A Life Without Debt: Learning to Live With Fear

A debt free friend of mine came to me this week with an interesting problem. He’s recently been laid off from his job and is living on his (not insubstantial) emergency fund and unemployment while he looks for work. By his own admission he has enough in various savings products to last him about five years at his current standard of living, even if he has to buy his own health insurance. With no debt, a reduced standard of living, and careful budgeting he could conceivably hold out for seven or eight years. The field he works in is in high demand right now, so there’s no reason he won’t have a job again within just a few months. It sounds like an enviable situation to be in,
especially in this economy.

“But I’m terrified,” he said.

“Of what?” I asked. I tried to explain to him just how lucky he was (comparatively) and how little he had to be afraid of.

“I could lose it all.”

“You’re not going to lose it all,” I said. “Yes, you may have to dip into your savings for a while but you’re debt free, you don’t live an extravagant lifestyle, and you have so much saved you could almost make it to your retirement and then you could start tapping those investments. You’re going to be fine.”

“I’m still terrified. When I had debt and lived paycheck to paycheck, I wasn’t this scared when bad things happened. I guess because back then things were so bad and I had nothing to lose, I just figured, ‘What’s one more disaster.’ But now I’m afraid of losing it all and having to go back to that way of life.”

We talked for a bit more and I think I managed to convince him that he wasn’t in danger of having to live in a box on the street and panhandle for cash. However, the more we talked I recognized some of his fear in myself and in other debt free people I know.

Janis Joplin sang, “Freedom’s just another word for nothing left to lose,” but I don’t think she was speaking of freedom from debt. As freeing as a life without debt can be, it can also spark some crazy fears. When you’re debt free and you’ve spent years avoiding debt and amassing savings, the slightest threat to that security, no matter how imagined it might be, can set you off. Suddenly you have everything to lose. You start worrying that you might burn through your savings or (eek) have to take on some debt to get by. You worry over every cent that has to go out, even if you have enough money to stay afloat for years.

By contrast, when you’re living paycheck to paycheck and wallowing in debt, things can’t really get a lot worse financially. So you take another ding on the credit report. So you have another collector calling. In this situation I think there’s a tendency, as in the case of my friend, to just say, “Well, what’s one more problem?” when a layoff happens or a medical issue pushes you further into debt. Not that this is the case for everyone; I know plenty of people who view any extra problem as a big event. But for many there is a thought that it can’t get much worse, so why worry about it.

It’s not that the debt free live in debilitating fear. However, I know that I react differently or more strongly (or in ways that don’t make a lot of sense) to perceived threats than do many of my peers. If word of a layoff starts to spread, I’m more apt to shut down all spending well before the layoff happens, just in case. Many of my peers who are drowning in debt, on the other hand, will go on a spending binge while they still have a job. Neither approach makes any sense if you look at it rationally. However, I am the one in the better position. I don’t “have to” freak out and shut down all spending, yet I do it because I’m afraid of losing what I’ve worked so hard to build. When there is an emergency that requires me to dip into my savings, I magnify that emergency to the point where suddenly I am broke and living on credit cards. It makes no sense because it would have to be all out Armageddon before that happened, but I know exactly what I stand to lose and it worries me.

People think that when you’re debt free you don’t have to worry. That’s just not true. Your worries shift and instead of worrying about getting out of debt, you start to worry about protecting the life you worked so hard to build. We debt free people know exactly how fortunate we are and what we are working so hard to avoid that the thought of having to revert to a debt laden lifestyle can make us almost ill. When you have a lot to lose, you can have a lot of fear. Part of being debt free is learning to manage that fear and to think rationally when things go awry. I’m not fully there, yet, but I am working on it.

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12 Responses to A Life Without Debt: Learning to Live With Fear

  1. Elisabeth says:

    My response has been a form of hoarding. Oh, not like television, but one person doesn’t need 20 tubes of toothpaste just because its free. Or, 25 bottles of shampoo(free). Or 100 rolls of tp. I now keep about 6mo to a year supply and give away the rest as I rotate products. I can tell my fear level by how much I accummulate and how hard it is to give away. I call it preparedness but really past a certain point it is fear.

  2. Joan says:

    I don’t think I’ve ever known anyone who had that, “What’s one more disaster?” attitude. For me, having some savings means I feel much less worry and fear. It is definitely the more peaceful position.

  3. cm says:

    Your friend is irrationally fearful, and he should not be used as an example of normal thoughts of the debt-free.

    Yes, sure, a little concern over protecting one’s money is normal. We can all get twinges of mild fear when we hear about layoffs or the risk of inflation or whatever. But when the cushion between where we are now and indigency is as large as your friends, being terrified is completely irrational, to the point where he should get help with it.

  4. Rick says:

    I have friends that react the same way. My friends that are in debt don’t seem to worry about the economy. They go along and buy things as if there is no recession.
    On the other hand, my friends that are sitting on ton of cash are shaking in their boots.
    I tell tham that having a cash cushion should make them feel more secure, not afraid of a finacial disaster.

  5. NJDebbie says:

    I know exactly how your friend feels. The thought of having to live off our savings terrifies, me but comforts me at the same time. It’s a weird situation; almost surreal.

  6. Kevin says:

    Good point on having “something” to lose. What your friend needs to work on is passive income. It’s one thing to have savings to dip into (this guy is already a step above many people), but when you have passive income to take care of you, then you TRULY have broken free of the rat race. This is my own personal dream as well…

    People with no wealth or income have pseudo-freedom (nothing left to lose). People with wealth but no passive income become misers. People with both wealth and passive income … are the ones that are truly free.

  7. Kevin says:

    the love of money is the root of all evil-Jesus
    money isnt evil but the love of it is

  8. Gail says:

    A coworker I used to have went on a complete binge, and I’m sure completely tapped out all her credit cards, within a month or two of filing for bancruptcy several years ago. I think her attitude was she might as well get it while she could as she wouldn’t have to pay it back. While she wore brand new clothes all summer (from the spree) I got through the summer with the same old clothes, and the next summer and the summer after that, etc. in those same old clothes. At this point she has probably gotten herself to the point of another banctuptcy while hubby and I make conscious choices to handle what we need to on as much a cash basis as possible, so what would be scarey for me is having to put anything on a credit card at this point as we aren’t up to debt free YET. I want to keep digging out even if it feels like a teaspoon at a time. I literally forget at times that we have money in IRAs and a mutual fund as I generally only look at the old checkbook when evaluating our position because those two items aren’t to be touched until forced to by retriement.

  9. Broken Arrow says:

    Very interesting. The guy in the article fits my thinking to some degree as well.

    Yes, I too am fearful of losing my job and having to float on my savings, but at least my fear is relative to the perceived risk at hand? In other words, I was much more fearful when I was laden with debt and little savings. If I should manage to get to a point in my life where I know the savings is extremely healthy and is able to float me for the rest of the way, my fear should hopefully subside completely….

  10. Your friend’s fear is a little irrational, but I can understand it. I listen to Dave Ramsey’s show a couple of times a week and I have noticed over the last six months that the number of calls from people who are back in debt after being out and having an emergency fund have increased. Sure, a lot of times they did something stupid. But sometimes it’s just bad luck during a bad economy.

  11. CindyM says:

    I think when your job is threatened, many things change in your mind about the future, especially for those of us who have always been diligently frugal and maybe have never been in bad debt. It is very disheartening, depressing and so hard on the ego. It stays with you even when things do turn around. I was out of work for a month last year, decided to put my house on the market and moved into a very low-rent place. I did land a good job again, feel very fortunate and hope it will last me until retirement. Who knows? My real estate agent assured me my house would go quickly. Guess what? It hasn’t and I’ll be moving back into it shortly. Yes, I jumped the gun and it hasn’t cost me much. I have emergency savings. But I have yet to stop thinking about how different I feel about the future and life in general now, though I have to say, I’d never freak out and go berserk with the charge cards no matter what happens.

  12. Larabelle says:

    I completely understand how your friend feels. In the past I lost my job and although I was in good fiscal shape I felt like the rug had been pulled out from under my feet. I had lots of doom and gloom thoughts of being destitute. It was totally irrational as I knew that God would bless me with another job (which he did) and I was working in a field which was in high demand. But I still had those feelings.

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