Debt ≠ bad with money. ‘We Should All be Millionaires’ author explains.

Debt ≠ bad with money. 'We Should All be Millionaires' author explains.

The Truth about Debt: It Doesn’t Define Who You Are

Debt. Just the word alone is enough to make people wince. No one wants to be in debt. It’s often seen as a sign of financial incompetence, as if the person in debt has done something extremely wrong. How could they get themselves into such a situation? Will they ever be able to afford anything again? These are the thoughts that often come to mind when we think of debt.

But what if we told you that having debt doesn’t make you reckless, careless, or even bad with money? In fact, it might actually signify the exact opposite. According to Rachel Rodgers, author of “We Should All Be Millionaires,” debt can be a testament to your commitment and determination to improve your life.

So why do you have debt? Be honest with yourself. Maybe you have debt because you value education. You’ve earned a couple of degrees, increased your skill set, or learned another language to better yourself. Education is an investment in yourself, and sometimes it comes with a price tag.

Or perhaps you have debt because you took a chance on yourself and started a business. Building a business takes time, and it can take years for it to become profitable. But if you took a risk to improve your life, build something of your own, and increase your finances, that’s never a bad thing.

Maybe your debt comes from helping out loved ones who are struggling financially. Or maybe you’ve been struggling financially yourself. We’re all still recovering from the effects of the pandemic, and for some, that means picking up the pieces financially. It’s important to acknowledge that we don’t all acquire debt for the same reasons.

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As someone who has tackled debt myself, I can tell you that not all debt is created equal. A home mortgage, student loans, or business debt are typically considered “good debt” because they’re viewed as investments that can grow over time. These loans often come with low-interest rates and can lead to positive returns in the long run.

This isn’t a free pass to jump into debt, but rather an acknowledgment that debt isn’t always a result of frivolous spending. It’s important not to beat yourself up or feel shame around having debt. When I completed graduate school, I had student loan debt that I aggressively paid off. Without those degrees, I wouldn’t have the wonderful career that I enjoy now. I got a huge return on my investment in education.

If you’re ready to take control of your debt, here are some steps you can take:

1. Pay more than the minimum payment

Go through your budget and determine how much extra money you can put toward your debt. Paying more than the minimum payment helps reduce the principal balance faster. Schedule an extra payment on your account or add it to the minimum monthly payment.

2. Try the debt snowball method

If you’re paying more than the minimum payment, consider using the debt snowball method to eliminate your debt. This method involves focusing on one debt at a time, starting with the smallest balance, while paying the minimum on the rest. By “snowballing” payments toward your smallest debt, you’ll eliminate it quickly and gain momentum to stay on track.

3. Consider debt consolidation

If you have multiple forms of debt, consolidating your balances into one payment can simplify your financial situation. This can be done through a balance transfer card or a debt consolidation loan. By consolidating your debt, you may be able to eliminate it faster, make payments to fewer lenders, and have a clear repayment end date.

Most importantly, stop demonizing debt and falling into the trap of shame because of it. You used debt as a tool to move yourself forward. Now, take the necessary steps to eliminate it and move on. Debt doesn’t define who you are; it’s how you handle it that matters.

Remember, being in debt doesn’t mean you’re bad with money. It means you’re human, with dreams and aspirations, and sometimes those dreams require financial support. So be kind to yourself, understand why you have debt, and take proactive steps towards a debt-free future.

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