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Preparing for the Move Series: Dealing with Personal Debt, Part 1

Preparing for the move


A great concern of many a potential digital nomads relate to the issue of debt obligations back home.  Sure, everyone would love to just pack a couple of suitcases and start a whirlwind tour around the world.  Yes, this may be a roadblock if you have outstanding obligations to take care of back home, but nothing that can derail your dreams of being a modern day Marco Polo.


Before addressing any problem or issue, it is best to get a sense of how the issue or problem arises in the first place.  This helps to uncover any erroneous decisions that might have caused problems to surface, serves to correct course, and more importantly, helps you avoid falling into the same trap in the future.


Well, how DOES one get caught in messy debt?  More than a few factors are at play here, but we’ll look at the usual stumbling blocks that get in our way to location independence.


First of all, congrats if you’re one of the smart ones that have not gotten trapped in the debt enslavement wheel.  Unfortunately some of us, whether due to social pressure, out of necessity, or because we didn’t know any better, got caught up in the debt trap.  The recipe for disaster usually goes something like this:


Step 1 – Person goes into debt (school loans) to get a better job, which allows the person to increase their income

Step 2 – Person decides, the reasons vary but the result is the same, that they “need” a newer model car.

Step 3 – Credit card offers start pouring in, offering easy credit.  Heck, even babies and dogs can qualify for credit nowadays.

Step 4 – Maybe thinking about starting a family, or have been told it’s a good “investment”, person chooses to buy a house (much easier in the zero-down-payment loan era).

Step 5 – With debts mounting, person has to work harder and much longer hours (two jobs even) to make the minimum payments required to keep all the accumulated toys, car, house, and items bought on credit.

Step 6 – Persons increased social status (or just plain toy envy) “demands” a newer car, a bigger house, better clothes, which means the person goes into bigger debt.  Here the person gets caught in the debt loop, as the person, unwilling to lower their standard of living for a more manageable and financially responsible lifestyle, chooses to double down on crazy and go to step 5 again.


The cycle above is very likely unsustainable, and the person will be essentially chained to a job or career that will allow them to maintain their “achieved” standard of living.  This is a no-win situation.  How did we get there?


Many of us started out by enrolling in a higher education institution because this would “assure” us of a higher wage upon obtaining a degree.  This is our first indoctrination into the system, the idea that we need to “invest” in education (aka. load up on school loans).  This often leads to obtaining a less-than satisfying job just to keep up with payments while trying to make a living.  If you had to take out large school loans to pay for school, you’ve just been suckered into a massive ripoff scheme.


After finishing up in school, we are pressured by family, friends, etc. to purchase a new vehicle commensurable with our new status in life.  Since saving some money the old-fashioned way to purchase this car is out of the question, the temptation is very strong to just produce a small down payment, sometimes none is required, and just make small payments for the next 5 years, sometimes even 7 years, to fulfill these expectations and have an inflated sense of self-worth.  This is a very bad financial decision and one that  you will have to pay dearly to get out of, should you decide to pack up and leave the country.


By this time, you may be looking to settle down and are thinking of starting a family.  Everyone tells you buying a house is a great investment, and that you should buy one just to build some equity and even make some money in the short run.  This one bad piece of advice destroyed many people’s financial worth during the Great Housing Bubble Crash of 2008.


Yes, owning a home is an investment, and a poor one at that, but many people forgot that an investment, just as it has potential for profit, it also carries inherent risks and potential for losses.  Not to mention, this obligation is a long-term one, one which you can be saddled with for the next 15 to 30 years.


Last, but not least, are the magic wands called credit cards.  Who needs to save up for anything, when you can, with one swipe, have anything and everything your heart desires?  And it’s so convenient because, “OMG, you only have to pay the minimum payment and you’ll be set!”  Besides, you promised yourself, you were going to pay the whole thing off next month.  Pinky swear!  ::sigh::


We all know how that goes.  Next month comes, minimum payment is met, and the debt keeps piling on.  Pretty soon, one need to work overtime just to keep up with the minimum payments needed to stay afloat.


Despite all this, don’t despair! Not all hope is lost.  There are ways to address each and every one of the obstacles above.  Of course, some are harder to get rid of than others, but having an open mind and a willingness to exchange a life of enslavement for much more life-affirming freedom is a worthy goal.  Remember: Less is more.


In the next installment we’ll look at the possible alternatives regarding the most common debt obligations people have and how to deal with them in order to be free and truly location independent.


*Image Credit

About Rich Polanco

Fan of dogs + all things tech. Love a great pizza. My goal is not to travel to every country in the world. I only want to get to know my favorite ones REALLY well. Check out the big bio here. Follow @RichPolanco and connect on Facebook.
Currently exploring: Guatemala.


  1. BayleyLive says:

    Right on bro. Life is too hard to get caught up in what other people say.


  1. […] our first installment in this series, I talked about the three major types of debt obligations that can tie up an […]

  2. […] the appearance of a financially successful lifestyle. Being permanently indebted it’s not a sustainable lifestyle and will be jarring should you be affected by a massive income loss. Learn to tune out the assault […]

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