  Used with a program that changes our lifestyle habits, it is a great tool.  That’s right, a tool.  Not a solution by itself, but a piece of the puzzle that could help you become and stay debt-free.

I would love to hear your thoughts in the comments.

  • Wow, we have so many similarities it’s not even funny lol. It’s so addicting to just want to hit the ground running and crush those goals as quickly as possible. I definitely became obsessed with paying off debt and hitting FI as i continued along my journey…. it wasn’t until recently that i realized it was more important to enjoy life now, and allow my family some breathing room.

    While i still stayed on track in my pursuit of financial freedom. Cheers man!

    • I agree. Just like everything in life, moderation seems to be key. I tend to become obsessed with things right out of the gate and that is all I want to do. All or nothing, no changes or modifications. You quickly become aware that some compromises need to be made in order to keep everyone happy and maintain your sanity. You need to balance things.

      But you still need to keep your goal in your sights. No doubt about it. Thank you so much for the comment. Love your stuff.

  • Captain DIY says:

    I am definitely one of the “dive in headfirst and get a little too obsessed” types as well, which in my experience has led to burnout and failure more often than not. I have recently made an extreme (there it is, can’t away from that word) effort to utilize the “aggregation of marginal gains” approach when attempting to implement a major life change. Or any change, really. Seems to be working so far, we’ll see.
    Anyway, great post, I really enjoyed reading it!

    • Thanks for the comment Captain! Burnout is definitely a side effect of the extreme techniques that can be used and one of the reasons some people fail to reach their goals. A major change in habits or lifestyle done quickly is difficult to maintain. I appreciate your thoughts on the subject.
      BTW, love your site. You have some great articles.

  • Sam says:

    Hey Mamm,

    That’s a really interesting take on the idea of paying down debt i.e. not going to extremes on it. I know Dave Ramsey does the whole “rice and beans…beans and rice” thing, but the reality is that it’s not always possible for people to do consistently for years.

    Everything in moderation seems to work well for most things in life 🙂

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