Suppose you had no debt.
Make believe you've paid off credit cards, student loans or anything else you owe. How would you restructure your life? Would you feel free to take a chance on a new career? To move to a new place? To retire early?
And would you create a financial plan for all the money you used to throw at monthly payments? Or would you slide slowly back into debt?
"The people who have a game plan are much less likely to wind up in trouble again," said Robert D. Manning, the author of "Credit Card Nation: The Consequences of America's Dangerous Addiction to Credit."
We put up with so much just because we need to pay the bills: abusive lenders, bad jobs, bad marriages. It's easy to fantasize about their absence. But what takes their place? If you can't imagine what you would do with your life, let alone with your money, you're not alone.No magic wand
One Smart Spending message-board reader recently did experience a windfall: the sale of personal property that yielded about twice as much as expected. Elaine, who asked that her last name and city not be revealed, disposed of all her debts in 10 minutes of online bill paying. She and her husband have been paralyzed with indecision ever since. Their only real plan is to pay off their home in the next few years.
They have been funding their retirement for years, so for now the extra cash is "this huge emergency fund." But Elaine worries about "becoming a miser."
"Now that I can spend money, I don't," she said. "Because I have all these choices available to me, it's scary."
Having a deep financial cushion is a problem that many Americans would love to have. But Elaine's anxiety is both real and understandable, according to psychology professor Jill Norvilitis of Buffalo State College. Newly financially secure, the woman is likely "terrified that she will lose control and return to (indebtedness)."
"I would want to see her develop a realistic plan of what to do with the money," Norvilitis said, "including identifying a small amount that is mad money to spend on whatever she wants."Long-term decisions
Sometimes, life teaches us financial lessons. A reader posting under the name "Beangal" ran up credit card bills in her 20s, paid them all off -- and then "got right back in."
Recently, she wiped out her consumer debt by refinancing her home. She now evaluates every purchase and steadily funds both savings and retirement. "I'm just smarter about my money now," Beangal concluded.
Paying down debt isn't enough, Manning said. You must set specific goals. He suggests looking at your life as "chapters in a book," with different goals for each stage. For example, the time to work a lot of hours and to diversify your portfolio is while you're fairly young. That gives you breathing room when you're older plus, maybe, the chance to retire early.
According to Manning, a financial plan helps people move "from debt management to wealth formation." He and other experts suggest reading books, taking classes or seeking professional guidance if you don't know how to manage money.
In order to manage money, though, you need to have some first.
"AllisonT," a teacher in her early 30s, knows she should be building an emergency fund and a retirement account. She dreams of buying a home and starting college funds for her two preschoolers. But none of this can happen until she and her husband finish paying off student loans, credit-card bills and two vehicles.
About $6,000 worth of debt remains, down from a high of about $30,000. That's progress, but years of stress are wearing on her. "I know there is an end, but I can't see it," she said. "I get very depressed."It's not hopeless -- it just feels that way
Some readers of the Smart Spending message board have trouble thinking about saving; it's all they can do to pay their bills.
"I feel like I am never going to be out of debt. Somehow hubby always keeps screwing me up," wrote a woman posting as "Libra007." A reader who calls herself "Ohio Belle" wished for "a comfortable life, (so) if something breaks I do not have to worry about how to pay for it."
In fact, a recent survey by LendingTree found that 26% of us expect to die in debt.
A reader posting as "Marie38" believes that "being totally debt free is impossible." She makes $42,000 a year, and savings and 401(k) contributions are automatically deducted. Marie38 does not defer vacations and other extras, although she does pay cash. "My plan is to live while I am still young enough to do it," she wrote. "No one can predict the future. . . . None of us are guaranteed even one more day."
Manning sees it differently. "Do you want to live it up now and live in poverty in retirement, or create a plan now?"
"Those are choices that people have to make, but most people don't want to make a long-term decision," he said.
"If you don't start asking that question, you're not looking for any answers."A game plan for the rest of your life
If you're in debt, you can't get there without following basic, common-sense advice: