Why is it Taking So Long (Debt reduction)


One of the more interesting analogies I like making is that Weight Loss and Debt Reduction have a great deal in common, not the least of which is that both are very hard for a lot of folks to succeed. If you have put on a lot of weight over time, it is hard to figure out how to lose it again, and it is the same thing with debt (i.e. it is rare that someone suddenly finds themselves in debt, it takes a while to build up a lot of debt to the point where you get upset about it).

A more interesting way to look at this is that losing weight and reducing debt both take a long time, but your progress with both are actually (usually) quite different.

If you try to lose weight and find a successful way to do it (via exercise, diet or a combination of those), typically you lose weight quicker at the start of the process than you do as you approach your ideal (or goal) weight. If you are trying to lose a lot of weight this is actually even more obvious, but this is what I have seen when I have lost weight as well.

Simplified Graph to show how weight and debt reduction take different paths to the same end point

With Debt Reduction, getting instant gratification is a lot harder to do, assuming that you are attempting to pay down debt because you are close to living “pay cheque to pay cheque”, so finding that extra cash to pay it down is a lot harder to find. At the start of your debt reduction plan, your debt will not be dropping quickly, however, if you persevere and remain constant with the money you are paying your debts down with (if not increasing it a little), you will actually start paying down debt at a much faster rate. This portion of most reduction schemes must be one of the reasons abandon their debt pay down plans (i.e. no real quick fix or quick gratification either).

Don’t get me wrong, I still think losing weight and Debt reduction are both really hard to do, I am simply saying that should you be trying to reduce your debt, keep in mind that at the start of your process you may get frustrated but if you stay with it things should get better quickly.

{ 4 comments }

{ 4 comments… add one }

  • Sudip Adhikari November 18, 2012, 10:41 PM

    Is it about reducing debt or the idea of working out on reducing debt – which one is more satisfying?

    Reply
  • Joe November 1, 2012, 7:25 PM

    Great analysis. I think you’re right — debt repayment accelerates because you can get ahead of interest payments while weight loss decelerates simply because the first ten pounds is really low-hanging fruit. Another interesting correlation is the connection between weight and net worth (inverse). I think DQYDJ wrote about it but if it was somebody else apologies.

    Reply
  • Elizabeth November 1, 2012, 7:52 AM

    Good comparison — especially when it comes to seeing the pay-off. When I was paying of my student loan (line of credit) it went much faster towards the end. The lower it got, the more I was motivated to pay down extra. Finally it got to the point where I could pay off the balance in a lump sum. It felt great!

    Reply
    • bigcajunman November 1, 2012, 8:42 AM

      Precisely, with debt reduction you speed up as you go, whereas with weight reduction the last 10 pounds ( or 4 kilograms) are the hardest to get rid of.

      Reply

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