How to calculate the “time cost” of your debt and take back control
We all know that debt is expensive. We obsess over interest rates, monthly payments, and the looming threat of wage garnishment, repossession, and so on. When we ask how much debt will cost, we’re usually talking about financial cost: how much will I have to repay compared to what I borrowed?
All of that is important, of course. But debt doesn’t just take your money; it takes your life.
Here’s what we mean:
- Debt steals your mental and emotional attention. You may be nodding while your spouse tells you about their day at work or your kid excitedly describes what happened at school, but you’re not really listening; your mind keeps running the same budget over and over.
- Debt also steals your time directly. You always have to pick up that extra shift or side gig to keep up with your payments. Your weekends are gone because you’re either at work or recovering from work. Your whole life is work, crash, repeat.
- Most insidiously, debt steals your future. The trip that you have planned for “someday” isn’t coming; it’s already been financed and leased away.
Your plan to take back your time is below. For more information, check out attorney Ben Matthews’ podcast, Debt Sucks.
When you make financial decisions, do the “time math,” not just the money math
We’ve filed thousands of bankruptcies, and one thing we’ve noticed is that people struggling with debt never look at their debt in terms of time.
Here’s an example. You’ve bought a car, taken out an auto loan, and your payment is $400 a month. You may have looked at the numbers and what that costs you over the life of the loan and decided it’s worth it. But have you looked at what that costs you in terms of time? If your after-tax pay is $25 an hour, that’s 16 hours per month—two full work days. If it’s a five-year loan, that’s 120 days—four whole months—just to pay for something you already have.
Do the same math for all your debts, and you’re spending the first half of every month to pay rent on your past.
What it looks like when you actually have control of your time
If you’re like most people, you took out loans in the past, saying, “I’ll figure it out later.” Well, “later” is now. Here’s what it looks like when you take back control of your time.
- There’s actual white space on your calendar. You have margin and breathing room to make plans and make choices.
- Your brain is present in your own life. You’re engaged in conversation and activities, not just thinking about money.
- You get to make real choices instead of being constrained by your finances. You don’t cringe when a friend asks you to go out to dinner, or your kid mentions a field trip.
When your calendar reflects your priorities, not your obligations, that’s when you’ve achieved real freedom.
Here’s your action plan to take back control of your time
- Calculate the time cost of your debt: total all your monthly payments and divide by your after-tax hourly wage. If you can’t do it all at once, start small: do the math for just one debt. Do the same for subscriptions and other monthly expenses.
- Identify your “time thief” debt. Unless you have a mansion, your mortgage is probably fine; it’s worth putting in the time to have a place to live. Credit cards, car payments, and luxury items, not so much.
- Get motivated. Rage at your own past decisions is a powerful motivator.
- Develop a time buyback plan. Let’s return to that car loan: if you pay it off a year early, you’re saving two days a month, for an entire year. That’s 24 days of your life, back in your control.
- Going forward, do the time math. Before you take on debt, look at it in terms of your time, and make the decision whether it’s worth it.
How bankruptcy can help you get your time back
As soon as you file for bankruptcy, the bankruptcy court will enter an “automatic stay”—a powerful tool that blocks all collection activities. That means your creditors have to stop calling you, stop sending you letters, and so on. If they’ve filed a lawsuit against you, the automatic stay will put it on hold. It also puts a stop to repossession or foreclosure. In short, the automatic stay protects your money, but it also protects your time—you no longer have to spend hours responding to all those collection actions.
More importantly, bankruptcy gives you a timeline to get out of debt and back in control of your life. If you qualify for Chapter 7 bankruptcy, your debts can be discharged (wiped out), usually within four to six months. Chapter 13 bankruptcy rolls your debts into an affordable monthly payment—meaning one that gets you moving forward instead of still stealing your time—for three to five years, after which your remaining debts are discharged.
Is it time for a financial reset? Give us a call or contact us online to talk to an experienced bankruptcy lawyer at Benjamin R. Matthews & Associates.
Very helpful in all aspects of our case. Understanding the stress of filing a case. Answered all our questions and put us at ease. Highly recommend them! – William G., ⭐⭐⭐⭐⭐