This post is part of The Gift of Debt Series an eight-day, multi-blogger extravaganza hosted by The Fiscal Flamingo. The series is designed to give you the permission to kick up your heels, embrace your debt with glee and look forward to finding the gold at the end of the rainbow. Follow along in the series as we tell the story of our gift and encourage you to find yours.
Yes, you read the title correctly. This is a post about the gift of debt. Now, how can anyone with debt even think it is a gift? Well, I used to be in debt. When you get out of it, you realize that debt actually gave you a gift. The gift is different for each person and I am no different. Debt gave me many things, but it also gave me a new perspective on my finances. Debt gave me the ability to enjoy hobbies again without worrying where the money was coming from.
When I was in my spending phase, I would pay for everything with my credit cards. I would continue to add to my debt balance and have no regard for how much I owed. I would go out and have fun, go on trips, and just enjoy life. It is really fun until you look at your credit card balance. After mine reached over $50,000, I realized my spending lifestyle was detrimental. I needed a change.
As I have spoke before, I went from being a spender to a saver as I paid off my debt. By the time I paid off my last credit card balance, I was all about saving money. My mindset had changed. Yes, it took four years, but I did get to the end of the tunnel. The light at the end was quite refreshing.
After I paid off my debt, I wanted to start enjoying my hobbies again. I do have many of them, but two of my favorites are hiking and working on cars. Yes, one is incredibly cheap and one is incredibly expensive. We love what we love and I am not changing.
Though I loved working on cars, I always just worked on my daily driver. If anyone who works on cars can tell you, never make changes to your daily driver. I learned that the hard way before I went to college. Long story, but important lesson learned.
A Project Vehicle
One goal of mine when I got out of debt was to buy a project vehicle. I have always been a fan of Jeep Wranglers, so that was my choice. I get to go out and four-wheel with my brother a few times a year and we always have a good time. I wanted to have a Jeep in order to take part in all of the festivities instead of just riding along. With my goal in hand, I had to start working.
Because of debt, I learned a new way of purchasing a vehicle. I could have just got another loan and worked on paying it off, but I wanted to do something a little different. I wanted to save for the vehicle.
Buying a vehicle is a lot of money, but it doesn’t stop there. When I get a project vehicle, I have to create a budget for the things that I want to do to it. When you are working on a Jeep, I need to think about lifting it, adding body protection, new gears, axles, tires, and many other aspects. It can cost a lot.
If I didn’t have debt, I would just load up the credit card and buy all of the things that I need immediately. After debt, I didn’t even think of that. I created a savings goal for each thing and would only buy those items when I saved for them. It made buying the items more rewarding. When you save for something, you enjoy it much more.
Credit Is Not Bad
Oh yes, I just said that. Another gift that debt gave me was to understand that credit and loans were not the problem, I was. I was the one causing all of the havoc on my finances. Credit cards are just tools that you can use. You choose how to use them.
For my latest project Jeep, I decided to use credit to my advantage. Yes, I used a loan to buy the car. Now, before you jump on me for this decision and how I would write about how debt changed me and then get another loan, let me explain.
The first thing I did before I bought the Jeep was to save over three times the amount of the car. I saved it up. Since I have a really good credit score, I get access to some of the best loan rates. I found that I would get an auto loan that would end up costing me very little over the life of the loan. I also realized that I would make more money in my online savings account than what the loan would cost me. So, here is what I did.
I put the cost of the Jeep into my savings account to earn the interest. I then put the same amount into my investment account that is earning me 8% per year. I then got the auto loan. With all of this, I realized that I could make money by not spending it on the Jeep upfront.
Yes, debt has given me many gifts. It has changed my mindset, but it also let me realize that you can use credit to your advantage. You just have to understand how to do it. Is it really a bad idea? I don’t think so. Why shouldn’t you use the tools to your advantage? I know that debt is scary. I have been there and done that, but I now know that you don’t have to be scared of it. You don’t have to be scared of loans or credit cards. You need to understand how to use them wisely. You change your mindset and you financial lifestyle changes. It is that simple.
So, if you have been in debt, what gift do you think debt gave you? Did it give you a better appreciation for your money? Did debt push you to make the necessary changes to your lifestyle? I want to hear from you!