YNAB Podcast Episode 57: When debt is an addiction.
Hello YNABers. My name is Jesse Mecham and this is podcast number 57 for You Need A Budget, where we teach you four rules to help you stop living pay check to pay check, get out of debt and save more money.
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Today we are going to be interviewing a participant in an awesome program, proven program, to help people that have a debt addiction, and that is Debtors Anonymous. I found it terribly interesting to interview Linda and to find out how the program worked; and she is an excited YNABer and she spreads the YNAB word among her Debtors Anonymous aficionados. So, it’s a great program.
Without further ado, here is the interview:
J: Okay, this is Jesse and I’m here with Linda I – that is not her real name, but she’s a member of Debtors Anonymous, and I just wanted to have Linda speak with us about the program and how YNAB helps in that, but also maybe how people would know if they should look into it. So, Linda, let’s just dive right in. Well, first, let me thank you for being on the program.
L: Thank you, Jesse.
J: This will be a lot of fun. I wanted to basically dive right in and just ask you if there’s a point where someone should be concerned that they really… I mean, we know debt is a problem for many, many people, but when someone should be concerned that they REALLY have a debt problem; like what kind of signs to be aware of.
L: Well actually, the organization Debtors Anonymous has 15 questions to ask yourself that can give you a clue if you’re really in trouble, such as, “Do your debts cause you to think less of yourself? Have you given false information in order to obtain credit? Do you make unrealistic promises to your creditors?” So if you read those, they say if you answer yes to at least 8 of the 15 you really should look at yourself and consider it that possibly you’re a compulsive debtor. There’s also signs of compulsive debting. The Debtors Anonymous site is debtorsanonymous.org, and it just talks about compulsive shopping and describes a lot of different signs that you can tell if… You know, so if you’re borrowing money off one credit card to pay another credit card, or if you just don’t pay your bills, even if you have the money you just can’t find the bills so you accrue late fees – all those things are signs that there’s something wrong and your life is unmanageable because your debt is just becoming crushing. If you look at it and you’re just constantly using credit cards or you can’t stop shopping even though you want to… You know, I know people who have plenty of money but they are out of control with their spending, even though they have the money. So it’s not necessarily that you don’t have any more money or you just have a lot of debt; and they say a compulsive spender is just a debtor who hasn’t run out of money yet.
J: Okay. So there’s obvious financial strain there with compulsive spending. Someone that maybe recognizes that they have a problem, they want to stop, how does that compulsive spending affect the person’s life outside of the obvious financial… direct financial consequences?
L: Well, I found just from my years now of being in recovery compared to being out there, it destroys relationships. I mean, I think – you might know this – there’s a huge number of divorces that occur over finances. You know, when one of the partners is a compulsive spender and one of the people is responsible, it can just wreak havoc because the person who’s out of control is spending money that maybe is needed for the mortgage or for food. Another thing, it can affect your relationship even with children. Let’s say you have small children but you’re compulsively on the computer with the home shopping network, not paying attention to your children. It can affect your time; they talk about time debting where you just… you fritter away and waste time with compulsive spending and compulsively thinking about spending.
J: Absolutely. So it’s interesting, when they were… I remember speaking with someone and I said, “Well, how do you know when you’re addicted to anything?” and they said, “Well, as soon as it starts to affect other aspects of your life – your job, your relationships, your health, things like that – then you know that you’re addicted,” and that goes for alcohol or gambling or any other number of vices, so to speak.
L: Right. This is not a play illness, you know; this is a very, very serious thing and people, they kill themselves over this. I mean, it destroys lives. It’s not a joke. And I think anybody who’s experienced the weight of crushing debt or not being able to stop spending money and worrying about using money that should be used for something else but they just can’t help themselves can understand that this is devastating.
J: Tell me about the structure of the Debtors Anonymous program – how it works, what the benefits are for those that are seeking help through the program, and maybe the difference of them going the Debtors Anonymous route versus tackling it on their own.
L: Well, the Debtors Anonymous route talks about… First of all, you aren’t alone – that’s one of the wonderful things, is that somebody who also has that problem can really help somebody else who has the same problem, right, because you can identify it. There are meetings; there’s many, many meetings on phone, so people all over the world – it’s just amazing – can get on the phone and all talk about the problem and the solution. And they say the solution is a spiritual solution, but that doesn’t mean religious because it is a big difference. But it’s if we could have stopped on our own, I think people who really have a problem with being out of control with money and debt would do it. I couldn’t do it on my own.
So, the program is based on Alcoholics Anonymous, and there are 12 steps and those are kind of instructions. There are books that you read and… So people go to meetings, and there are face-to-face meetings but they do it on the phone as well. One of the key things is a spending plan, which is where YNAB comes in, because without… They don’t call it a budget, even though you call yours a budget – that’s sort of a “no-no” word in Debtors Anonymous because budgets can imply deprivation, like being on a starvation diet; whereas Debtors Anonymous is helping you create a spending plan which is showing you how to use money to live your life appropriately. As opposed to gobbling a whole cake, you know, eating it in proper bites. So, in Debtors Anonymous, by having a spending plan – which YNAB is THE perfect tool… In the older days people did what was called the envelope system where they literally kept cash in envelopes that were labeled Groceries and Hair-cut; and YNAB is a virtual envelope system. It’s just… it is THE most perfect tool, because it helps you accrue in your different categories so you save up for things monthly. And one of the best ways to do that spending plan is to take what you have to pay and you divide it up by, let’s say every month you owe your car payment, so you put that much away, or if there’s an annual… something you pay annually you divide it by 12 and for each month. I mean, I know this is all the stuff you teach as well! And you also get someone called a sponsor, who is another member who can help you on the phone.
Now, I do something called the HOW Program – Honesty, Open-minded and Willing. It’s a little more structured with the tools. So, I make a phone call every day to a sponsor; I tell the sponsor what I planned to spend yesterday to the penny, what I actually spent to the penny, what I plan to spend today; and I actually don’t spend one cent without calling somebody or texting somebody to let them know, and it is the most freeing thing in the world. So I no longer compulsively just go have a spending binge. And I also do some writing and reading every day – not excessive, just something that kind of helps me to think about the healing part of this. And we also call each other in between to get support. And one last thing, we do something called Pressure Relief Groups. That’s where two other members get together, say with me, and I do it on the phone, and they help me with any financial pressures, to work through my spending plan, to create the spending plan, to tweak it to if I need to save for something or if a crisis comes up. It’s just, it’s a wonderful way to support each other and to gain the strength together with others to do what we couldn’t do by ourselves. So that’s pretty much it.
J: So you combine… I sometimes wish that I could have YNAB sponsors; with everyone that purchases the software, I wish they could call someone and say, “Okay, tell me how this works.” We try and do that with our online classes to a degree, but I’ve always wanted that sponsor program. It’s always been so fascinating to me because it just seems so effective. You know, someone that has some empathy for that person’s situation, having been there and kind of walked that same path.
L: Well, that’s why I just created a website called gettingoutfromgoingunder.wordpress.com, and that’s the purpose. I wanted to talk about… That’s why I’m doing it anonymously because in the program you can’t reveal your name, etc. But I wanted a place where people who were maybe exploring this program, or even not, to understand how to use YNAB in context of the program. So for instance, today I just wrote a posting about split transactions and how to do them, and with some philosophical ideas around it. And I have some posts on setting up the spending plan within the context of the whole DA ideology.
J: This is great. So, for people that maybe… you know, maybe they’re not compulsive spenders, maybe they aren’t a prime candidate for Debtors Anonymous, but what are some good habits that people can maintain to make sure that their debting never becomes a serious issue?
L: Well, actually, something that shockingly my own son is doing on his own – he’s in college and he called me, he was all excited – he’s using a tool to write down every single thing he spends. And so he said, “Do you know, I spend most of my money on pizza!” You know, it was kind of funny! And I think the most… to me, the key thing is being… having clarity about what you’re spending your money on. I think everybody should use YNAB – I do, whether you have this problem or not – because you get… there is no more clarity than with your program. And I mean, you’re not paying me to say this! I’ve used your program for almost three years now, and it has just changed my life. I was an expert Excel… I could do Excel spreadsheets and all kinds of stuff, and before YNAB I just couldn’t get it right; I just kept, “No, but I need this and I need this and I need this.” And then when I got YNAB, you actually had everything that I felt that I needed.
So to me, the willingness to live by the categories, to reconcile with your bank account; I’m surprised at how many people don’t know how to do that. I just did a post because a couple of people were telling me they’d never done it before, and I was shocked. These are adults! You know, these are not just kids. So I think, I really think that being willing to live within your means is crucial, especially in these days. My husband is not a compulsive spender or debtor, and I’ve watched… he’s amazing. He, of his own volition, writes down every single thing he spends; he’s never had credit, other than he’s had a mortgage or a car payment; but if he uses a credit card he pays the entire thing at the beginning of the month. He’s never been in debt. And I think that’s the most important thing that people can do, is live within their means. I mean, just as a person. And that’s separate from the 12 steps, which is what somebody with higher power and power that’s greater than you in your life – that’s a little bit different.
J: That sounds… It really comes down to what we talk about a lot when we talk about Rule One, and just one word to sum up the idea of giving every dollar a job; and the idea is just to be aware. You know, just to have awareness; just to know where the money’s going and making sure that it’s doing things that you really care about.
L: Right. And you might find that, you know, if you’re short at the end of the month and you say, “Oh my God, I go to restaurants so much!” how much clarity that gives you. And you can change that behavior. And the other thing is… you call it the buffer, I call it living in the next month. That absolutely is the most amazing thing, and it’s not so easy to get to. But the idea of “what I earn this month I spend next month” is SO freeing, because on October 1st I don’t have to worry about that in the middle of the month… I know I’m getting a check on the 17th but today I’m almost out of money, I know on the 1st exactly what I have to spend for the whole month. It’s just the most fabulous thing, especially… well, for anybody who gets maybe two pay checks a month. Right? So on the 1st they have their pay check, but their spending plan is for the whole month; however they’re not going to maybe have enough on the 14th if that check hasn’t come, the second check.
J: It’s just a lot of stress there. That timing of those bills to pay checks is just lots of stress. Absolutely.
L: Yes. They should teach this in school!
J: They absolutely should. You know, the only problem with that is that the kids don’t have any pain yet. That’s what I always tell people. I say, “Well, if the kids had bills to pay then they’d start to feel that pain; but they don’t so they don’t perk up because they don’t have a pain to talk about.” But it is something that we… I mean, as parents, you know, you basically teach your kids by example, and it’s kind of like you do things so loudly I can’t hear what you’re saying, is kind of the phrase. And so I always hope that I can LIVE in a way that my kids can just see, “Oh yes, dad checks his budget before he spends money, and then he plans,” and things like that. So that’s probably the biggest thing. But that means we have an awful lot of adults to educate in the meantime.