For a person to do what it takes to get out of debt, they need to have a total mindset change about money and start thinking about their finances differently.
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.
#17 is like what I used to do before when I was in great debt. I didn’t cut my credit card. I still had it whenever I went to malls and still used it whenever I needed to buy something. Now, I just wish that I had cut it off so that it have would have been easier to get out of debt.
Jayson @ Monster Piggy Bank recently posted…5 Reasons Why Your Business Needs an SMS Solution
I didn’t cut up mine either Jayson. I wish I had done, but in the end I let mine expire (once I was on the road to paying off the debt that is!).
“I know I need to pay off my debt but I don’t have any spare money” – yep, been there before!
I spent years thinking I couldn’t afford to pay off debt – funny how things change when you get serious.
It’s amazing just how much you can cut from your budget – or earn extra – when you really put your mind to it!
RIchard recently posted…How To Pay Off Debt When Everyone Else Is Getting Ahead
Definitely Richard. Where there’s a will, there’s a way!
That’s why it is a good idea to pay yourself first. It’s much better to run out of money for entertainment than money for debt repayment
Yep, some of these sounds embarrassingly familiar!
Amy @ DebtGal recently posted…It Can’t Hurt to Ask
Definitely at one point in my life they did. I used to wait for the work bonus or raise to pay off my debt or put a huge chunk towards it.
Tonya@Budget and the Beach recently posted…2015 Goals: Six Month Check Up
That’s great that you used your payrise for debt instead of spending it!
Oh boy, I used to say at least 15 of those. No wonder I was always broke and in debt.
Aldo @ Million Dollar Ninja recently posted…I “Won” a “Free” Vacation!
Glad you’re out of debt now Aldo!
An absolutely fantastic article and one which will hit reality with a lot of individuals struggling with debt. I’ve said many of these things over the years but have had great people to turn to when I need support, such as friends, family and the brilliant team at Chiltern Citizens Advice (http://chilterncab.org.uk/get-advice/debt/). Keep the great articles coming . . . . . . .
Thank you so much Jeff! I really do hope that people struggling with debt will read this and recognise that they might need to change the way they view their debt.
I’ve definitely heard all of these before, Hayley. And as you pointed out, there is a lot of danger to these excuses. I have to mention that a lot of people expect to receive some sort of inheritance from their family but it doesn’t always end up happening and not due to any falling out between family members. People sometimes live longer than expected, use more of their “retirement” money than planned and have higher health care costs, especially with long-term care needs at the end of their life. Ultimately, they leave very little (and sometimes they end up living none or debt) behind. I hope to leave a financial legacy for my daughters but I would also tell them not to plan their lives around receiving it because they could be in for a rude awakening if it never materializes.
Shannon @ The Heavy Purse recently posted…The Financially Sound Podcast with Shannon Ryan
It’s impossible to know what’s going to happen in the future isn’t it Shannon. And when it comes to families and money, things aren’t always straightforward!
Number #1 was my crutch and I received many pay raises and never took care of my debt. It really takes a change of your mindset to wake up, stop making excuses, and get rid of the debt.
Petrish @ Debt Free Martini recently posted…Do You Really Know What Personal Finance Is?
I did the same Petrish. Payrises came and went and the debt remained. Oddly enough, we ended up paying off our debt when we took a paycut! 🙂
Can I add another one? “But I’m supposed to invest my extra money”. This article is great because someone can easily reference it and see how crazy they sound. It’s not crazy when they say it, but it’s crazy when they hear someone else say it. Paradox of life, i suppose.
Luke Fitzgerald @ FinanciallyFitz recently posted…Top 3 Benefits of a Budget
Sure! Thanks for contributing Luke, that is a good one to add to the list!
This used to be me! I’ve been debt free for a while now and I’m never going back!
Katy Stevens recently posted…Prolific Academic referral scheme
I know what you mean Katy, I feel the same way!
Wow, most of these statements are terrifying.
That said, I do think people should keep a credit card. No matter how good your emergency fund (within reason), things can pile up to the point that you’re out of money and still looking at bills. What if your emergency fund is depleted, and your car breaks down? There are places where public transit just isn’t viable.
That said, I’ve heard of people taping credit cards to the back of a dresser they can’t move by themselves. If they have to call someone over, they’ll have made sure it’s important. Or people who tuck their card in a ziploc, then submerge it in a container of water then put that in the freezer. If they need to use it, they’ll have to wait several hours (or more) to get at it.
Abigail @ipickuppennies recently posted…The streak is over… and I don’t feel so good
I like those delaying tactics, especially keeping the credit card in water, in the freezer! By the time it defrosts, the urge to spend could have disappeared, but in an emergency, it can still be used. Thanks Abigail!
Number 19 is one that I actually thought was true when I started using credit cards in college. I thought you had to use them every month in order to help increase your credit score.
Financial Conversation recently posted…3 Ways Single Women Save More Money
Yep, me too! 🙂
I’m probably guilty of saying plenty of these at some point in time. It’s so interesting to see how perspective impact behavior. Boy did I need a mindset change.
Toni @ Debt Free Divas recently posted…Financially Savvy Saturdays #96
I remember when my student loan money turned up in my bank account, I immediately felt sick. I’ve never understood how people can be so calm about debt. Even the prospect of taking on a mortgage isn’t really something I’m that interested in ever doing.
Mel recently posted…Financially Savvy Saturdays #96
So true! I used to say “Once I start getting bonuses I’ll pay off my student loans quick”, but the bonuses didn’t come for years. When they did they were 10% of what the company used to pay. That wasn’t going to be the magic fix for my student loan debt.
Tre recently posted…What A Week! 2015-15
Yep, this all sounds familiar to me!
No. 5 resonates re new/ used cars. I bought a 5 year old car for under 3K, 8 years ago. It has NEVER broken down. They are made to last, if maintained and serviced annually.
These are all great! I worry about the “everyone has debt, it doesn’t matter” attitude! If that’s the case, I don’t want to be like everyone else!
Erin @ Stay At Home Yogi recently posted…Unexpected Expenses, Sinking Funds, & Crappy Shoes
Debt is an absolute killer to your health, your sanity and your life. very strongly linked to depression and suicide. debt is very effective at poisoning your relationships with the most important people in your life. think of being in debt to a drug dealer. then buying more drugs to ease the pain. sanity ? nope
Couldn’t agree more Peter! Debt can turn toxic very fast…