News Flash: Your Debt is an Emergency!!

I like to think of Mr. Money Mustache as an advanced personal finance blog.

We don’t talk about cutting up our credit cards, or clipping coupons to save $5.00 on the newest Swiffer mop, or making a budget that forces us to save 10% of our income while we devote the rest to “guilt-free spending”.

I don’t talk about my own personal battle with consumer debt and how much I struggled to get out of it, because come on, I am Mr. Effing Money Mustache. I was cleaning and ironing my five dollar bills and storing them meticulously in a photo album at age ten*, obviously I was never going to go out and spend so much on my credit card that I couldn’t pay it back at the end of the month!

This unique history and perspective allows me to see some things that are not immediately obvious to people who have been raised in the current consumer/debt society. And for all the Beginner Mustachians in attendance today, I would like to share one of these observations:

Your Debt is not something you “work on”.


Let’s illustrate what I mean with a few examples:

One time, I lent money to a friend so he could pay his university tuition. The cash came right out of my own bank account, and since I had already paid my own tuition, I had just enough left to cover my groceries and other expenses for the school year. After the loan, that left pretty much nothing, but I assumed that my friend would have the balance paid back within just a few paychecks.

I was therefore surprised when the friend proceeded to live a normal university life of partying and eating out, even during the delayed repayment process.

Everything worked out fine in the end, since this was an honorable friend, but I still learned something about society’s differing opinions about debt.

On another occasion I was visiting some friends – a married couple. The guy was showing me his new TV and video game system. As we battled on the Nintendo Wii, the wife came home from working at the part-time second job she had boldly taken to accelerate the paydown of some old personal debts.

On the way home from work, she had picked up a bottle of wine and purchased a DVD containing some episodes of a popular TV show.

This may sound like a normal Friday night to most people, but note that the purchasing of expensive beverages, DVDs, and video games was put at a higher priority than paying off the debt.

The girl thought she was taking a second job to pay down debt, but in reality her second job was going towards those wine, DVDs, and video games.

And finally, nowadays I receive emails from people who are working on developing their own Money Mustaches. They often detail income, spending, and debt situations. Often, there is a category for credit card debt. Yet these budget sketches also include amounts for entertainment, cable TV, and multiple cars.

The final straw was when I ventured out to poke around on some other personal finance sites last week. I found one that had a post from one of the authors, containing a table like this:

Mortgage: $75,000 @ 4.5% interest
Bank of America credit card: $4500 @11.9 interest
Wells Fargo credit card: $17500 @ 18.9% interest (<-we HATE this debt!)
Citibank credit card: $2900 @ 14.5% interest
We’ve really cut down on our dinners out and Brad has even started biking to work once a week to save gas in his 15MPG F-150 truck…


Do you see the glaring problems in these stories? If not, you have not yet developed the appropriate hatred for unnecessary debt. So let me spell it out for you.

The correct response to this sort of debt is,




Go back and imagine this person about one month after they got that first Bank of America credit card. They went out for dinner a few times a week and bought some shoes and a few tanks of gas in that first month, and eventually the bill came in the mail for $1125. They realized that they only had $600 in the bank, but that was OK, since the “minimum payment’ was only $75.

In the absolute worst case, it is at this moment that the emergency bell should sound, for anyone in the world. The response should be:


I just totally blew it and spent more money than I earned!

I need to fix this immediately, so obviously all spending beyond food, and getting to and from work in the cheapest way possible, is now suspended.

No, I don’t need a budget to pay back my debt, and I certainly don’t need two more credit cards.

I simply need to do zero extra spending until my debt is corrected.


Logically, it follows that even if you only wake up several credit cards later and realize that you have fucked up, the emergency applies to an even greater degree.

If you borrow even one dollar for anything other than your primary house or a profitable investment,  the very next dollar you can get your hands on should go to paying that back.

You don’t space it out all nice and casual with “monthly payments”, and you don’t have a “budget”, “entertainment allowance”,  or any other such nonsense. You don’t start a family or get yourself a dog, and you don’t go out for drinks and dinner with your friends.

There will be plenty of time for these things later, and they will feel much better when they are not set against the backdrop of Incorrect Debt Due to Error.

Don’t worry, there is nothing wrong with making errors. They are actually good things, since they help you to learn. But you learn by fixing them, rather than letting them ride.

“Sure Mr. Money Mustache”, some beginners will now say. “Of course you would say that, but I’m still less practiced than you. I still need my Starbucks Lattes and my husband likes TV sports so I can’t cancel cable. Can you please stop punching me in the face and let me adjust my consumption gradually instead of suddenly?”

Wrong Attitude!

Even if you are an absolute Beginner Consumer Sucka and your goal is still to consume the maximum amount of luxury products, you are still cheating yourself out of stuff just by running a consumer debt balance.

Every dollar you pay in interest to the credit card company is stealing dollars away that you could be using for more luxury purchases for yourself.

Those dollars are gone forever, and you’ve permanently lowered your ability to consume luxury products, for the rest of your life. Since you need those luxury products so much, you’d better get out of debt quickly so you can afford to buy more, right?

The credit card debts above are eating up over $4000 per year of your after-tax salary just due to interest payments. That’s hundreds of lattes, several pairs of shoes, thousands of miles worth of gasoline for your SUV, and even some massages at the spa and a couple of cross-country flights that you are foregoing every year.

Or, of course, once you start your Money Mustache, the interest savings could also be used to shave decades off of your mandatory working career..

And there is more good news, since this is an Advanced blog:

Your Debts Are Tiny.

I always have a little chuckle when people talk about a $10,000 debt, or even a $70,000 or $200,000 one as if it is insurmountable.

Sure, these sums of money are big when measured against the cost of groceries, and they are not sums of money to be wasted.

But this is an early retirement blog. Here we are learning how to rake together much larger sums of money to allow us to live our lives free from mandatory work. For most of us, that means somewhere between $400,000 and $1.5 million.

Beginners to Mustachianism find these sums unimaginable, but after a few years, the same people find their net worth spreadsheets increasing at over $100,000 per year due to investment returns and reduced spending.

Getting rich really is an exponential process, a concept that is hard to grasp until you realize that your money can work harder than you can. Once this higher level of financial skill is reached, you will realize that the debts of your youth were indeed small potatoes.

How do you get this elusive financial skill? If you’re still in debt, you get it by getting much more bold about wiping it out. Sure, you can do it slowly, just as you can lose 100 pounds by lifting a 5-pound dumbell a few times each day while you sit on the couch and watch Oprah.

But I recommend the more efficient path: put on your walking shoes and start walking as much as you can. Eight hours a day. Go straight to the most healthy and balanced eating regime and never deviate. Stay on it and let the forward progress accelerate your progress each day. Consumer debt and excessive amounts of body fat have a lot in common.

The more vigorous method has multiple exponential benefits: every dollar of debt you pay off creates a compounding snowball of savings that continue for a lifetime. And every dollar you manage not to waste, builds your skill at saving money and learning to spend it more efficiently. These skills stick with you for life as well.

So if you still have a car loan, credit card, department store or even a student loan debt, you should destroy that as a prerequisite to beginning the more relaxed stage of saving for financial independence.

At the later stages, you can start to take it easy, but right now is the time for some hard work. Depending on your life situation, you might decide to go car-free, live with roommates, eat a vegetarian diet, take on extra jobs, delay parenthood, enjoy only local travel, and do any number of other things to get the job done. This stage will be short and effective.

Then I’ll see you at the next stage, which is really where this more advanced blog begins.


Further Reading: one man’s description of what it feels like to escape from over $100k of student loan debt in less than a year – by treating it like an emergency and applying some real effort to it:


Or if you prefer a 4-minute video summary of his experience: http://www.youtube.com/watch?feature=player_embedded&v=1Y6kTsBNH78 



* This is actually true

  • Grant April 18, 2012, 6:10 am

    No More Harvard Debt is an inspiration! I was hoping you’d feature him sooner or later!

    • Mr. Money Mustache April 18, 2012, 6:42 am

      Glad you like NMHD.. I have mentioned him before, plus he stops by here occasionally and I’ve commented on his blog as well – we go way back.

    • Jedi April 20, 2017, 2:51 pm

      Late to the party, but I don’t agree with that assessment. If your answer to “how do I pay down my debt” is “sell your second car, your motorcycle, your roadbike”, then you’re obviously in a better damn spot that 95% of the people out there. It’s akin to ‘just forgo the daily starbucks”, when I brew my own coffee daily.

      • Drew September 28, 2017, 10:19 am

        Jedi, your statement suffers from several logical fallacies (https://en.wikipedia.org/wiki/List_of_fallacies). The standard United States consumer has more than enough fiscal fat to cut to make a huge, immediate impact on outstanding consumer debt. If your situation is different, sorry, but that doesn’t mean that 95% of people are like you.

  • Baughman April 18, 2012, 6:19 am

    I had a similar experience with loaning money to a family member to pay tuition. Since this money management stuff is so ingrained in me, it’s hard for me to realize that other people don’t think like me. When I proceeded to watch my family member pay for trips to amusement parks, restaurants, expensive cell phone plans, unnecessary road trips…it was hard for me. I wanted to punch the family member in the face because my hard earned dollars which were supposed to be financing this “need” of tuition were really just indirectly financing a wasteful lifestyle. 5 years later, the loan remains unpaid, and feelings of frustration remain.

    Another good friend/colleague of mine back when I was an engineer was struggling with credit card debt. I wanted so badly to help him out and buy it off, in exchange for a modest interest payment…just to give him a fresh start on life. Finances I think were a big source of depression for him, so it was a big temptation. I tried counselling him instead, but he continued to make extravagant purchases such as $30 giant omlettes which he called a “good deal” because they had 6 eggs (at a true cost of $0.50).

    Another story comes to mind. While I was pursuing a masters degree, one of my classmates approached me and said “you know…this credit card debt is really stressing me out and I need to figure a way out of it.” When I found out in the proceeding sentences that he had just bought his wife a new iPad2 (financed by credit card), I had to literally bite my tongue to not laugh out loud at the absurdity of his conundrum.

    I learned two important lessons here: 1.) Never loan money to someone who is less frugal than you (which for me is practically nobody) or it will drive you to an insane asylum. More money doesn’t solve money problems….it only augments them! 2.) Some people just don’t get it….and never will despite your best efforts. Some people were not born with the financial gene, and as a result, are doomed to a life of 50 hour work weeks until they turn 90 and die in their cubicle. This actually happened at my last job. People died of old age on the job. It’s also sad when people don’t show up to work because they died over the weekend of old age.

    Here’s a rant I compiled to help friends realize the logic between disposable income and debt repayment: http://thebaughfamilypublic.blogspot.com/2011/02/thoughts-on-debt.html

    • Mr. Money Mustache April 18, 2012, 6:44 am

      Wow, a $30 OMELETTE? I didn’t know such things existed – you learn something new every day.

      • Baughman April 18, 2012, 6:51 am

        Upon further investigation, it was probably a $22, 12-egg omlette: http://www.bethscafe.com/menu.php?menuCategory=omelettes. Sorry if I lose all credibility due to the misspricing, but you could easily get to $30 with taxes and tip.

        I’m 95% sure that he took his girlfriend there for a grand total of $60.

      • Llama April 18, 2012, 4:14 pm

        Had to chuckle, as I look over at a banqet order currently on my desk:

        “Continental Breakfast Buffet:
        Selection of Juice (orange and cran, not necessarily fresh)
        Sliced Fresh Seasonal Fruit and Berries (i think they mean not quite ripe canteloupe, honeydew, and bland watermelon with a few blueberries scattered on the tray)
        Selection of Freshly Baked Breakfast Pastries (nasty dry croissants and danishes)
        Freshly Brewed Coffee, Decaf, and Herbal Tea (that will be sitting in an urn over a flame for an hour before you arrive and have the consistency of tar… and the tea is Lipton and Celestial Seasons teabags)

        $19 + 21% service charge + state tax, or $30.74/ person

        I don’t even see any eggs on this menu.

        • Julie January 22, 2015, 2:50 pm

          If that is at a hotel, I can guarantee you the quality of the food is shit. I know I work as a temp cook in them. It’s a huge mark up for crappy food.

    • AspiringYogini April 18, 2012, 6:57 am


      I liked your quote, “More money doesn’t solve money problems….it only augments them!” because it reminds me of one of my mantras. Namely, “If money solves your problem, then it’s not a very big problem.” I think Big Problems are physical and mental illness, trauma, death of a loved one and grief that follows and money doesn’t fix these things.

      I agree with you and don’t lend money to family and friends. Also, I only occasionally tend to donate time to an organizations and charities, but not my money because they are much more wasteful than I am.

      • Emmers April 18, 2012, 8:15 am

        I believe this is backed up by research, too — once you hit a certain level, more money doesn’t make you happier.

        Or, perhaps, “less miserable” is a better descriptor — money doesn’t buy happiness, but the lack of it buys a hell of a lot of misery!

        • Blaze May 20, 2014, 11:05 am

          True, sort of. At this point we’ve cut our expenses as far as we are able to given the local COL, kids still at home and 2+yrs left on the mortgage. We’re surrently saving about 45%. More money wouldn’t change our daily lives in any way, but it would certainly shorten the time to financial independence. At this point everything is on autopilot, we’ve done the hard work of cutting expenses and reducing what can’t be cut entirely. We save everything we can and now just have to put in the required number of months/years to hit our number$. More income would just increase the savings, and which would make me happy. Does that count as more money making me happier?

      • The cat lord's wife April 19, 2012, 7:28 am

        Sometimes even illness can be solved with enough money. Ask my husband’s cat…
        We took him to the vet, to see what is wrong with him. Two days and ~600$ later (it is a very expensive cat, considering he is street-breed), we found the heart problem and got prescription for pills to take for the rest of his (hopefully long) life.
        See? Like my mother always says: Problems that could be solved with money, aren’t really problems.

        BTW, I never lend money I want to see again to friends I want to see again. If I can give one of these up – no problem.

        • Emmers April 19, 2012, 10:30 am

          “Problems that could be solved with money aren’t really problems.”

          Like cancer!


        • RJ April 26, 2012, 10:52 am

          I never lend money to anyone. If there is a relative or friend who really needs it, I give it to them as a gift without any expectation of repayment.

          It makes my life much easier …

          • Ralph December 20, 2015, 6:24 am

            here here, I do the same, but only for family. If it comes back, great, if not no prob. But the reason had better be a good one.

      • brenda from ar November 19, 2012, 9:40 pm

        I like your comment about giving time to charities rather than money. You seldom find a person or organization that will be careful with OPM (other people’s money).

        Here’s one for the books. A sibling needed money to keep a roof over her family’s heads during the winter, so I made the loan. Later, I learned that half of the money was used for mammary enhancement. Needless to say, the loan was not repaid. I’m not in the loan business anymore.

    • Kenneth April 18, 2012, 8:24 am

      Thanks for the great comments. I’m out about $60,000 to my 4 kids in total, over the years (I’m 62). One has paid me back completely, the other three do NOT have the frugal gene. I’ve made peace with this, it was my fault as much as theirs.

    • Jared Chmielecki April 18, 2012, 11:23 am

      not lending money to people who are “un-frugal” is great advice. It is difficult to do sometimes, probably very difficult with family, but when someone manages to amass more debt than they know how to deal with, and then you ‘help’ by consolidating that debt into a low or no interest amount.. pretty soon those cards are creeping up again, and paying you back is less important than the scary credit people.

      • Emmers April 18, 2012, 7:11 pm

        Really, it’s better to not lend money to family, unless you can afford to do without it ever being paid back. The risk of a rift is too great otherwise.

        My parents helped us with our house down payment, but (a) they know we’re good for it, and (b) they won’t go broke if we flake out. You have to have both (a) and (b) for this to be an acceptable proposition; just (a) is not sufficient.

    • Debbie M April 18, 2012, 12:48 pm

      I actually do think there are some cases where loaning money, even to people less frugal than me. For example, when my brother was stuck because he couldn’t afford to pay first and last month’s rent to move closer to his job to a place that was cheaper and wouldn’t require a car, a loan of first and last month’s rent (or to subsidize whatever part he couldn’t afford) could make a difference. (I’m not sure–I didn’t think to offer a loan for that until it was too late.)

      But I agree, when my sister asked for money because she was going to get evicted, but it was because she couldn’t afford the rent and had no plans in the future for affording the rent, that’s just throwing money in the trash. She extended the time before eviction by getting money from various other places, but she was still evicted. Now she lives somewhere she can afford.

    • Lindsey April 18, 2012, 4:02 pm

      Loaned my brother $2000 (against my better judgement) five years ago and have yet to see a penny of it, while he continues to live high on the hog. (God, what memory of my grandmother did that come from!?). Loaned a friend $1200 for a mortgage payment, four years ago; have yet to see a penny of it. Lesson learned, and probably cheaper than a lot of life lessons. My blessed husband has never mentioned either mistake once…Now I give money to no one for no reason. Hard-hearted? Yes, but the resentment of watching people not pay their debt to me when they had the funds was eating me up, so now I avoid the problem by not lending anything.

    • Maxwell C. December 18, 2013, 1:20 pm

      I have made it a life policy never to loan money to anyone, for as Polonius counsels Laertes in Shakespeare’s Hamlet:

      “Neither a borrower nor a lender be,
      For loan oft loses both itself and friend,
      And borrowing dulls the edge of husbandry.”

      I figure that if someone can’t get a loan through a bank/credit-union/credit-card/other-company-whose-business-is-making-loans…then he obviously lacks the creditworthiness for me to loan to him.

    • Britni January 29, 2015, 11:18 am

      I can completely relate to you, Mr. Baughman. It’s all the worse when it’s a family member. My parents are constantly fretting about their debt. They have several credit cards, vehicle loans, and a large mortgage. A couple of years ago they refinanced all of their debt into a consolidated mortgage with a lower interest rate. At first, I thought this might be a step in the right direction. But then they kept right on using their credit cards building up new balances in addition to everything that had just been consolidated. They even financed a new tracker ($12k), a new SUV ((20k), and a long-arm sewing machine ($7k)! I try to be a voice of reason, but there is always an excuse. As long as they can make the minimum payment, they don’t mind piling more on.

      They are in their late 50’s and still have a long way to go before retirement, assuming they will ever retire. I love them dearly and want to help them. But it would be even more irresponsible for me to halt progress toward my own financial freedom and risk letting their poor choices pull me under too. It’s frustrating. All I can do is watch.

      • Django November 24, 2015, 4:15 am

        I lended a couple of times in the past. One was my best friend who works hard but doesn’t get paid well, and he wanted to buy himself out of an awful car-leasing contract. I gave him a four-digit sum (€, not $) and as he was and still is my best friend and I have known him for 25 years, I never really expected to see a penny of it. It made a friend’s life easier, and I can afford it. Second, I bailed out my sister with 25.000 € – money her husband had – no, not spent, he had “forgotten” to fully pay the house they lived in, and he had “forgotten” to pay the tax man, and so the hungry wolves were at my sister’s heels also. As there was a chance they would break up (I never liked my brother in law), I thought “well if he walks out of her life, I won’t see the money back, but it’s worth it”. Well, they didn’t split up (which is good, on the other hand, as they have a child), which means that I got my money back – because *she* has taken over finances…

        Lesson: If you lend, be prepared to make a donation, or don’t lend.

    • Suhaila November 13, 2015, 8:53 am

      I can tell you from my own personal experience that they can figure it out, it just may take a long time. While I never borrowed money (I was usually the lender but I always got it back-I’m slightly intimidating apparently) I did rack up tons of debt and had poor spending from, let’s say my mom allowed the spending as a kid, 18-33. But I’m on the road to recovery! I’m not even halfway perfect but I’m going to be cc debt free in 2016 and I only started getting my act together in late May 2015 and I’m working on 35% savings (post tax,401k,and benefits) thereafter. And I hope to make it more the better I get at this new lifestyle!
      It can happen, I guess, is what I’m saying. Even to the worst of us!

    • Giles October 6, 2019, 2:42 pm

      “This actually happened at my last job. People died of old age on the job. It’s also sad when people don’t show up to work because they died over the weekend of old age.”

      This shouldn’t have, but made me laugh. We all know people who don’t get it. Credit card debt but still buying silly things and then complaining about not making enough money.

  • jlcollinsnh April 18, 2012, 6:30 am

    If your lifestyle matches or, god forbid exceeds, your income you are no more than a gilded slave.

    Without F-you Money you are a slave. If you have debt, you are a slave with still stouter shackles.

    You weren’t born to be a slave.

    Carrying debt is as appealing as being covered with leeches, and has much the same effect. The idea that many, indeed most, people seem to happily cover themselves with debt is so beyond my understanding it is hard to imagine how, let alone why, the downsides would need be explained.

    Take out your sharpest knife and start scraping the little blood-suckers off.

    The above is from my Manifesto:


    beyond that, since I have absolutely no experience with consumer debt, I’ve yet to offer a post on the subject. Been thinking about it but maybe now when the topic comes up I’ll just link to yours here. Nice job!

  • Patrick April 18, 2012, 6:34 am

    Thanks for the punch in the face! For us, it’s just an underwater mortgage, but the freedom of having some equity is a goal. Last year, we had a couple of “emergencies”: a $3,000 transmission for the car and a $3,500 heat pump replacement (needed in the south where we live), and cancelled a vacation and stopped all eating out until we had the money saved up to pay for both. We paid for both on credit, because the URGENT, YOU HAVE TO PAY THIS THE FUCK OFF is more motivating for recouping the expenses than the pansy “oh well, now we should start putting 250/month back into the emergency fund to build it back up” method of laziness. 2 months later and we’d paid off the $6.5k on $5k/month take home.

    I loved the comments of family members who offered to “loan” us the money so we could still go on vacation!

    And thanks for the shout out to NMHD; I love his site. I actually found your site via his…and was referred to him by none other than…Ramit. Whole fuckin’ circle.

    • yosnowden April 18, 2012, 4:46 pm

      > And thanks for the shout out to NMHD; I love his site. I actually found your site via his…and was referred to him by none other than…Ramit. Whole fuckin’ circle.

      Me too!

  • AspiringYogini April 18, 2012, 6:39 am

    Nice post! The point you made about learning fiscal responsibility as a 10 year old child (Wow, you probably already knew this before you acquired your facial hair!) was especially important, MMM. Having this trait allows one to advance much faster than those who don’t learn these lessons early on. We watch our parents spending and saving patterns and think that this is the norm.

    Learning this type of restraint also helps in ways other than with finance. We learn not to eat or sleep too much, not to work to much, not to play and party too much and we learn not to feel deprived while we are carefully using the resources we do have.

    My dad knew that I had a pile of “unironed” cash in my drawer at 12 (I offered to lend him some of my baby sitting money) and had me open up a checking account. Then we went out and bought my first share of stock, Disney! I was FI at 36 and am really thankful for both of my responsible parents (who have been FI for years)!

  • Faun April 18, 2012, 6:39 am

    The impression I got from the Harvard Guy is that he isn’t planning on continuing his frugal ways now that he’s paid off his debt (which he paid off in large part by liquidating his retirement savings). He’s expressed a huge fondness for “bottle service” at upscale bars and other expensive hobbies.

    Not Mustachian by a long shot, IMO. My prediction is that he’ll be back in serious debt in 5 years.

    • Mr. Money Mustache April 18, 2012, 9:38 am

      Whoa!! You’re totally wrong on that, and suspect your comment would be pretty insulting to NMHD after all he’s written to the contrary.

      First of all, if you search his site for “Bottle Service”, you’ll see that he uses it mainly as an example of a wasteful indulgence. Secondly, he repeatedly states that he LIKES the new frugality – while he may be loosening things up a bit now that the debt is gone, he’s not about to go out and re-purchase the Nissan Murano and the motorbike. Much as I now live in a balance between freewheeling cash spending and still enjoying an efficient lifestyle.

      Secondly, transferring the retirement savings to the higher yield of the student debt payoff was only one part of it. Cutting monthly spending by over $3k/month, plus the bit about roommates and selling extra cars, and choosing to save rather than spend his raises and bonuses were much more important – especially when you track the effect of these new habits over several years instead of just seven months.

      As for the prediction of returning to serious debt within 5 years.. That’s a wager I’d gladly take the other side of!

      The reason I’m attacking your comment like this is that the comment itself runs against the spirit of this blog. When somebody does something worthwhile, you celebrate it and use it as an example for others. To shoot it down without even reading and understanding all the posts is negative Antimustachian Complainypantsing at its purest.

      • NoMoreHarvardDebt April 18, 2012, 2:21 pm

        Haha! Thank you, Mustachio Man. I relished every word of your rebuttal. I’ve been student-debt free for almost three weeks now and I’ve achieved a decent cash cushion that would technically permit me to spend more freely, but I can’t. I still can’t bring myself to pay for a dinner date and I can’t bear to leave my flask at home when I head to the bars with friends. I bought some gravel for my yard two weeks ago as part of a zeroscaping redesign that will save me money in the long run, but I’m still suffering from buyer’s remorse. I haven’t yet replaced my shoes that have a hole in them or taken care of other deferred expenses. I continue to track every single one of my expenses and set goals.

        My frugal nature has become habit; the lifestyle ingrained.

        Thanks, MMM, for the link to my site–traffic is off the hook. I hope everyone’s enjoying it. Best of luck to y’all.

        • Mr. Money Mustache April 21, 2012, 8:31 pm

          I was a big fan of the Secret Booze Flask in my barhopping days as well. I even made a culture out of it among friends – it was called the “Drink Booster Program” (DBP for short), and part of the challenge was to do high-drama booze pours – boosting your drink in public without being secretive.. while the others might discreetly chant “DBP! DBP!”

          But my favorite moment in the program was one evening walking down the boardwalk in Waikiki at sunset, heading to a bar with some friends. Suddenly I reached up and instinctively caught a 12oz mini bottle of vodka which had come flying at me out of nowhere, followed by two others aimed at two nearby friends.

          We identified the source of the projectiles – a new inductee to the DBP had taken the initiative to run ahead into one of those ABC variety stores and stock us all up before we got to our destination. “DBP, Boys…let’s go!”.

          • No More Harvard Debt April 25, 2012, 7:10 pm

            NIIIIIICE! I am totally feeling that. I did a high pour on Saturday–unscrewed the cap on the flask and poured it into my Sprite from about two and a half feet above the glass. The jaws on a couple of girls nearby dropped. AWESOME.

          • EarningAndLearning May 11, 2017, 11:36 pm

            Ha ha DBP I love that! You are such a great storyteller, the Waikiki incident was brilliantly described!

            I drink wine, so it’s a little harder to sneak a bottle of wine into a bar! But I am definitely the initiator among my friends of “pre-party” drinking at my house. I hate drinking “retail” (paying bar mark-ups), so I’d rather the bulk of our Saturday night be a wine & cheese chez moi then a drink or two out on the town. For fun, and frugality. :)

  • rjack April 18, 2012, 6:44 am

    I’m 52 and I’ve never carried credit card debt. The only debt I ever had was for the first couple of cars that I bought and my home. Now I have no debt.

    I think I learned most of this Debt Aversion from my parents. They never even had a credit card. They had a Sears and JC Penny store charge cards and that was it. Debt Aversion is one of the greatest gifts my parents ever gave me.

    I’ve always been surprised/horrified/disgusted by people that seem to live beyond their means as signified by credit card debt. I just don’t understand how they sleep at night – I know that I couldn’t.

    Maybe Mustachians are just wired differently than the average consumer?

    P.S. MMM – I never felt the need to iron my money, but I did occasionally accidently leave money in my pocket and launder my money. :)

    • Jared Chmielecki April 18, 2012, 11:34 am

      From your avatar picutre I thought you were late 30’s ! Keep up whatever it is you are doing!

      • ice April 21, 2012, 12:23 am

        I also thought RJack was, like, 28.

  • JJ April 18, 2012, 6:48 am

    * This is actually true.

    You’re killing me here stashe. I thought I was the only one!

    • MoneyOCD April 18, 2012, 7:23 pm

      Nope, looks like at least 3 of us LOL
      Instead of photo album I used small box that was hand decorated with beads.
      Hey, I am a girl after all … Sometimes I still have an urge to clean and iron some dollar bills, please do not tell my husband, he will flip out. LOL

      • BobTx June 22, 2013, 11:39 pm

        Super late to this party (reading through the posts from the beginning), but I thought I should contribute my odd early stash location:
        From pre-k to maybe 1st or second grade, I put all the money I earned into the keep of a cardboard castle I made in school (the pre-K lemonade stand money had been somewhere else I don’t remember up until I built the castle in our medieval times unit.in kindergarten).
        The odd thing is I forgot about it at some point during grade school after I started a second stash in a wallet that my Granddad gave me.
        When I found the castle stash sometime in high school, it wasn’t more than I could earn in a day or two of mowing lawns or construction site work, but I can’t pretend I’m not still proud that I had amassed something over $200 in my castle before maybe 3rd grade.

  • Jimbo April 18, 2012, 6:52 am

    MMM, I enjoy your blog so much I have to pace myself while reading new posts in order to savour it…

    I have friends around me that are waaaay impressed that we pay more than our ‘normal’ required monthly payments on the mortgage. We just bought the house less than a year ago, and we managed to pay down 10% of the mortgage. Nothing spectacular, yet stil a good lump of money. And I keep telling them, if you can’t put capital on the house now with such low interest rates, what are you gonna do when the rates go up? Take another 30 year mortgage? Come on! The point is to own a house, not rent it from the bank…

    Now credit card debt… that’s another level. If I ever received a credit card bill I could not pay down, I would go into crazy frugal mode instantly. Probably eat canned goods for a couple of weeks/months, depending on the debt. However, sometimes things come up in a close time frame – car breaks down, property taxes are due, house repair all happening at the same time… That sucks. That’s why there are credit lines – I never used mine since college… Also, a little cash flow flexibility usually does the trick. Anyways, credit card debt, seriously?

    • No Name Guy April 18, 2012, 11:02 am

      Canned goods are SO expensive. ;-)

      Cook up the red beans and brown rice from dry stuff in your pressure cooker. Its WAY less expensive than canned beans..

      • ghyspran April 18, 2012, 1:28 pm

        Just make sure to cook the beans to 100 C boiling temperature either before or during: http://www.fda.gov/food/foodsafety/foodborneillness/foodborneillnessfoodbornepathogensnaturaltoxins/badbugbook/ucm071092.htm

        • Gerard April 18, 2012, 3:51 pm

          What ghyspran said, at least for kidney beans. I once substituted white kidney beans for fava beans in a felafel recipe (which involved grinding soaked raw beans, then frying balls of the mush). Imagine the movie Speed with a porcelain bus…

        • eva April 19, 2012, 5:58 am

          In a pressure cooker, at 15psi, water boils at 121ºC. It’s OK to do them from dry under pressure.

          • Gerard September 6, 2012, 7:37 am

            Cool, I did not know this! Thanks!

  • Nick April 18, 2012, 7:19 am

    Well put, sir. Sometimes I forget that not everyone has the same aversion to debt as my wife and I do. Paying cash for a Master’s degree, saving/investing for the future and paying off extra mortgage principal every month are just way more important to us than driving an expensive car, buying the latest iGadget or going out to eat 5 nights a week. I know MMM preaches to the choir a lot here, but it still feels good to be amongst like-minded company.

  • sencando April 18, 2012, 7:20 am

    YO MMM! Groovy post. The link to ” your money can work harder than you can” needs a http:// or something along those lines.

  • RiskyStartup.com April 18, 2012, 7:43 am

    Sadly, I can tell you that youth moustache can be lost. When I was 10, I was such a voracious saver that my mom and my neighbours would borrow money from me constantly. I only ever wanted cash for gifts, I had jobs since I was 11 (not chores, actual jobs like flier delivery etc)…

    Then married life came, and somehow I got sucked into the consumerist society, credit cards etc. Before I knew it, I had more than years worth of salary in credit cards alone, plus car payment etc. Finally, I realized how dumb I was, so before I ever missed a single payment, I went to the “credit consulting” place (what a waste!). Since I realized that will not help me get out of debt in any reasonable time, I went towards bankruptcy. I settled with the companies that loaned me the money by agreeing to pay about 70% of the debt over 5 years (no interest would continue). It was hard, but I managed to do so in less than 4 years and was debt free. During this time, we drove cheapest card around (no, biking is not an option here), we sat on the broken sofa and watched over-the-air free TV on the old style TV…

    Funny story – once we paid off the debt and now are able to afford anything, we are still driving 12 year old cars, sofa is still crap and we still do not have cable TV.

    Still, getting out of the debt was the best thing ever – I was able to walk into my boss’s office and demand huge raise (as I could afford to lose my job), my wife retired at 35 so that we can have kids and she can raise them herself), and last week I started moving towards my own business (work is my hobby).

    I agree with MMM – if you have any debt, there is no excuse for doing anything but paying it off. You should downgrade your accommodations to the one level up from a tent, sell the big cars, cut the cable, cell phone bills… Feed at the value grocery stores and only with what’s on special and for the time being, eating out means your back porch or a picnic.

    • Gipsy queen April 19, 2012, 7:42 am

      Back porch (or balcony) eating out is my favorite! The food always tastes better at home!

  • Ross April 18, 2012, 7:57 am

    My favourite (laughable) comment from my good friend about student loan debt is “well it took me four years to rack it up, of course it will take me longer than than to pay it back”. His comment was in response to me turning down going on a golf trip with him and some buddies as I told him I was going to put my money towards my student debt instead.

    In the end, I spent 7 years in Uni and paid off my student debt in 14 months after graduating. My friend who spent 4 years in school is still working on his student loans 6 years later (and think he has also rang up a LOC debt to pay off his credit cards).

  • Chris April 18, 2012, 8:02 am

    I’ve always tried to tell myself that “NOW” is the time to pay off debt as I stared at a painful credit card balance and not later. Right now is always the time to pay off debt- As in “Right MEOW!!”

  • Dancedancekj April 18, 2012, 8:13 am

    Hah, hopefully you’ll get a laugh out of this. I was always puzzled by the fact that other people my age (I’m in my upper twenties now) always seemed to have a more expensive and trendier wardrobe than me, always had money to spend at the bar, and could afford expensive cars and igadgets and ski trips to Colorado. Where was all this money coming from, since they were still going to school and didn’t have a trust fund? I was so CONFUSED :-/

    It took me four years to realize that these people were all racking up credit card debt. I had no idea that there were plenty of people who didn’t pay their monthly credit card balance off in full, or who used their student loans to pay for vacations and shopping sprees. It is no less absurd to me, but at least it is not so mystifying anymore…

    • butterandjelly213 April 18, 2012, 9:09 am

      Totally relate to this. At my first job out of college, I actually had a few nightmares about my peers earning a larger salary than me because I couldn’t figure out how they were able to spend as they did (combo of credit card and their parents kicking in, I later learned).

      • Joe Average March 24, 2015, 3:17 pm

        YES! THIS! Talk to your kids alot while they are growing up. I had the same problem. Little concept of money, how much people made, and how they spent what they had.

        Parents and I talked but we didn’t always do a good job of communicating. I made alot of mistakes b/c of the lessons not learned – my fault. I also learned alot from those mistakes – and for me at times – that was the only way I’d ever get smarter.

        Talk to your kids about money and life choices (choosing a spouse, starting a family, career, etc). My wife and I have done really great on the choice in spouses and raising the family so far. We’re old fashioned on some topics I suppose. Money? Not as successful immediately. I put some of the blame on the slow economy. We’re past all that now.

    • lian April 18, 2012, 4:12 pm

      I know exactly what you mean. I could never understand how my co-workers and peers had such nice homes and cars, vacations, the latest gadgets. I couldln’t figure out what I was doing wrong – thought I was either underpaid, or they were managing their money much better than I. I finally realized they were living way beyond their means.

    • Lea April 18, 2012, 5:59 pm

      I only realized in the last few years that you COULD carry a balance on your credit card. I asked someone why the limit on my credit card was $6000, because how could anyone possibly spend that much money in one month? They had to explain to me that you were allowed to carry a balance on your credit card.

      • Mr. Frugal Toque April 19, 2012, 6:52 am

        It’s funny that the world makes us feel crazy for not carrying a balance when clearly it’s the only reasonable way to use a credit card.
        As you point out, we should be suspicious when the credit card limit is more than one months’ net salary.
        Already, you have to know somebody is up to something fishy.

  • Poor Student April 18, 2012, 8:16 am

    I always shake my head at personal finance bloggers who say they are keeping their debt so they can invest, or because it is tax deductible, or any other nonsensical reason.

    Debt scares me like nothing else. I made a vow to get through school without debt, and am going to stay debt free after graduating.

    Every time you go out for dinner while you still have credit card debt each dollar for that meal likely costs $1.10 or something if one does the math. I would like to see a chart like that.

    Great post, something everybody should see.

    • Sir Osis of DeLiver February 23, 2013, 6:24 pm

      While I understand the psychological aversion, it’s not always irrational from a purely economic standpoint to carry some debt under controlled circumstances.

      For example, I have a 4.0% fixed rate 30-year mortgage on my primary residence. The loan is less than 40% of the house’s value so I have no concern about being underwater even if/when the market tanks. I see no reason to pay it off ahead of schedule, although I certainly could, since even in the mediocre market since 2000 I’ve been averaging 4.7%+ CAGR on my investments, and I don’t expect inflation (and market returns) to stay this low for the entire remainder of the mortgage term. I also have a disproportionately large share of my assets in real estate since I live in an expensive area and have a (profitable) rental property, so I prefer to have some diversification.

      Of course, credit cards debt is a totally different story.

      • Joe Average March 24, 2015, 3:20 pm

        For those of us without a ton of property assets though I would argue paying off the house isn’t a bad idea. Sure, you could invest the money rather than paying off the debt but having a roof over one’s head when the economy tanks isn’t a bad thing.

  • Matt April 18, 2012, 8:20 am

    The video was great, particularly the music. Explosions in the Sky is by far my favorite band!

  • Brian April 18, 2012, 8:27 am

    It seems like we all learn this lesson about lending money the hard way. I guess the point is that the reason the person that needs the money got there is because they didn’t prioritize paying debt off.

    We have a renter in our duplex and we reduced the rent for a few months because he was having difficulty with some bills. I’ll never do that again. He bought a used car and continued with the mega cable package while we biked to work and cancelled cable. Four years later, he is just about paid back up.

  • Mr. Frugal Toque April 18, 2012, 8:31 am

    Whenever I owe someone money on a personal level, I have a vague sense of a giant flashing red negative number over my head.
    “Bob! -$10!”
    Since the flashing red number is visible to everyone around me, it would be as embarrassing to go to a Nonsense Store and purchase a Flashy Consumable Item as it would be to be a vomit-covered drunk who found a $20 bill and immediately heads to the liquor store.
    The odd thing is that my parents never felt the need to tell us about the importance of buying things with money you have rather than money you hope to have later. They just did things the proper way and it rubbed off on us.
    Raising children today, though, I feel it’s necessary to explain to my kids how to buy and not buy things. The people who market credit cards are much more clever than they were 30 years ago.

    • Mr. Money Mustache April 18, 2012, 9:12 am

      Ahh.. But did it rub off an ALL the frugal toque siblings? I think I’ve heard stories that indicate otherwise :-)

      I wonder if monetary responsibility is a combination of genetic predisposition, parental example, and peers and cultural learning later in life. Here at MMM, we’re working on the last of these factors – changing the entire culture!

      • Marcia @Frugal Healthy Simple April 18, 2012, 11:49 am

        For sure. My dad was very financially responsible and it rubbed off on me and many of my sisters. But I’ve got one sister and one brother who are spenders. Much of it is their friends and who they are married to.

        • fruplicity April 18, 2012, 2:33 pm

          I also wonder these things – would love to see a post from MMM or guest on any real studies behind the psychology of savers. I also agree it has to be a wide combination of factors, and it IS possible to change later in life (for worse or better)

          I think it’s important to keep in mind that people who grew up in non-Mustachian environments have real barriers to overcome to “see the light” – no excuses, but barriers. It is a HUGE perspective shift to undergo, coming from someone who’s gone through it (and still considers it one of the most influential events in my life). There’s no one magical way that will work for everyone to change their way of thinking – like addiction, everyone’s rock bottom is different!

          Also I would love to see someone come up with a “How Mustachian are you?” survey/grade so people can really see where they stand. Like, +10 if you are completely debt free, +5 if you only have a mortgage, +3 if you only have student loans under 20k, 0 if you have student loans over 20k, -3 if you have car loan, etc. (there could be LOTS of measurements!)

          Finally, this post made me think of this “modern classic” SNL skit: http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff

          Amy Poehler: “Hmm…’If you don’t have money, you shouldn’t buy anything.’ Sounds interesting!”
          Steve Martin: “Sounds confusing!”

          • Emmers April 18, 2012, 7:24 pm

            I definitely get my hyper-saving from my grandmother, who grew up during the Depression.

          • Curtis April 21, 2012, 8:41 am


            In many cases it’s like trying to describe a rainbow to one born blind.

            Talk till your blue in the face, and get nowhere. (Don’t bother using that idiom with a person born blind either.)

      • Mr. Frugal Toque April 19, 2012, 7:21 am

        For sure. There are a lot of factors. People raised in the same household can become massive credit-card overspenders or frugal penny pinchers without any apparent regard for age, economic situations during childhood or any such thing.
        I used to believe that kids raised in single parent households came out magically responsible with debt and frugal with spending, but I’ve seen enough cases now to show that this is no panacea either.
        It’s something that has to be intentionally taught. Without forethought, your kids might go either way.

      • Oh Yonghao August 28, 2014, 4:43 pm

        My family is a good case in point. My father worked at a large microchip manufacturer making good money, probably around $70k a year back starting in the 80’s to 90’s. My life growing up included phrases that made me believe that checks are made out of rubber (they bounce, or had the possibility of bouncing) and that eating out with a family of 7 was at least a once a week occurrence.

        Checks have fallen out of fashion these days, but back then a common “trick” my parents would do was to go to the grocery store, each grab a 12 pack of Diet Coke, head to separate check out stands and write checks for $20 over. With the $40 we would then go to McDonalds and all get a happy meal. As we got older they would have to go to multiple stores so we could all get the #2 super sized. Any windfall was immediately celebrated in like fashion.

        Somehow through all of this I came out as the black sheep of the family. At an early age I realized that I could save whatever money came my way in order to purchase things later that I wanted. When given $10 for lunch I would get something around $3 and pocket the rest.

        We grew up on and off of food stamps, free lunch programs, and eventually reduced lunch as some of us got older. We shopped K-Mart and Good Will for clothing due to not having enough money. My father commuted 50 miles each way to work 4 days a week and put in every over time hour he could. Despite all this by the time I graduated high school they had lost their cars and their house, and continued to spend on storage units and eating out while complaining about not having enough money. They eventually divorced due to the mishandling of finances.

        Luckily I was unable to get a credit card until my frugality muscles were well developed. Against my friends advice I never run a balance on my card that ever incurs interest, I always pay it off. I’ve had enough money to live in a foreign country, move there, move back again some 6 years later, buy a car when I got back in cash (although had a been a bit more Mustachian then I would have opted for a more efficient vehicle, but 32mgp while doing some basic hypermiling isn’t too bad when compounded with the fact I use less than one tank a month), and spend another couple grand on furnishing, including washer and dryer (dryer is rarely used now).

        A year and a half after the move here I had enough for a 10% down payment and bought a house close to work and now bike. My net worth is around $63k and growing roughly $24k a year. Like other posters here I have lent money to friends and cringed as I saw them continue to indulge in luxuries and consumer spending. My family all still live paycheck to paycheck, one makes minimum wage and bought a car to drive to work which is half a mile down the street.

        My father now is much better off, but he still spends every cent he earns on things he likes, but no longer plays the bouncing check game, or using credit cards, only debit cards. He’s been a great example to me of someone who never complained about hard work, even while working three jobs, two on top of his nice salary one, to continue and provide for his family.

        Despite all the lack of frugality, and the rampant spending of money in my childhood I came out with an utter distaste for running a debt. My biggest memory of watching Little House on the Prairie was Mr. Ingles insistence of “paying cash on the barrel”.

  • John @ Married (with Debt) April 18, 2012, 8:40 am

    Awesome. I’ve been trying to develop a quiz where you can decide if it’s time to panic about your debt. I could just save people the trouble and send them this post.

    • Emmers April 18, 2012, 7:25 pm

      Every answer to the quiz: “Yes! Panic!” :-D

  • James April 18, 2012, 8:51 am

    “Then I’ll see you at the next stage, which is really where this more advanced blog begins.”

    I spend my limited blog/forum time for that very reason. I’ve been done with the CC debt for many years, working on wiping out student loan debt this year, I’m not interested in someone baby talking their way toward suggesting modest changes that have limited results. I want someone to kick my ass and remind me to be badass, and this is the only place I’ve found to get it. That is why I’m here. That is what makes you a unique and valuable commodity.

    • Kenneth April 18, 2012, 11:31 am

      Yes MMM is a kick your ass punch you in the face blogger. I think we are all OK with that. If I had my weight loss to do over again (I’m down 70 pounds) I secretly fantasized about having Jillian Michaels of Biggest Loser fame being my personal trainer and kicking my ass every hour of every day. “Do NOT eat that thing or I will kick your ass!” “Do NOT hang onto the treadmill rails or I will be in your FACE right now!”

  • Samantha April 18, 2012, 10:01 am

    Hello MMM.

    A question: why not encourage paying off a mortgage too? (We have no debt other than our four properties – one we live in, three apt buildings. Our emergency funds are $50k plus. Our investment accounts are plugging along…blahblah…) Just curious. Is it b/c the thought of paying off that amount is too much? or b/c of the tax write-offs? or? I did a little investigating a while back and concluded that paying off one of our properties is a better investment for us, than other options. I don’t mind losing the tax write-offs b/c our income goes down as we work less. We don’t want more properties, b/c managing three is enough. Anyway, why not include it?
    Also…as an aside…you have got me walking to work! Seriously! I’m doing it!

    • No Name Guy April 18, 2012, 11:16 am

      Tax write offs….let’s see. If you spend 10,000 in interest on the mortgage (to pluck a nice round number out of the air) to “save” 2,800 in taxes by being able to write off said 10,000 from the gross…….

      Net……-10,000 interest paid to the bank + 2,800 tax “savings” from the feds = -7,200.employees leaving your pocket each and every year.

      There. Did the math set up for you, plug in your own numbers.

      • Emmers April 18, 2012, 7:27 pm

        THANK YOU. Whenever people talk about how having a mortgage is good because “tax write off,” my poor keyboard gets a pounding from my forehead.

        Seriously, MMM, please consider writing a post about Common Myths About Taxes!

        • DiggingForDividends April 18, 2012, 9:13 pm

          Unless you’re burying your money in the backyard this is a gross simplification.

          • Emmers April 19, 2012, 10:34 am

            Yes, exactly. Paying interest to anyone is not something you should ever do, unless your return on that money (from an investment elsewhere) is greater than the interest.

        • Gerard April 19, 2012, 1:44 pm

          I second what Emmers says. My favourite: “My marginal rate is 39%, therefore I pay 39% on every dollar I earn… I avoid earning extra money because it’ll put me in a higher tax bracket and I’ll lose money on the deal!”
          Although given that this is an advanced blog, perhaps such stuff is too far beneath us…

    • Geek April 18, 2012, 11:22 am

      I’m taking on a mortgage (I can own a house fully in <20 years, or I can rent another 30 years and save at the same rate I am now and own the same house after inflation.)…

      And I'm probably going to treat it as pretty urgent debt for a while. I think we could pay it off in 5 years. Credit cards would have me joining the "free food on campus" group at my work for all my meals.

  • joe @ Retire By 40 April 18, 2012, 10:16 am

    Nice. Yeah, there are plenty of beginner blogs that deal with credit card debts. That’s just the first baby step toward being financially independent.
    Why do you have that 15 mpg Ford F150 if you owe so much credit card debt?
    I still have mortgage debts and those are painful even if they are low interest.

  • Andre April 18, 2012, 10:19 am

    That $30 omelette better be able to beat its six eggs, fry itself, serve me, and clean up after!

  • Andre April 18, 2012, 10:26 am

    I’ve only lent money on two occasions ($600 and $10K) to my best friend and to my brother. I was fully paid back as agreed both times, but I don’t plan on ever doing it again. A joint real estate venture with my father, however, went terribly bad fast.

  • Joy April 18, 2012, 10:49 am

    When wanting to help out a family member or, friend, I like Bill Cosby’s advice.

    Don’t loan money. Give the money as a gift.

    Money mixed with personal relationships are not good business. Nor, are
    they good relationship builders. Your once “equal” friend/family member
    has now become a debtor to you. You will look at them with different eyes.
    They will see you differently too.

    If you are being asked for money and, don’t want to gift it, simply say no.
    There was a time many years ago my younger brother showed up at my
    house asking for 10 bucks. I gave it. A few weeks later he came to the
    door asking for 10 bucks. I emptied my piggy bank and, gave it to him in
    change. A few weeks later, he came to my door asking for 10 bucks. I told
    him I didn’t have 10 bucks but, if I did, I would like to spend it myself.
    He never asked for money again.

    • ErikZ April 19, 2012, 3:53 pm

      When I needed a car loan all I could get was a loan at 16%.
      Instead I borrowed the money at 6% from my Mother and paid it off early.

      It depends on the situation of the person who needs it. The job market has been very rough for a lot of people.

  • Ginger April 18, 2012, 11:31 am

    It has been shown, with research I gave send you if you like, that making large sweeping changes does not work long term and those habits will not be formed. It is better to start slowly and work your way up. Cut down cable, then 6 months later, cut out cable. Cut down one meal out , then another, and another. Then, start working on grocery meals etc. Someone who takes a year to get to the point you think they should start off with and keeps it up until the debt is gone will be better off than a person who starts like you think they should and stops it after 3-6 months. That is why yoyo dieting does not work. I understand that you never had to work your way up, but that means you may not understand the best way to do so.

    • cdub April 18, 2012, 12:24 pm

      I think that the opposite can easily be true too. When I do things gradually I tend to fall off of the wagon because the change I seek is happening too slowly.

      I hate going to work NOW. I want to be able to do things on my terms AS SOON AS POSSIBLE. For me this blog and others have been a wake-up call to action and I am going in with both feet as fast as I can. To do it gradually just invites exceptions to creep in and focus to be lost for me.

      • yosnowden April 18, 2012, 4:44 pm

        Ditto that for me. When it comes to will-power and getting stuff done I have to go all or nothing.

    • Stashette April 18, 2012, 4:00 pm

      I think it depends on the amount and type of debt. A person who is “just getting by” without accumulating serious debt would likely benefit from a gradual approach.

      However, a person who is $10k, $50, or more in debt is a like a person who just had a quadruple bypass. Gradually cutting back on bacon intake over the course of a few years isn’t going to make a difference. In these cases, rapid changes are needed because as MMM says, it’s an emergency.

    • Roothy March 14, 2015, 3:58 pm

      I know this post is almost three years old, but I’d love to see that research. It seems to me if we could devise some device to distinguish these two types (who are helped by extreme, cold turkey measures; who instead need gradual changes) we could tailor interventions in a way that would be truly helpful.

    • Maitas January 14, 2019, 7:04 pm

      Thinking about what you said. Diets don´t work because yo can start for two weeks and nothing happens.

      But frugality has an instant effect. You stop spending on everything except the bare minimum and instantly you will see your money stays with you.

  • Marcia @Frugal Healthy Simple April 18, 2012, 11:46 am

    I find that this is a personality thing, a lot like Ginger said above. Meaning, large sweeping changes versus smaller incremental changes.

    I liken it to weight loss, because I have experience with that. I gained 50-60 lbs gradually over several years, though the first 30 lbs came on fast. I tried for a long time to lose it. It wasn’t until I went all ninja on my diet (I was already exercising) that I was able to lose the weight. And that trend has continued. When I lost the baby weight, it was the same. I had to sit down, count calories RELIGIOUSLY with weight watchers, take zero money with me to work so I wouldn’t be tempted by the vending machine, stop eating out completely, stop drinking wine completely.

    Only after making those drastic changes and having them be “habit” after 2-3 months could I relax a tiny bit and incorporate an occasional meal out or glass of wine, and by then, I was no longer overweight. Kind of like the Biggest Loser (to get an example from bad reality TV). Those people only are able to lose weight by completely changing their lifestyle upside down.

    So when it comes to debt reduction, I would say that’s probably my personality also (though our only debt is our house). Big, bold changes.

    However, a lot of people have to do the small, incremental changes, or they will give up. I know many others who try the drastic process, and fail, and that’s it. I have a friend who is a dietitian who helps people with weight loss using the small steps process and it’s amazingly effective for some people (not me). I have a friend who lost 30 lbs with small, incremental changes. It took him 2 years to do it but he didn’t feel deprived at all, and it all started with cutting back from 2 cups of rice at lunch to 1.5 cups. Then from 1 glass of wine/day to 1/2 glass per day.

    Of course, success in small changes makes you more confident and able to accelerate the changes or make them bolder.

  • Jamie April 18, 2012, 12:11 pm

    Great post MMM. Continue to tell it like it is!

  • Leslie April 18, 2012, 12:32 pm

    Wait, so… I have some sort of investment account currently worth $17,000, started for me by my parents in better times (I don’t think I even knew about it until I was 24 – I’m now 27. I don’t know what kind of account it is, beyond “securities market,” or whether money can be taken out of it, but I’m trying to determine that now). I don’t have any credit card debt, but I do have about $10,000 of student loan debt left to pay off from undergrad, which will cost me $14,000 on my current payment plan. Would you advise taking this money and using it to pay off my student loan debt immediately? That seems like the obvious thing to do, but it seems like my parents would have thought of that and mentioned it if it were.

    Do you have other reading you’d recommend on these kinds of decisions? Sorry to be such a noob.

    • cdub April 18, 2012, 12:40 pm

      I think you know the answer to this… Of course you pay off the student loan. You are looking at a known money sink (debt interest) versus an unknown potential gain (securities.) Also, you are 27… It’s time to take control of your finances.

      • Leslie April 18, 2012, 12:49 pm

        >>Also, you are 27… It’s time to take control of your finances.

        Thanks, brah. That’s why I’m reading this blog, doing research and asking questions.

        • Ross April 18, 2012, 1:18 pm


          Why is it going to cost you $14,000 to pay off your debt? It would take 10 years at 4% to add another $4,000 to your debt. 10 years is way too long for a debt of this size. Although paying interest is not good, I think you need to take another look at your repayment plan rather than dip into existing savings. You will appreciate paying this off more if you do it yourself.

          At payments of $500/month you would be able to have this debt paid off in less than two years and minimize your interest costs. Once paid off I would recommend switching that monthly payment to putting it towards a retirement account or saving for a house down payment.

          • Leslie April 18, 2012, 1:26 pm

            Hi Ross,

            Sorry, I should have been clearer – it’s $14,000 on my current payment plan, which is the default Sallie Mae assigned to me when I graduated in 2006 – payments of about $110 a month (now stretching until 2023, because I deferred payment for several years while I was in grad school). If I decide not to use my savings to pay it all off at once, I could certainly change this payment plan significantly. (Although interestingly, on the Sallie Mae website, they only give you an easy link for decreasing your monthly payment, not for increasing it. Thanks, guys.)

            • Ross April 18, 2012, 1:52 pm

              In that case, I would definitely recommend paying down the debt yourself as you will get a much greater appreciation for taking responsibility for your finances. I would suggest that you start by creating a monthly budget and figuring out how much you can put towards debt repayment. Most people on this blog would recommend paying it down as aggressively as possible and setting high monthly payments. If you set a frugal budget with high monthly payments you should have that debt paid off in no time and keep your interest costs to a minimum. You may also want to review the loan and make sure that your are paying a reasonable interest rate.

              I was able to pay off my $35,000 student debt in 13 months. My budget was very tight and I had to be frugal but by the time I had it paid off I had a much greater appreciation for the amount of work it takes to get out of debt and pay for the things that I want.

              • Leslie April 18, 2012, 3:24 pm

                Thanks for your advice! In case anyone is curious, it turns out my investment account is a Roth IRA, so I can take out the principal with no penalties but would have to pay a bunch of tax if I took out any of the earnings.

                Paying off $35,000 in 13 months is awesome. Congratulations! I only make $45K pre-tax… but maybe I can pay this whole thing off this year.

              • bogart April 18, 2012, 8:53 pm

                @Leslie I won’t claim to be fully Mustachian and may get blasted for saying this, but I for one would not take money out of a Roth lightly (e.g. to pay off a loan that is at a “reasonable” interest rate, where <5% is clearly reasonable and anything 5-10% probably merits some mulling and anything over 10 may not merit mulling at all, but I really have no idea, not having ever if my life to date had debt at that rate.). The tax advantages of Roths appeal to me a lot (and basically, the younger you are — and you are noticeably younger than me), the more valuable those should be (the longer your investment and its earnings have time to compound), and, though there are some loopholes (e.g. converting other IRAs to Roths, if you have other IRAs), you can only contribute $5K per year outright to a Roth.

                Were I you, I'd check the interest rate on that debt, and possibly talk to a professional financial advisor, before touching the Roth. Once you've done that, you can't undo it. I'd also, of course, recommend exploring other Mustachian options (cutting costs), rather than touching the Roth.

        • cdub April 19, 2012, 9:49 am

          I just read that it is a Roth IRA. Yeah, definitely don’t touch that. As for my 27 year old comment. I guess that came out wrong. I have an 18 year old who graduates high school next month. He can’t wait for “freedom” as he calls it. I guess I just can’t fathom someone your age actually giving a care what their parents think about their finances. That said, it sounds like they did a nice thing for you with that ROTH! Keep it, pay down your debt and keep learning!

          • JaneMD April 19, 2012, 8:46 pm

            As a whole, I try not to remove my debt payments from my retirement savings. Many people consider doing something similar to pay for their children’s tuition – but the retirement count marches on. You can alter and extend your loans; retimrement accounts not as well.

            How long would it take you to pay off living frugally or becoming a Master Mustache?

  • James April 18, 2012, 1:15 pm

    Hey MMM,

    I have a tiny formatting suggestion; instead of putting footnotes at the bottom of the page, could you put them right after the relevant paragraph? That would save a lot of unnecessary scrolling.

    • Sean April 19, 2012, 5:01 am

      That, or you could use a hyperlink instead. I’ve seen other bloggers do that before, and I love it.

  • George April 18, 2012, 1:17 pm

    Thanks for the great posting.

    Even though me and my wife have no debt except our mortgage, I think the same hardcore attitude can be applied even after you’re out of debt.

    I noticed that there is a comfortable neutral area that is tempting to fall into, its the zone between having only mortgage debt as your only debt and not yet reaching early retirement.

    Even though we’re doing ok with about 150k in savings total and steady dividend income, this reminds me that we need to kick it up a notch and start building the stash up more to get to that next level. I think I am getting too complacent.

    It seems its even better if you can take that same drive and apply it even after you’re out of debt to get to early retirement.

  • Brian April 18, 2012, 1:24 pm

    I agree that debt should be considered an emergency. I’d like to add that it only crosses the line into ‘Emergency’ territory when the interest you’re paying on it is higher than the return you can logically expect from investing the money, in my opinion.

    For example, I have a loan with my parents left over from school. I pay zero interest on this loan. I recently finished paying off my government student loan (after putting a concerted effort at it for a year, although only a fraction of what No More Harvard Debt did!).

    Now, while I am paying of the loan to my parents, I am also putting a larger effort towards investments that will return 4-6% over time.

    • Emmers April 18, 2012, 7:54 pm

      Yep! We have a 0% loan for our newer car — we don’t pay it off, because 0%!

      • cdub April 19, 2012, 9:51 am

        I was doing that but had to pay it off to qualify for a loan on an investment (rental) property. Still feels nice not having the payment even though it was interest free.

  • Marianna April 18, 2012, 1:24 pm

    If you like a good inspirational anti-debt tale, check out Andthenshesaved.com

    • Mrs. Money Mustache April 18, 2012, 2:01 pm

      Nice suggestion! Thanks.

      Looks like she has also knocked off her debt in a NMHD type of way – by going all out. I love these stories! The most interesting thing is what people learn through this experience and how much of that badassity they decide to keep for the rest of their lives.

  • The Masked Investor April 18, 2012, 1:28 pm

    Mr. Stache, I would be interested in your view of debt for those of us who are comfortable and could easily extinguish such liabilities if we wished. For example, the working stiff who has no immediate plans to retire, is in a 30+% marginal tax bracket and owns a home with a 200k mortgage at 3%: would you suggest that this person hurry up to pay off the loan? This becomes an investment./trading decision more than anything else, I would suggest