This is sure to be a hot topic :). It occurred to me one day that eliminating debt is a lot like fighting a fire. As a financial coach I often told my clients that playing with debt is like playing with fire but I never took the comparison any farther than the figure of speech. I thought it was a cheesy analogy at first but the more I thought about it, the more it made sense to me. There are so many different ways to compare debt to fire, so I just couldn’t leave it alone.
- Fire is dangerous. You can play with fire and get lucky sometimes. Occasionally you may get burned, but not bad enough to learn your lesson. If you get lucky often enough, there is no incentive to stop playing with the fire. That’s when it can spread out of control and really get you. Debt won’t burn you every time. You get lucky most of the time, but you’re still playing the odds. Sooner or later, though, you will get burned by debt. It’s just a matter of time.
- If you don’t put out the fire immediately, it spreads. If you ignore it, it spreads. If you aren’t paying attention, it spreads. Debt is the same way. If you don’t take care of it right away it spreads, often until it’s too late.
- It only takes a sudden wind gust to burn out of control. One seemingly small, isolated event can fan the flames into an inferno in seconds. Other conditions can have the same effect. A dry year or diseased trees in the forest provide extra fuel for fires to consume. With debt, small things also quickly contribute to an out-of-control situation. A sudden job loss or unexpected medical expense can put you over the edge with your debt situation and cause you to miss payments, which spirals the situation out of control in a hurry.
- When a fire is burning, the best way to put it out is to focus water or an extinguisher at the base (near the fuel source) and cut it off from the rest of the flames. The fire is cut off by the volume of fire or chemical that you spray at the base. If you try to put out the fire with a little bit of water here and a spray from the extinguisher there, you’re not going to get very far. It’s focused intensity at the source of the flame that helps you make progress. Debt is no different. You gain the most momentum when you cut off the source of the problem (the spending) and use focused intensity to pay off each debt one at a time rather than trying to pay a little bit extra on every debt you have.
- The best method of fighting fires is to prevent them from happening in the first place. Keeping flammables away from heat sources and not playing with fire are great ways to prevent fires from starting. Naturally the same holds true for debt. It’s hard to get into debt when you have a plan for your money and make a commitment to not borrow money. If you never borrow in the first place, how can you possibly end up with a debt problem?
I sincerely hope none of our readers are playing with fire, either in the literal sense or in the figurative sense with debt. Both can lead to serious trouble if precautions are not taken to mitigate the risks. The best offense here is a good defense. You can perform a fire risk assessment of your home and the places you frequent to reduce the risk of fire. You can do the same type of assessment with your spending and debt habits to reduce the risk of financial catastrophe from your debt situation.
Where are you most at risk? Have you been burned by debt? Leave a comment to share your story.