Getting Off the Debt Merry-Go-Round

Day 12 of 31 Days to a Better Bank Balance is all about getting off the debt merry-go-round for good.

The single most important thing you can do to get out of debt is this: Stop adding to your existing debt.

While that sounds simple at first glance, if it were as simple as it seems, everyone would do it.

What “stop adding to your existing debt” really means is that you’ve got to change how you think about your wants and needs.

Most people have a heck of a lot of their wants confused with needs. So for today, get out a piece of paper or open a document and categorize your spending into three categories: needs, wants, and high-priority wants.

There should be very, very few things in your “needs” category.

For example, cable TV is not a need. Nor is a car (even if you live out in the country, have kids to haul around, or live in an area without public transit.) Eating out is not a need either.

How do I know those aren’t needs, without knowing your individual circumstances?

Simple: you won’t literally die without those things.

The only things that belong in the “needs” category are things you’ll die without. Everything else is either a “high priority want” or just plain a “want”.

Maybe surprisingly, high priority wants aren’t things that you want a lot or that you put a high priority on. Instead, they are things that it would take a significant amount of time, effort, or money to do without.

For example, if you live 40 miles from work, it might be hard to do without a very basic car if you can’t move, work from home, change jobs, or carpool. You’ve got to be ruthless with the high priority wants category though, and thoroughly explore alternatives without dismissing them out-of-hand. Servicing (and ideally paying off) debt IS a high priority want, even though few of us look forward to sending out money.

Everything else should fall into wants, and should then be prioritized in order of importance to you and your family members.

If you’re up for sharing your categorized in the comments, I’d love to hear them.


  • so true! i love when people say, “I would DIE without cable.” I know i’m guilty too. “I would DIE if I couldn’t eat Thai food.” lol

    i will say though, a car is almost a necessity in LA. i don’t know anyone who has been without a car here who was able to really get things done without it being an extreme hassle and/or struggle. a new car…definitely not a need, though.

    i believe true needs fall into 3 categories: basic food, clothing and shelter. but so many people can’t/don’t live just with what they need. would you recommend that for people who are doing well now financially? there are so many ways to answer this :D lol

    • Would I recommend that people separate out their expenses into needs, high priority wants, and wants even if they are doing well financially? I don’t think it could hurt. After all, chances are most of us will get laid off at least once or twice in our lives, so situations can change quickly. It can’t hurt to already have a handle on things, and to keep things in perspective even if things continue to go well.

    • Dude (or Danielle, rather): I’m living life in LA without a car starting tomorrow. We’ll see how it goes. I shall chronicle on me blog! But yeah, it’s gonna be different. Most importantly, it’s not going to be convenient. That’s what people really love about the car, it’s glorious pinnacle o’ convenience.

      Anyhoo, Jackie, I find it amazingly offensive that you think I won’t die without wine. HOW DO YOU KNOW? ;P

      I’m going to start a very aggressive and ambitious savings plan once I kick the car addiction (tomorrow! Holy hell!) and I am pretty amazed at how much money my car “want” consumed and how very little there is that I actually “need” to spend money on. Oh, how I wish I had done this years ago.

      But my list goes something like this:
      Family (I help a couple of family members out) & Charitable Giving
      Household goods (vinegar to clean with, etc.)
      ‘Net and phone
      Random Crap (eating out, entertainment, etc.)

      Only the first two are actual needs. Everything else is gravy.

      • I’m glad you’re going to chronicle; I’m planning to interview some people without cars for a future post too, so maybe you want to be volunteered for that? :)

        And as far as the wine thing goes, I suspect we’ll never know for sure, right?

  • I’ve never really considered high priority wants. Just the basic needs/wants.

    I think that a car for someone who lives far from work and doesn’t have to option of changing that would consider a car a need – since not having it will destroy their ability to buy needs.

    • Ah but see there are a lot of other ways to buy/get needs beyond owning a car…

      Needs vs. wants is a huge pet peeve of mine, I think because it’s so easy to turn wants into needs. Maybe a car makes life a whole lot easier, but that’s different.

  • Glass Is Half

    There is something called Maslow’s Hierarchy of Needs … really smart guy developed it but it basically outlines the prime difference between need and want. People’s definition of the two are completely skewed and without realizing the difference no one will get out of debt in any reasonable time-frame.

    • I agree. Also, if we don’t realize the difference between the two, we don’t appreciate the things we have as much as we could, which means we miss out on a lot of opportunity for enjoyment and contentment.

  • Great stuff

    Because if you look at it this way, at least in the beginning, the only thing that is truly a need is food and water.

    Keep that in mind.

    Of course, we can’t live our lives that way, but it should put things in a little bit better perspective for us.

    Then you can move on down the list and decide what else is really a “need” and not a “want” in disguise