Debt: It's Not What You Have, It's How You Look At It

If you have had debt for years, you know how it is. You can approach it in two ways. The first way to handle debt is to have it take up most of your paycheck and many of your life decisions. The second way to handle it is to push it in the back of your mind, still live life “normally” (let’s be real here, your version of normal probably got you into debt in the first place) and open up as many bank accounts and credit cards as you can.  Consider this article a snap back to reality either way you look at debt. I promise I will be nice about it!

If Debt Takes Up a Chunk of Your Life

Congratulations! You are just like me. If you haven’t noticed already, I like to think about money from an educational perspective and am always striving to achieve financial responsibility and security. If you are paying off debt with all of the money you have left over after living expenses and a little bit of fun in your budget, in my opinion you are doing the right thing! With the method of allocating all of the money you aren’t spending to paying off your debt (not to mention that you are living at or below your means) it will pay off big time in the end. In fact, it’s not an uncommon that every dollar you pay off in debt now will equate to over $200 in savings over your lifetime.

As awesome as this method is, there is one annoying thing you need to avoid: a little thing I like to call Debt Recovery Depression. This happens when you are obsessed with getting out of debt to the point where the debate of whether or not to buy a cup of coffee will send you into a tizzy. If you find yourself avoiding reasonable purchases, sitting home along for weeks at a time or eating an incredibly unhealthy diet to save some change, take a step back and take a deep breath. With your habits, you WILL get out of debt. Your sanity is just as important though, and if $10 for a healthy meal makes you feel better for the next few days, than so be it.

If You Ignore Debt Like An Ex

All right people, pretend that your debt is your loveable (cough cough) ex-boyfriend that just walked into a party. Oh, and this is at least the 10^th party that you have seen him at since you broke up three years ago. If you are one of those girls who bolts to the bathroom and then sneaks out to avoid saying hello even though you couldn’t legally enjoy a glass of wine while dating him, I have three words for you: get over it. Mr. Debt is a friend of your friends, and he isn’t going anywhere. It is always better (and very girl power satisfying) to be the one to walk up to him, say a polite hello, chat for five minutes and then walk away with a satisfactory grin on your face knowing that he was a complete idiot for dumping you. So do that with Mr. Loser Debt. Pull out your credit card bills. Answer the calls from collectors. Start paying more than minimum payments and most importantly, stop spending more than you can afford! Eventually you will stop seeing him at parties, as long as YOU are the one who chooses to move on. 

If You're A Newbie, Do It Right The First Time

There are people out there who are lucky enough, smart enough or a combination of the two to avoid debt for the larger part of their twenties. This may be because parents are generous (say thank you!), scholarships are won (nicely done!) or budgets are kept (impressive!). Whatever the reason may be, there is one thing to keep in mind: at some point in your life you are going to be in debt. You just have to be smart about it.

Debt is defined as something, typically money, that is owed or due. Before you pay a credit card bill, even if you pay it in full every time, you are in debt until you do so. When you buy a house in your adulthood and sign a mortgage, you are in debt that you dig out of little by little every month. The reason why I am telling you these things is not to scare you, but rather to have you get used to the idea and not be deathly afraid of debt. Don’t get me wrong, there are some instances where you should definitely be scared (that’s for the next blog post), but if you’re looking at the land of debt through the rose-colored glasses of no outstanding monetary obligations, everything could be okay if you handle debt responsibly. I’m here to tell you how to do just that!

Having debt is just like getting your license – it’s a great idea to have someone in the passenger’s seat when you start out just in case you forget to put your clicker on. Consider me your co-pilot. We will start with these three basic driving rules:

Determine Your Destination – Before you take the leap into spending more than you can afford at the moment, ask yourself why you want to. You better have a pretty darn good answer to that question, and once you have the answer, ask your personal co-pilot (parents, a financially responsible best friend, mentor, cousin’s spouse) for an objective answer. The worst thing you can do is forget to ask this question from the get go and then ask yourself why why why why why you did that years down the road when you are wallowing in bills. The last thing you want to do is end up staying in a motel on a deserted highway when you could be in Hawaii instead.

Map Out Your Route – Once you have a destination determined, figure out how you are going to get there. Financial advisors are like the Google Maps of your monetary wellness. GO TO ONE. Fidelity and Vanguard are two of my faves and try your hardest to go see a financial planner in person. They will help you determine whether you should take the express or local train when you start paying off your debt. Faster is usually better, but this can vary on a case-by-case basis.

Focus While On The Road – There are so many distractions when you are driving. Your cell phone, the radio, the surrounding scenery, the list goes on and on. Once you set off on your debt adventure, keep your eyes on the road. Yes, that sushi restaurant is awesome, but you don’t need to go three times a week. Yes, that movie theater has really comfortable seats, but playing a DVD at home and making your own popcorn every once in a while won’t ruin the movie. Stay focused on paying off your debt. Motivational monetary quotes or songs do the trick for me. Destiny’s Child’s song Independent Women: Part I gets me back on the road every time.

So, my friends, the best advice I have for you is to be wise and act as if this debt determined whether or not something very important to you happened. Would you get into debt and then pay it off if it could make the Cubs win the World Series? Would you get into debt and then pay it off if it meant you could find your soul mate? Would you get into debt and then pay it off if it meant you could FINALLY have six pack abs? You get the idea.

Now get in the car. That is, after you have filled up your gas tank, tested the air pressure in your tires and made sure your AAA account is still active. Just in case.