What’s the minimum amount you’d need to STAY debt free forever?

The weird psychology of why people stay in debt
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written by oz chen

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minimum debt free payment unconscious spending

I noticed a curious pattern in money coaching, when it comes to people’s debt.

A client would wish for some windfall to wipe out their debt.
And then, money does come their way…
A year-end bonus, a bigger tax refund than expected, or a generous gift from a relative.

You’d think that THIS time is perfect opportunity to wipe out a meaningful portion of their debt.

It. Doesn’t. Happen.

If you’re struggling with debt, reading this today is a perspective shift – and the tough love – that you need to hear today.


For the purpose of this illustration, I’ll reference the average American debt of $10,000. This is in the low range of debt by age, which is Gen-Z right now.

With this figure in mind, here’s the type of scenario I’d pose to clients:

“What’s the minimum amount you’d need to receive…in order to ensure that you remain debt free forever?”

I’m not talking about clearing the debt once and getting back in debt again. I’m talking about staying debt free.

The logical answer is that if someone has $10,000 in debt, they’d want $10,000. Even a bit more for padding, let’s say $15,000 or $20,000, is reasonable.

But here are the actual responses I get, in escalating scale:

  • “I’d be set if I made six figures”
  • “Maybe if I had $50K in the bank”
  • “If I won the lottery and had a million dollars.”

Here’s the punchline: The amount you want minus the actual debt = your financial discipline.

If you need more than $10,000 to stay debt free, then that means the problem is bigger than just debt.
If the underlying issue – your money habits and beliefs – are not resolved, then the problem will just repeat itself.

It’s hard to hear, but this also explains why even 40% of six figure earners live paycheck to paycheck— even high income people are in debt.

This also tracks research that roughly half of all money inherited is spent or lost.

You don’t rise up to the level of your expectations.
You fall to the level of your training.

When money is tight, you need to give every damn dollar a job.

If there’s no financial order of operations, any extra funds will just conveniently follow the path of least resistance – your existing money habits – and bleed into unconscious spending.

Compare this to someone who has a plan.
For every dollar that comes in, at minimum of 20% automatically goes towards savings or debt.

If a windfall (unexpected money comes your way), at least 90% of that money gets thrown at debt to pay it down.

Aside: to keep motivational progress, I recommend carving out a little bit of fun money from windfalls. If you suddenly come across $1000, immediately set aside $100 to “treat yourself.” The rest of that $900 should go straight into debt payment. This framework works for most of my clients, though sometimes a client would be encouraged to use 100% of the new amount to pay down debt. Even better. The point is that

Some would rather dream about a lottery amount than make meaningful progress on their debt today.

Don’t wait for the pipe dream.
Work your reality now so you achieve the dream.

It’s not easy and building wealth is supposed to be hard. Getting support on this journey can mean everything. If you need help coaching to design a debt payoff plan, you know where to find me.

liked this article? tell your mom, tell your kids

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