Debt is the great equalizer

Imagine we are on a desert trip. Every 2 weeks we come across an oasis with a spring full of fresh water. We replenish our water supply. We feel good, revitalized, and ready to go. So off to the next oasis. Over the course of those 2 weeks we drink and drink and drink. We drink all the water so as the end of week two approaches we get nervous. What if the water is not there? If we can’t access the water? If we need more water? All of this leads to stress, sleepless nights, and a more difficult journey. And it sucks! No one wants to live this way.

Debt desert

In the modern era, at least in most developed countries, water is abundant and instead we thirst for money. We imagine that those with lots of money are doing great. They are living in big homes and driving fancy cars. It is true, they may be living the high life, but if they are in debt, they are still stressed.

Debt is the great equalizer. It doesn’t matter if make $50,000 or $500,000; debt is the great equalizer. Debt is waiting to take it all away. Debt doesn’t care how much we make. It just wants to take what we have.

I may be a doctor and make more money then the average American. We may eat at more expensive restaurants and vacation at fancier hotels (well maybe not fancier hotels, but I do like to travel), but at the end of the day if I am taking on debt to finance my lifestyle, then I am stressed and unable to focus fully on other aspects of my life.


Make more money

If most people had the option, they would choose to make more money. Money makes life easier. It doesn’t fix all of our problems or make us happy, but it does make things easier. The problem is that money does not equal smart decisions.

I have plenty of colleagues who make a ton of money, while also sitting on a lot of debt. Instead of focusing on debt pay down, they buy $100,000 cars and spend $10,000 on trips. Then they sit home and stress about where their money has gone. Despite large paychecks, they are running high credit card balances. They are living paycheck to paycheck. It’s okay to buy things if they will make us happy, but to buy toys while worrying about debt doesn’t make any sense.

Many of us in the US live pay check to pay check, and it is stressful. Debt can ruin sleep, lead to ulcers, and upset the natural order of home life. I have been there and it sucks. In fact, while I am better off now (less debt), I am still not out of the woods and depend on a regular income to keep me afloat. I am not financially independent. It doesn’t matter that I make a lot of money, if everything that comes in goes out then I am not relaxed.


So what can we do to improve our lives? 

It depends how much we are (or are not) saving.

We need to figure out how much we make and how much we spend. By tracking the amount in and the amount out (a spending report), we can get an idea of what, if any, money is left over to pay debt. If we are spending everything we earn, then we are breaking even. This is not ideal, but is better than taking out more debt. In this situation, we should pay attention to spending and determine a few places we can stop spending and save money to pay down debt.


Are we saving the equivalent of half our income?

This is respectable, particularly if we are thinking of early retirement, as saving half of our income means we can typically retire in 10 years. I would be cautious of such extreme saving, however, as there are no guarantees we will be here in 10 years and such saving may leave life a bit dull, a bit mundane, and a bit monk-like (though Mr. Money Mustache would disagree).

The gateway to freedom?

Are we spending more then we make?

This is the case for most Americans that are in debt. We buy a car with a 60-month loan so we can afford the monthly payments. We cannot necessarily afford the $40K sticker price. This is a bad scenario. We should not be buying everything on debt. Some items are okay and arguably necessary. Our family’s security or education is worth it. Even an automobile if it is needed for transportation to and from work can be worth it (albeit we can all likely buy cheaper and equally reliable cars). Taking on more and more debt, without first paying those we owe will lead to more stress down the line.


What is the best scenario?

Ideally, we spend most of our money (70-80%) and save the rest. This requires some discipline but allows us to enjoy life now, while planning for the future. We have provided for our family while protecting them. We pay down debt and prevent it from stressing us out. Once the debt is paid down, we start saving.


Once we figured out which scenario we are playing out in our lives, we can move forward and make the changes necessary. It may not be easy at first to stop borrowing and pay down debts. As our net worth approaches 0, we can all sleep easier at night. Our financial stress (and likely familial stress) will begin to fade away. As our net worth grows positive, we will feel more relaxed. Remember Debt is the great equalizer. I may take home a bigger paycheck, but I am currently just as broke as most of the dads out there.

What is your net worth? Do you agree that debt is an equalizer? Share your stories here.

Sign up for the latest post!

No spam guarantee.

Follow me on social media!
  • Facebook
  • Twitter
  • Instagram
  • Pinterest


I am a Dad and Doctor trying to find financial freedom by owning my dollars and debts. Helping dads with their finances so they can focus on the family.

12 thoughts on “Debt is the great equalizer

  • March 10, 2017 at 2:32 am

    Good post! If we can learn how to handle or money we can be content with the income and lifestyle we have instead of using debt to finance the lifestyle we think we want till the debt stresses us out too much. People tend to only know how to handle the money they are used to and when we make more we tend to mishandle it. Someone once told me that if a poor/middle-class person gets the hands on a lot of money they will soon be our again because that’s all they know how to handle. Same for the wealthy. If a wealthy person losses all their money, all they know is wealth so they will make it back.

    • March 10, 2017 at 3:37 am

      Thans Mr Frugal Father- great name! I am guilty of lifestyle bloat but mainly in housing and not the other stuff (cars, vacations, etc.). Still the house can be a killer. Debt is a big stressor for many of us out there and that’s why it is my goal to be debt free (even before building a large nest egg). Great point regarding your last line, poor people become rich and then loose it. The rich become bankrupt and then build it back up. I hope I can teach my kid to be rich, whatever number that may be.

  • March 9, 2017 at 3:04 pm

    Great post! I think it’s crazy how sometimes we judge big time celebrities for having money problems. When in reality the ratios are the same and the only difference is the zeros behind the problem!


    • March 10, 2017 at 3:34 am

      Yeah, you always hear of celebrities that our broke…still I assume they get a lot of free stuff- food, clothes, etc. Not a bad gig. The ratio is important and you are right that they are probably the same. Thanks for checking in on the blog!

  • March 9, 2017 at 12:51 pm

    Ahhh, this is a good point. This is how you can have “millionaires” who are just as poor as those living below the poverty line. Most people have debt nowadays, which means lots of negative net worth, unfortunately. I’m one of those people too, although I’m slowly pulling myself into the black. 🙂

    • March 9, 2017 at 2:29 pm

      It’s funny, because no one thinks of those millionaires as being poor. It’s like they are living in a house of cards, one wrong move and it could all collapse around them. Keep up the slow and steady race to a positive net worth!

  • March 9, 2017 at 9:15 am

    I have no debt except 11 years left on a 15 year mortgage, which I’m targeting having paid off before I’m 40. It’s an aggressive target but doable if I follow my plan. You’re right that your income isn’t what matters-it’s what you keep. The person making $40k per year, debt free, and saving 20% is better off than the person making $200k per year and spending it all, with huge amounts of debt.

    • March 9, 2017 at 2:28 pm

      That is great! The low debt that you have. I think being debt free by 40 would set you up for a very successful future. Personally I am shooting for 45 (but that is 8 years for me). Thanks for checking out the post!

  • March 9, 2017 at 1:21 am

    Honestly I don’t think it’s as simple as your good if your saving 20-30 percent, unhappy at fifty, or even living like a hedon at 95 percent. Personal finance is largely personal afterall. I live off fifty percent of my income, but I can honestly say there is nothing in my life I feel is missing. I.e. Spending more wouldn’t make me happier, so why go to spending 70 percent. I also make a higher end salary that affords me the ability to go to fifty percent and still be happy. If our household income was 30k I likely would be saving five to ten percent, build be much less happy and much more in deprivation mode. It’s all relative to your income level and the cost of your hobbies. My salary for example wouldn’t support a flying or boating hobby at fifty percent savings. It’s a good thing those things don’t interest me, but if I can afford them and they are my hobby, then I wouldn’t say your hedonic pursuing one of them.

    • March 9, 2017 at 5:34 am

      Interesting point. You are right that it is all relative. Saving should be relative to your happiness and if you earn a good income (and don’t have those high end hobbies) then saving more should be easy. So maybe the percent saved should be thought of more as a amount needed for happiness. Thanks for your checking in. I liked your article about Net Worth not being that important for your financial plan Nicely said.


Leave a Reply

Your email address will not be published. Required fields are marked *