That mindset change can be a very long time coming as I know from personal experience! The impact of debt can be easy to ignore, until it sort of sneaks up on you and hits you right where it hurts.
I was thinking recently about some of the things people in debt often say or think when they can’t see how much of a problem their debt could cause them, in the future, if not already.
Take a look at these common statements or beliefs and my reasons why this way of thinking could cripple someone financially for a very long time.
1. When I get a payrise, I’ll use it to pay more towards my debt.
Yeah, but you might not get a payrise… you might even have to take a paycut or lose your job! Life has a funny way of not going to plan…
2. At least I’m making the minimum repayment, so I am actually paying my debt off.
You won’t really be paying much off and it could take decades to pay off your debt. DECADES! If you’re paying a lot of interest, then your debt could actually increase because the amount of interest added to the debt each month could be more than the amount you’re paying off the capital.
3. It’s not like I’m struggling, I can afford to make my minimum payments.
You can afford your minimum payments now, but what about if your circumstances change? You could fall prey to the minimum payment debt trap before you know it where you no longer can afford to make even those payments.
4. Once I’ve bought a new TV, car, house, etc, I’ll be able to work at paying off my debt.
There’s always something that needs paying for, I get that. But getting rid of your debt first will help you save more money for those big purchases without the stress of your finances being uncomfortably tight.
5. I had to get a new car (on finance), it makes better sense than buying an old car that will break down.
The trouble with getting a financed car is that it won’t really be yours anytime soon. You’ll be paying a fortune for the car over the time of the finance agreement (even double what the car is worth) and its shiny newness won’t last for long. If you fall behind on payments, your car could be repossessed by the lender.
6. I’ll probably get an inheritance in the future, so I’ll pay off the debt then.
Imagine how much you’ll have paid in interest by then! Plus, it’s crazy to bank on inheritance until you have it in your pocket.
7. I don’t think of my student loans as “debt” – they helped me get my education.
Yes, but they are a form of debt. In England and Wales, you don’t have to pay your student loans back until you earn £21K per year (if you started Uni on or after 1 September 2012). But unless you plan on not earning more than that for the rest of your working life, you WILL have to pay them back at some point. Sometimes, it can make sense to consider student loan refinancing in order to make your payments more affordable.
8. I know I need to pay off my debt but I don’t have any spare money.
Ok, but why not try to earn some extra income? There are so many things you could do to make some cash on the side!
9. I already work full time, I don’t have time to earn extra money to pay off debt.
Lots of people work full time, have families and still manage to earn extra money. You’re not the only person in that situation! More and more people choose to make money online or from home.
10. How else am I supposed to afford a holiday (like everyone else) unless I spread the cost on credit?
Well, you could just not go on holiday until you can afford it. *shocked face*
11. Debt is normal nowadays, everyone has it!
Totally untrue. You might think this but the truth is that not everyone has debt and you can choose to live without debt if you want to.
12. I don’t worry about debt because life’s too short. You only live once, right?
What happens if you live into your 80s? Do you still want to be in debt then, when your health is deteriorating and you don’t have two brass buttons to rub together to make life easier?
13. I don’t want my kids to miss out so I spend my money on them rather than my debt.
Forget gifts, your kids need financial security. They’ll be better off if you’re better off.
14. The interest rate on my credit card is really low, so it’s fine.
But you’re still throwing away money on paying interest – money that you could do with!
15. I know I’ll always have debt, so I just work around it.
Don’t accept that debt will always be a part of your life. It really doesn’t have to be and the world could be your oyster if you don’t have debts to take care of.
16. I’m just going to shift my balances around on 0% credit cards until I have more money to pay off my debt.
What about those balance transfer fees? They usually range from 2% to 3% of your credit card balance, so transferring your cards continually will actually cost you money.
17. I can’t cut up my credit card in case I need it for an emergency.
You could try to save some cash for an emergency fund, then you can cut up your credit card. You don’t have to close the account, but cutting up your card could be all you need to do to stop getting into more debt.
18. I can’t put my life on hold just to pay off my debt.
You might not have to put your life on hold, although you will need to make some sacrifices to get out of debt. If not now though, you will have to in the future anyway.
19. I need to use my credit cards to keep my credit rating looking good.
Keeping lines of credit open is good for your credit rating, as is paying off balances in full at the end of every month. Spending on credit and taking ages to pay back your debt won’t have a better impact on your credit rating though. If you want to line the pockets of your creditors though by paying interest, that’s another matter!
20. The debts won’t matter when I’m gone.
To you they won’t. But if you have debt and family too, they might have to sort out your financial mess when you die. Believe it or not, your debts don’t just die with you.
My husband and I used to say and think these very things about our own debts. We were in debt for 15 long years before we finally saw the light and realised the damage that our debts were causing to us and potentially our young daughter in the future.
Life is so much better without debt!
What do you think about these statements? Do they resonate with you?
*Image courtesy of Flickr Creative Commons.