Austerity Didn’t Work for Greece, and it Won’t Work for Us

Photo credit: Map Cycle, CC BY 2.0.

This is a response to WearsPants’ “Welcome to 2018. We’re Broke!” written by their partner, WearsShorts.

The renovations for our house were like an onion, and the rot we saw on the surface turned out to go many layers deeper than we expected. A project we anticipated would take six months has now taken more than two years, and to complete it we’ve learned to do work ourselves, borrowed money from friends, took out a personal loan from an internet bank, took out financing for various projects on limited-time 0 percent APR balance cards, and put well over $20,000 on a high-reward, high-interest credit card. Our intention was to enjoy the “points” from the card, while studiously paying it down every month, but the debt quickly got away from us, resulting in large monthly interest payments that quickly exceeded the points we had accrued.

Several years ago, just a few months after starting my first full-time, benefited position after years of hourly work without vacations or sick days, I was accepted to a dream graduate program at an Ivy League institution. The program was full-time, and did not offer funding. They invited accepted students to come by to tour the ivied campus, meet esteemed faculty, and hobnob with accomplished and interesting accepted students. They noted that there would be a short talk on affording the program. After outlining how the program would cost close to $40K a year (before housing), a former student announced without a trace of sarcasm, “You may want to cut back on those Starbucks lattes.” At that time, I did not go to Starbucks for lattes; I pilfered K-cups from my office instead.

A Grande Latte at Starbucks costs about $3.65. At the time, a year’s tuition would have cost more than 10,000 lattes. If you had just a single latte per day, cutting back to zero would net an annual savings of $1,332.25. Not chump change, but not enough to make a substantial difference in one’s ability to afford a $40K (per year) graduate program.

Seeing that tuition breakdown was a wake-up call — and so was seeing our monthly expenditures on But in this case, we need to look at our expenses within the context of our overall personal economy. We have a lot of debt, but we also make a lot of money, and have tangible assets. We bought our house, a multi-unit apartment building, at land value. We have perhaps a few thousand dollars left of work to do before we’ll be ready to get our building fully rented, and in the meantime, we’re experiencing a short-term personal recession.

Just as I was not going to be able to afford that graduate school program by abstaining from frothy coffee beverages, we will not find our way out of our personal recession by eliminating restaurants or avoiding avocado toast (I think WearsPants had this at a café once in the last two years). Cutting down our patronage of the arts — including theater, modern dance, concerts, and books — would certainly save us money, but not enough to pay down our debt significantly faster. These anxiety-driven decisions could actually make us unhappy, and more likely to make impulse purchases.

Instead, we need to stimulate our economy. We’ve started that process by taking out a line of credit to consolidate our debt, allowing us to lower our cumulative interest rate. We’ve only shaved a couple months off of a multi-year process to bring our debt down to zero, but the psychological impact of consolidating the debt — and not having tons of money on high, variable interest rate credit cards — is huge. At the same time, we’ve raised our personal debt ceiling. One of WearsPants’ first thoughts for the raised debt ceiling was to save our personal car industry by paying off our car note and eliminating one source of debt/interest. For now, we’ve opted to keep paying off our car, and will instead look into selling it — taking the $433 monthly out of our budget would be great, but not if we sell it at a loss of several thousand dollars before buying another used car.

Meanwhile, we’re investing in our economy’s infrastructure. This primarily means finishing our apartment building (where we live) so we can rent our two other units as soon as possible. Our current mortgage, mortgage insurance, and fees are just over $2,800 a month, and with both units rented at about $1,650 a piece, we will be able to more than fully address the single largest line-item in our budget. This will start our economic recovery — but while we’ll move as fast as we can, it may still be three months before our apartments are fully rented, and longer till we’ve paid down our debt-obligations enough so we can feel comfortable building up our personal savings rather than relying on credit for unexpected expenses.

To ensure that both prior to and after getting renters into our building, we’re staying focused on paying down our debt — but not at a substantial cost to our quality of life and emotional well-being — here’s my proposed plan for 2018:

  • Plan for treats, meals out, and events, rather than buying on impulse. Planning makes it easier to control the money we spend, and means we can also savor the anticipation of these treats and events.
  • Hustle for gigs. One cannot eat on side-hustle alone, and we both work challenging full-time jobs and have our own creative work, in addition to finishing our building. However, a few additional gigs will allow us to treat ourselves without touching our regular budget.
  • Get rid of stuff. Up to $500 in total item donations to places such as Goodwill and the Salvation Army can be deducted from taxes each year, while other items, including excess books and unused items can be sold via Craigslist, Amazon, and Ebay.
  • Start meal planning. Most budget meal planning seems not to be low-FODMAP friendly, but if we plan we can still enjoy tasty meals and snacks without impulse purchases.
  • Use the library. If we go to the library for most books, we can still support the authors of books we love. We can still make a few purchases at our local independent bookstore, but should stop blithely buying all our books new.
  • Look for free and low-cost activities, including making better use of our YMCA membership, and attending free library and university events in our community.
  • Play more games, and have friends over for meals and games rather than going out. When WearsPants returned from a long business trip, we celebrated by playing mini-Jenga, and it was a ton of fun.

I’m looking forwarding to mindfully continuing our economic recovery in 2018, and I’d love to hear from other Billfolders who have plans to be more mindful about spending without resorting to strict austerity.

WearsShorts usually writes poetry, but sometimes has essays published in The Billfold and other venues. They live with WearsPants in the upper Midwest.

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