Debt isn’t dumb!
Stressed by your debt?
A new mindset can help you shift your perspective and give you confidence in your ability to pay it back.
A popular financial expert is well-known for the phrase “Debt is dumb.”
While I understand what he is saying, that phrase just bothers me because I think it is so discouraging and kind of insulting to those who have debt.
Like most financial experts in the media he speaks to the masses, and gives advice that works for a broad range of situations. Since advice to stay out of debt will never be a bad idea, it makes sense that he recommends to get out of debt and stay out of debt. I just happen to disagree that his advice is the gospel truth that everyone should follow
Although I’m not saying that taking on a lot of debt is wise, some debt is necessary and can be very helpful.
And the biggest thing for me is that I don’t think the “debt is dumb” mindset is helpful for those who already have debt and are working hard to get out of it.
Discouraging thoughts do not create the energy that help people get in the mood to pay off debt.
I don’t know about you but discouraging thoughts make me want to go to Target or TJ Maxx and spend all my money just to prove that I can. Now that’s dumb, but it’s human nature!
So here’s the thing…I don’t think you’re dumb and I don’t think you got into debt recklessly. Debt is not dumb, and in fact sometimes debt can be pretty dang smart. Here’s why I say that.
Some forms of debt can help you move more quickly in pursuit of your goals.
We’ve all heard the saying time is money, and is that is very true when it comes to things like the rising cost of school tuition and housing.
School Loans Can Be a Smart Move
For example, if you try to pay cash for your college education and it takes you twice as long to get through school, that is twice as long that your earning power is limited.
That is twice as long for tuition rates to increase at a rate faster than inflation. And tuition is most definitely going up faster than the pay rate at the low paying job you’re likely to have while putting yourself through school. (Google it and you will see that tuition increases are averaging about 5% per year.)
Student loan debt, if you exercise a reasonable amount of caution with it, is one of the smartest moves you can ever make.
So when you think about your school loan debt, give yourself some encouragement.
Tell yourself that you went to college and now you are in a better position than ever to make more money in the future!
***By the way, I’m using the term college loosely. The same goes for any type of education or training that you get. Education or job training is money well spent even if you have to go into debt for it.
So let’s talk about other smart debt starting with my favorite kind of debt. 🙂
Mortgage Debt is a Safe Bet
The absolute smartest debt most people can take on is mortgage debt.
The reason I say that is because I am a real estate agent.
Just kidding….
The reason I say that is because I have seen more people grow wealth through owning their own home than any other way.
Historically, home prices always rise. Some markets grow slowly and some grow quickly, but it is very rare for home prices to go down over time. There is too much upward pressure on housing prices for them to be able to go down in most cases. (But that’s an economic lesson for another day.)
You can get into a home with as little as 3% down, and in some cases even less.
So let’s do the math…
If you put 3% down and live in your home for a few years while prices are appreciating, your 3% will eventually turn into 10%, 15%, or even 20% down on your next home.
Since you are always going to be paying for housing, my suggestion is to get into a home as soon as possible and start building equity. I recommend it even if that means taking on more debt than you would if you saved longer for your down payment.
Owning your own home is one of the most emotionally satisfying and financially rewarding things you can do. There really is no other investment quite like it. I actually have a saying about it that I will share with you here. 🙂
“A good home in a good neighborhood is always a good investment.”
I have that saying because it’s true.:) I’ve seen it prove true thousands of times.
Mortgage debt is smart debt and I stand by that.
A Good Car Will Take You Far
Do you like my rhyme? Sometimes I can’t resist.
But anyway…another type of debt that makes sense, to a point, is car loan debt.
A reliable car is an absolute essential, especially for parents who have kids to get around, jobs to get to, and stuff to get done.
You don’t want to be messing around with a bunch of car repairs from your crappy car when you have places to be. That situation causes a whole different type of stress of it’s own, probably equal to or greater than dealing with car payments!
I’m not saying go crazy with some big fancy car and big fancy car payments to go with it. Obviously you need to be smart about it. Shiny new cars don’t last long, especially if you’ve got a load of kids in the backseat. Am I right?
Again, you are sensible enough to know what kind of car you need and what car payment you can afford. So get a car you like that meets your needs, and then tell yourself that was money so well spent!
If something changes and you can’t afford the car you have, you can make a new plan. It’s really not that hard to sell a car and get into a new one.
Approach Debt with a New Mindset
So now instead of beating yourself up over your debt, give yourself a pat on the back and tell yourself you’ve got this!
Beating yourself up over your debt will never help you pay it back. What will help you pay it is spending wisely and having a plan for paying it off.
It’s a scientifically proven fact that you can pay off debt by making regular payments on it.
So make a plan, work the plan, and drop the drama!
And by all means, let yourself enjoy life in the process!
Happiness and enjoyment is not reserved for those who are debt free with piles of money in the bank.
Even if you have some debt that was incurred unnecessarily or unwisely, you have the debt, and all the mental scolding in the world will not take it away or help you pay it but…
A positive approach will help you win every time!!!
When you’re feeling down about your debt, try some thoughts like this to encourage yourself:
We will for sure figure this out and pay all our debts.
We just need to stick to our plan and we will be debt free in no time. If something changes we will adjust our plan.
The debt we have from our car, house and education was money very well spent. We wouldn’t be where we are today if we hadn’t spent that money when we did.
I’m so glad I got my degree. Couldn’t have done it without good old Sallie Mae!
We will be better off and wiser for going through this experience.
A faith-based approach might be something like…With God all things are possible. God will help us pay our debts.
You could even try something really crazy…How about gratitude for your debt? Seriously try this! Think about all the savers and investors who made your debt possible. Did you even know that mortgages, school loans and car loans are made possible by people who invest in the companies that provide the loans, or save money in the banks that lend you the money? It’s true! And thinking about those people with gratitude can actually help you feel more positively and less worried about your debt.
And while you’re giving gratitude, you can also give yourself some gratitude for investing in yourself and believing in your future enough to get those loans. It really is a vote of confidence in yourself. Crazy eh? It kind of sounds crazy, but my whole reason for writing all this stuff is to get you to think about life a little differently because thinking differently is the key to different results!
So while “Debt is dumb” might be good expert advice for the masses, you are wise enough to know what is good for you and your family. You are amazing and you are the expert about your own life!
I am confident that you can handle anything you are dealing with and figure out the best way to move forward. Let me know what questions you have and how I can help. You can leave a comment below or email me at mommindset@gmail.com.
XOXO
Rachel
Here’s a final thought that I hope might help with some of that “crazy debt” you may have that was just plain overspending or taking a YOLO approach to life.
Years ago I had a friend who told me that she and her husband took out a second mortgage on their home and used the money for a trip to Brazil where she and her husband were from. She said it was the best trip in the world and worth every penny. She had no regrets.
That same friend died pretty young while on another adventure. I’m so glad she got to live her dream and take her family to her home country while she still had the chance.
While some might call that “dumb debt,” I like to think maybe she just felt compelled to take that trip because God knew what the future held.
God is in the details of our lives and He can fix our mistakes and bad choices and help us with any situation we face. He truly does turn all our experiences for our good when we turn to Him.
