Debt has a way of breaking down our minds. It feels like the only thing you can think about is the heavy burden of your credit card balances.

And this feeling is not out of place, because consumer debt is a drain on our finances. When you are trying to pay off a balance, you are working against the interest you are paying the credit company. Every month you pay less and less interest (assuming your balance isn't increasing). With every payment, the sting from your debt goes down.

Every item you went into debt for goes up in cost. That $3,000 tv you put on your credit card could end up being over double that amount if you only make minimum payments.

But paying more money is not the only thing you lose.


The more you can grow your net worth, the faster it will grow on its own. This growth is the power of compound interest. What is the most potent factor of compound interest? Time.

Saving your first $100k is a big deal. As this article from Four Pillar Freedom points out, for each $100k you accumulate, the next $100k will come faster.

It's crazy to think how powerful money is once you start getting more. The more time you have, the more compound interest has a chance to work towards your benefit.

Caught in the Consumer Debt Storm

At least in my case, I was so caught up in what I wanted to buy or paying off the debt I accumulated, I lost track of time. And this time was costly.

If I had started saving $500/mo 15-years ago, assuming a 7% interest rate, I would have over $159,000. If I saved $1,000/mo, it would be around $320,000.

Saving $1,000/mo grows to $320,000 over 15-years.

But why would you want to save while being in debt?

The idea is that if your debt has a higher interest rate than what your money could earn, say in index funds, than you are better off paying down the debt instead of saving money.

And the math is clear. Your investments are most likely never going to earn more money than 18%-24% interest you would pay on most credit cards.

But the only way you are going to stop habitually going into debt is by changing your habits and tackling the core issues in why you went into debt in the first place. Paying off your credit cards might partially do that. However, you could find yourself with zero credit card balances, and end up going back into debt.

I'm not advocating that you don't pay extra towards your credit card balances, because you still want to get those paid off as soon as possible. But I think it is valuable to also work on changing your habits and seeing your money grow, which will help you not put the past on repeat.

Looking at my past, this is what I wish I started doing while I was paying off credit cards:

  • Contribute to our 401k's to meet the employer match (free money). This investment is a guaranteed 100% return that you don't want to miss.
  • Open up Roth IRA accounts and put some amount of money every month, maybe $50-$100 into each account.
  • Work on filling up our emergency fund. At a minimum, I would have liked $2,000 available for emergencies.
  • Open up an after-tax investment account and put in $100-$500/month.

Double Motivation

Seeing negative account balances becoming less negative is only going to motivate us to a certain point. But seeing these balances go down, while your investment accounts go up, has a way of re-wiring your mind.

After a few years, these accounts will start to have a significant amount of money in them, and will hopefully be growing. You'll begin to want to see these accounts grow faster, which will provide more motivation to get rid of your credit card debt.

By the time you do reach credit card debt freedom, your primary investment accounts will already have balances, and you can start focusing on pumping more funds into those accounts. This idea, in turn, will increase the rate they are growing, which further helps to build a positive mindset on the power of money.

Power of Money

It's amazing how money can either make us feel a tremendous burden when we have massive credit card debt or incredibly powerful when it starts growing on its' own. Living paycheck to paycheck feels like you are living on the edge, waiting to fall off.

But we can use our emotions to help us make smarter financial decisions by seeing how small amounts of money can slowly grow to significant balances. The hard part is getting started.

This reason is why I think anyone who is paying off large amounts of debt should consider saving money while paying off debt. The psychology in making small changes in our habits can have a considerable impact.

Will this mean it will take a little longer to become credit card debt free? Most likely. But you also might end up finding ways to increase your income and get rid of that debt faster. So even from a math perspective, you could end up ahead.

Timeline and Burnout

Most of the times when we got serious about paying off debt, it was going to take 2-3 years to get fully debt free. We would work hard for a time and knock out debt.

But then we would get to an incredibly low emotional spot where we were drained to our core. We weren't enjoying life. These low points made it easy to forget the pain that was caused by the debt we paid off, and we would end up repeating the cycle.

Pushing harder towards a goal for a short time can be a good thing. But we need to be careful in understanding why we are doing what we are doing.

That's why I think the goal has to be much bigger than becoming debt-free. Consumer debt is usually a symptom of larger problems. Why do we believe overspending is going to make us happy? How were we convinced that all of this crap was worth the cost when most of us knew going into debt is not a smart financial decision?

Tackling the Core Issues

For some of us, we are mimicking the environment where we grew up. Maybe your family lived paycheck to paycheck and brought everyone around to show what they bought, but couldn't afford.

These type of habits and perspectives are the hardest to break because they often drive most of our debt behavior. It's like we are chasing after the same positive feelings we experienced when we younger.

The more we can face reality in how things actually work, the more we can break down the walls that are holding us back.

Part of what motivates me is that I want to show my kids how to learn to be happy without feeling the need always to buy things. Not that they should never spend money, or splurge on something they want. But they should be cognitive of what is going on with their spending. Wanting to live like a Kardashian without having the income to support that lifestyle is not healthy. And even if we could spend money like that, would that make us happy?

That's why I think putting yourself in a position where you realize you have only a certain amount of money you can spend from your budget is wise. But also making sure your budget isn't too tight or unrealistic.

Benefits of Saving While Paying off Debt

These are the main reason I've become an advocate of saving money while paying off debt:

  • Having an emergency fund will give you some margin in not having to go into debt for unexpected emergencies.
  • Contributing to your 401k is the easiest way to save, as it comes directly out of your paycheck and gives you some tax benefits.
  • Seeing your saving balances grow over time can help re-wire your brain in forming healthy saving habits.
  • If you have a family, you can teach them how to budget and save money.
  • By the time you get debt free, your savings will already have been started.
  • Provides extra motivation to get debt free as soon as possible so that you can grow your savings accounts faster.
  • The emphasis shifts from not only becoming debt free but building your net-worth. Which is a positive spin on the situation.

I'm frustrated and amazed at how I was able to get so passionate about paying off debt, and yet unable to avoid the same mistakes. This cycle ultimately cost me valuable time, and massive amounts of interest I've paid on our consumer debts. Now I'm left with the burden of how much time we wasted, and the amounts we could have saved if I figured out what was going on earlier.

This reason is also why I question whether implementing the debt snowball is always the smartest option. When paying off debt becomes the primary focus, it's easy to miss the whole point of what we are trying to do.

Pursuing Happiness and the Life We Want

Our consumer culture makes it seem like spending is the secret to happiness.

And it gets confusing because buying stuff can be exciting. We get a new shiny object that takes us away from our current reality for a short time. But I'm learning that these types of feelings at best are temporary. They never last. There was no product I went into debt for that was worth the cost after time.

The reality is that our choices either have positive or negative outcomes. By learning to be purposeful in every aspect of our lives, we realize that our ultimate happiness is not tied directly to what we can buy. In some cases, we are trying to live up to a standard to make ourselves look good in the eyes of other people, or make ourselves feel special. Or maybe we believe our hard work deserves this stuff. Or we are spending money we don't have as a way to distract us from the pain and frustrations in our life.

But all this is ultimately bullshit. And it costs us time that we cannot gain back.

Do I want to get to a spot where we can loosen up our budget and spend more money? Yes. But I'm learning that even if/when we get to this spot, this is not a magic happy pill. By learning to be satisfied with a limited budget, we are figuring out the secret in having a happy life, which is separate from how we spend money.

Ultimately we are trying to increase our net-worth, while also figuring out how to be true to ourselves and what makes us happy.

The Secret to Happiness is Gratitude

I've written about how gratitude is one way we can increase our happiness.

When we feel like our life is lacking for whatever reason, it becomes easy to think about how buying something is going to turn our life around. We buy into the commercials that this is the ultimate product we “need” to be happy.

But we are pretty much grabbing at air. Sure, some products and things we buy will make our lives easier, but none of them are designed to make us a happy person. The only way we can be happy is by looking inward and figuring out what matters the most.

My relationship with Andrea and my girls is the most valuable thing I have. Creating happy memories with my family is worth more than all the money in the world. The more I realize this fact, the easier it is for me to cut through my desire to accumulate more shit.

The more time I have to spend however I want, the more I can focus on what really matters. This freedom makes me and my family happier, and it also has a way of helping my girls create good spending habits. Instead of them chasing what they don't have, I hope they can see what matters most much earlier than I did. I don't want them to have to go through what I did to understand the most important things in life.