Debt. Yuck. Is that concise enough? Unfortunately, without it life can take more effort – until some skills are learned. Debt is a tool. Used well it can ease stresses. It can be the lubricant that lets life flow by allowing action easier and sooner. Used too much and it becomes as destructive as any addiction. During the last couple of years I agonized over a bit of an excess. I’m feeling better now, thank you. It hasn’t been easy, but I’m glad I am tackling my debts.

Life without debt would mean always saving for every purchase. That is an admirable goal. It would still be possible to spend too much, but the limit is physical and real. It would also mean possibly waiting decades to buy a house (how long would it take to save up $300,000?) or years to pay for some medical treatments. Living without debt worries is one of the attractions of wealth. The wealthy have a much broader range of stuff they can easily buy. Unfortunately, without a fortune, the unwealthy would have a harder time starting businesses or paying for schooling or many of the other avenues for getting ahead. Ah, but the frugal folk have a way around that. But lets put that aside for now.

Many people decide to go to school, start a business, buy a house, and take occasional vacations. Some of that involves work and necessities. Some of that involves play and passion. All of that can make life better. Most folks take on a bit of debt rather than waiting through years of saving. Done prudently, temporary debt is powerful. At the corporate and governmental level, temporary debt eases a lot of bookkeeping. Otherwise, with so many different people depositing money and writing checks, eventually there’d be a slip when a lot of checks bounced merely through a fault of timing.

Most of the current concern is about too much debt. House defaults, maxed out credit cards, and eternal student loans coupled with unemployment and stagnant wages mean lots of expenses happening at a time of lower income. Except in the case of things like medical expenses, we did it to ourselves. It is easy to point fingers at the financial institutions for overselling, but buying houses that were too big, or buying more stuff than we could afford, or spending too much on vacations and dining out are personal decisions and personal responsibilities. Even student loans can be discretionary. Parents who succeeded on state university educations seem compelled to pay for Ivy League diplomas even though they learned in simpler establishments and some of the most marketable skills are taught in community colleges.

Sometime before August 2nd, 2011 the US government has to figure out how to handle its debt. Except for a few years during the Clinton administration, I can’t recall even a hint of a budget surplus. I don’t know anyone who handles money less responsibly than the organization that the money represents. Sadly, the argument over the deadline is reducing to a contention over the debt ceiling. That’s like being able to arbitrarily raise your own credit card limit. It’s an attractive option, but interest has to be paid on that increasing debt, and many people have witnessed that pain. Luckily the government’s interest rates are much more reasonable than most people’s credit card rates. The numbers are unsettlingly large though. The average US debt per person is about $45,000. The average household credit card debt, for those who have credit card debt, is $15,000.

Fortunately, there are wonderful role models amongst us: the Frugal Folk. While I aim for frugality, I bow to those who truly embody its practices. (Simple Living Forum and The New Road Map Foundation) They spend less than they make, pay for their needs first, have money set aside for emergencies; and if there is excess, invest; and if there’s excess excess, maybe pay for some comforts, probably help others, but not spend for the sake of spending. The trick is an awareness of personal needs versus personal wants versus public pressures, and the appreciation of what’s here and now. Use those tools for years and some frugal folk find themselves well off and dealing with that excess excess. Ignoring external pressures to buy and spend uselessly saves impressive resources. Maintaining appearances is costly.

The media and advertisers make it sound like such folks are uncommon and probably odd, but there are enough frugal folk out there to make a major party. Despite the difficulty of buying without debt or credit, about 30% of the population doesn’t have a credit card. Considering that about an additional 15% of the population is under 12, there is a bare majority that account for our personal credit card debts. Thirty percent of the population probably understands personal finance better than the US Government. It’s a good thing this is a country built from We The People. The pity is that the frugal folk aren’t the ones running the country. The ones running the country are typically wealthy, and have an odd relationship with money because of campaign financing. I think it would be fascinating if one of the requirements for public office was to live within the median household income while in office.

Personally, I am making good progress on paying down my debt. Up until about two years ago I almost always paid off the balance each month, but then as the market collapsed I decided to delay some stock sales and let a few of the expenses sit on my card. The costs of publishing the book (Dream. Invest. Live.) while producing a photo essay (Twelve Months at Cultus Bay) weren’t extraordinary, but they came as the market fell. Then came a major car repair, some medical bills, and an obstinate desire to maintain the habit of one vacation per year. The credit card company raised my debt limit, but my emotional limit was more important. I wanted to get rid of that debt, regardless of the charges. I’d rather live within my means. The delayed market recovery delayed my paydown, and the accrued finance charges became more than an emotional issue.

A simple choice here, an unexpected expense there, a habit that should’ve been put aside for a while (though that vacation in Scotland was revelatory), and I began to understand how easy it is to fall into a debt spiral.

For the last year or so, I’ve paid down my debt by about two dollars for every new dollar spent. My credit card debt is much reduced, and a glance at the numbers suggests that costs from delaying the paydown are smaller than the returns I’ve received from my stocks, but that’s not a game. I played it and paid an emotional price. I don’t recommend it to others.

Speaking of other, last week a friend though was able to celebrate paying off a major credit card debt. The onerous interest rate of over 24% is now being charged against a balance of zero. The financial institution wasn’t happy about it and tried to talk them out of it. My friend may have kicked the habit, but the bank is still addicted to debt.