I'm a money coach but have a complicated relationship with debt. Here's why.
I have a complicated relationship with debt. Growing up, my mom had a lot of credit card debt. It felt like the reason we could never do anything as well as the reason we could ever do anything. I was terrified of debt, and yet when I found myself in my early twenties, underemployed but pursuing my dream, it felt like the only option. And, truthfully, maybe it was.
I was able to pay down my debt when I landed a really good job, and I stayed debt free for a while. But after a few years, I fell back into debt. And it paralyzed me. It drained my self-worth to feel beholden to these companies and pay more in interest than the things I bought were actually worth. I didn’t want to look at the amount of money I owed and I didn’t want to look at my relationship with money. This avoidance kept me from paying down the debt, and perhaps more significantly it kept me from pursuing educational opportunities that I dearly wanted to accept.
A few years ago, I reached my breaking point. I had pretty good credit from making timely payments (don’t get me started on the credit rating system, that’s for another post) and I was eligible for a decent balance transfer offer. “Great!” I thought. “I’ll just scoot this money over here real quick and pay it off in 18 months. No prob.” Y’all, that balance was about $3k at that point. And that was not the only balance. Not only did I not do the math to figure out what the monthly payment would be to pay it down in time, I also made new purchases on the card. It was a 0% interest rate! It was basically free money! And I would be getting paid “soon”…
A few months after that, I realized what I had done. My debt was bigger. The solution? Get another balance transfer card! But this time, I wouldn’t use it. I would just pay it down. I had also recently come to realize that the interest that I was paying was going to institutions that invested in fossil fuels. So this new card had to be at an institution that didn’t do that.
OK: ethical credit card company? Check. Not using that card? Check. But I was still earning less than I was spending, which meant that eventually I had to use the cards again. And I did.
It took a few more steps forward and a few more steps back before I put together the pieces of the puzzle that equaled living within my means - the real key to getting out of debt. I had to get a second job (even more challenging these days than it was for me then) and cut back on a lot of spending. The process was hard, non-linear, and involved self-reflection, sticking my cards in a bag of water in the freezer, and finding a really good rate on a personal loan from a credit union (which I’ll still be paying for another 10 months or so).
I’m now at a point where I feel ready to take on debt for the right reasons. I’ll need to buy a new (to me) car soon, and I’ve done the work to set aside some money for a good down payment so I can keep my monthly payments low when the time comes to buy. I still feel nervous about it, but I can calm my nerves by reminding myself that I’ve built strong financial skills, and also that a newer car is in line with my values of being kinder to the earth. And in this case, the debt also leads to an asset, which is a building block of wealth.
There’s so much more to say about debt and my debt relationship. For now, just know that there are resources available to move you from where you are to where you want to be.
Do you have specific questions about debt? Hit reply to this email. No judgment, no shame, no embarrassment. I've been in your shoes before and I can help you address your questions around debt.
You got this,