The Financial Emergency

I have been doing a lot of reading Mr Money Mustache of late (go check it out, it's an amazing blog) and he said something that struck a chord with me. In his column, he occasionally has a letter from someone wanting advice on their money situation, and one particular guy had listed a monthly spend on gym membership and also that he had college debt. He wasn't drowning, or struggling to eat, but life was becoming financially painful.

I'm not going to touch on the relative merits of a gym membership here (I can think of better ways to get people angry really quickly!) or even on college debt, which is an Evil, Evil Thing™. What I liked about MMM's evaluation was his declaration at the end. Essentially he said: You have debts; this is an emergency!

Wait, what... emergency? Really?

Yeah, really. Think how we might weigh up our spending if we actually kept that concept in mind. As MMM noted, you don't spend on non-essentials when you have a financial emergency. And he's right - most of us, for example, would not buy a takeaway dinner while knowing that we might struggle to pay the rent later in the month. Struggling with the rent is a Financial Emergency.

But for some reason, we treat debt differently. Even well-managed debt, where we are paying off the agreed amounts, like a car loan or college debts, or that blasted credit card (like, don't worry, we'll easily cover the minimum).

Insert siren here. In fact, I think I will.

This might be news to people, but having debt costs money. It's called interest. Paying interest is poo. It's the pits. It's something we Don't Want To Do, and thus, having to do that shit? It's an emergency. While we have debts incurring interest, that one pound cheeseburger is actually a one pound fifty cheeseburger if we spend that money instead of attacking a debt. Even interest-free or interest-deferred debt costs us; in stress when thinking about it, in delaying us from doing things, in hurting our credit rating.

Antler dancing. Start them young.

We really should be treating all non-mortgage debt as an emergency. And by that I don't mean we should be doing antler dancing, I mean stop buying things. Or as MMM would say, next time you want to buy something that isn't necessary, punch yourself in the face then walk away. Put the money onto your debt and the debt will be gone faster, along with the interest charges, freeing you up to waste more of your money on whatever you please.

Or more likely - if you've practised not spending for quite a while - to free you to work fewer hours and do whatever you please with all your glorious, glorious free time.