Debt Payoff: when your debt repayment strategy is overexposing you (in a bad way). We want you to get out of debt, not go deeper into it because of your choices! | https://www.frugalconfessions.com/debt/overexposing-debt-repayment-strategy.php

You shouldn't use a debt repayment strategy blindly, it could lead to overexposure.

I love a good debt-payoff story.

In fact, during my 30-day Debt Bustin' Challenge, I took the time to research + highlight one debt payoff story a day (you can still get super inspired by these on my Debt Bustin' Challenge Pinterest Board).

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That's 30 different debt-payoff stories. And I probably could have kept on going.

These are people who, mostly, were gazelle-intense about their debt payoff strategies. They did some crazy things that resulted in some crazy goodness: reaching the debt freedom promised land years earlier than their creditors wanted them to.

Yet some of them − myself included when we decided to gut our $7,600 savings account to pay down the remainder of my Sallie Mae student loan debt − got downright lucky.

Lucky that something big financially didn't happen to them while they had exposed themselves to the wilds of Africa.

Let me explain what I'm talking about.

Getting Gazelle Intense Exposes Yourself + Your Family

The idea behind invoking the intensity of a gazelle into your debt repayment strategy is that you will get to the other side much more quickly (especially since they can run up to 55 mph!).

Your job after that is to quickly save up an additional 3 to 6 months of living expenses in an emergency fund.

In the meantime, you're supposed to have saved up $1,000 to stave off any small emergencies while you've exposed yourself in the vast wilds of Africa.

Got that?

Step #1: $1,000 in an emergency fund

Step #2: get gazelle intense and pay off all that debt as quickly as possible

Step #3:  mitigate your exposure to those wily cheetahs by beefing up your emergency fund to a more proper 3 to 6 months' worth of expenses

Three Times When You Should Mimic a Sloth's Debt Repayment Strategy

It's a sexy plan, I gotta say.

And we mostly kept to it during our last push to pay-off our remaining $25,000 of debt before we walked down the aisle together (though really we used a hybrid between Dave Ramsey's plan and Suze Orman's strategy).

But sometimes, it's not the most sound financial advice.

Sometimes the signs around you indicate that it would make much more sense to use all that extra money you're sending into your debts for something else instead because a nasty financial surprise might be lurking at the next water hole.

Here are three such times I'd like to point out:

  • Shaky Job Atmosphere: If things are looking a little shaky around your job − like that guy, third cubicle down on the right, is no longer there, and come to think of it, that woman you used to exchange hello's with in the hallway is no longer there, and now they're talking furloughs in the breakroom… − then you have got to stop putting all your money into your debt repayment strategy. In the event of a layoff, you have no real idea how long it will take you to secure new employment (fyi my husband and I have been laid off four times between the two of us, and each time it took between 3-5 months to find new employment). In the meantime, you're overexposing yourself by taking all of your money − money that can be used to pay immediate bills like food + the mortgage − and sending it out the door. Another word of caution here: if you have any 401(k) loans, then you might want to funnel money to those instead. Check out my layoff empowerment kit + free checklist for more info on why your 401(k) loan gets quirky post-employment + lots of other things you need to be aware of.
  • You Find Out You've Got a Little One on the Way: Having all of your debt (especially all of your non-mortgage debt) paid off before a little one comes into your world is absolutely awesome. What's not so awesome is only having $1,000 in an emergency fund for their arrival. Extra costs are coming, I assure you. Things you couldn't even think about are coming. For example, in our own case, we paid close to $10,000 out of pocket after health insurance due to unforeseen circumstances…and we had thought saving an extra $5,000 would be plenty. Then those unforeseen medical circumstances cascaded into me not being able to breastfeed, which meant formula costs of about $150/month we weren't expecting. And it just snowballs from there.
  • You Find Out $1,000 Isn't Enough to Cover Your Insurance Deductibles: Take a minute to add up all of your insurance deductibles on your various policies. This includes things like flood insurance, car insurance, homeowner's insurance, etc. Does the total equal more than $1,000 (heck, one policy alone might equal more than $1,000)? Then it's time to save up more in your emergency fund. Trust me, you're talking to a person who has faced several insurance deductibles in the last few years. Things can and will happen, and if you don't have enough to cover the deductible in order to do the work you need done…well let's just say you're overexposing yourself.

I'm all about gazelle intensity. I'm all about paying off your debt ASAP. But I'm also smart, and there's more strategy to money than what meets the eye. Think about your own personal situation, and if you get that little feeling in your gut that a herd of jackals is coming around your water hole, well then it might be time to modify your debt repayment strategy.

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