Debt Is Not A Problem Solving Tool - Financial Peace Is

It is possible to go from minimum wage to a real salary and still feel completely suffocated by debt. A caller named Gabrielle, twenty-seven years old in Los Angeles, just landed a job making $65,000 a year after earning $17 an hour. He has $60,000 in debt, two children, $1,100 a month in child support, and recently totaled his $1,000 Toyota Camry. His solution to the car problem was to finance a $17,000 replacement. As Dave Ramsey put it, "Totaling a $1,000 car does not constitute purchasing a $17,000 car. These things are not on the same page. This is your emotions got out of control."

The Big Trap After a Raise

The most dangerous moment for a person in debt is the moment they finally get a real paycheck. Dr. John Deloney described his own experience: "I got my first big fancy job, and I worked a bunch of extras... and I ended that year double, if not one and a half X the amount of debt I started that year with. Because I finally got this job... I didn't say no to myself ever." The psychological mechanism is simple: after years of deprivation, you feel entitled to "catch up" on all the spending you missed. The advice is brutal but specific: "If you will hold tight for twenty-four months, you can change everything in your life." The first step is to stop using debt as a problem-solving tool. When a new problem arises—a totaled car, a medical bill, a home repair—the norma