Why you shouldn’t be ashamed of being in debt

Why you shouldn’t be ashamed of being in debt

Did you know that according to CNBC, 8 out of 10 Americans are in debt? I would imagine that estimating the number of Americans who are in debt is no easy task. But I also think it is safe to say a lot of Americans struggle with it. And CNBC isn’t alone in their estimation: I Googled the topic, and most of the postings seemed to agree.

Debt is a problem many of us have. But it's okay to be in debt.

Although our anecdotes can often be biased or misguided, I believe debt is different. I hear about it all the time – from people declaring bankruptcy, to borrowing money from family members, to taking on predatory loans.

In fact, lending has gotten so “creative” nowadays that many people are even financing their pets. Taking out a loan to purchase a pet is a bad idea for a number of reasons. But the fact that it even exists is a great example of how ill-advised many financing decisions are in recent years.

And even though pet financing is so shortsighted as to almost be laughable, the point is that I’m not laughing. Whether it’s something as big as a house or something as small as a pet, you obviously had your reasons for taking on debt. And, to be honest, I don’t think it’s my place to judge.

Thus, allow me to discuss how we got here, and why you shouldn’t feel bad because your finances are less than ideal.

We’re told some debt is “good debt.”

I personally do not agree with this, for several reasons. But I’m also not going to speak ill of you because you bought into a certain philosophy – literally – even if that philosophy turned out to be different from what you expected.

You might have heard that your mortgage or your college degree are “good debt.” And while there is an argument to be made for each, I guess I just don’t like the term.

You may have heard college is "good debt," but that isn't necessarily true.
You may have heard college is “good debt,” but that isn’t necessarily true.

“Necessarily evil” is better in my opinion. Granted, even college isn’t guaranteed to pay off.

Having a mortgage is probably a better example, since owning a house can be cheaper than renting in the long run. You may also have more flexibility in terms of changes to it, so again, I can understand having a mortgage. Especially since very few families could ever afford to buy a house with cash.

Despite all this, I still wouldn’t consider a mortgage to be good debt. It’s just that most people and most families need loans to be able to afford them. So, if you bought into that idea, I totally get it.

I sort of did the same with my student loans. Yes, I am using my degree, and yes, I have paid off all of my loans now. But still, having $100k in debt was a significant strain on my finances for a number of years. I am obviously glad to be done, but I feel like I could have been further along now if I hadn’t dug myself into such a huge hole.

The point I’m trying to make here is that many people believed that some debt could be good. And so, it’s totally understandable if you have been one of them at some point.

But you are not alone.

You might have a huge amount of debt, and perhaps it’s very stressful for you. I can understand that, as I remember thinking my whole future was in jeopardy if I didn’t get rid of my debt immediately.

The thing is, nobody’s perfect. While it may not help you to know that so many people have this issue, know you aren’t alone if you do. Based on the 80% figure, there are actually hundreds of millions of Americans who are shacked by loans, credit card bills, and so on.

Yes, it sucks, to be totally honest. But it’s not just you. And sometimes, having that strange sense of reassurance can be the first step in addressing the problem head on.

Debt isn’t permanent.

There are many things that could have a permanent negative effect on our lives – the loss of a loved one, a disability, and many other changes in life circumstances. Because they are permanent, the only thing you can do is adjust to a new way of life.

Debt is different. It’s not permanent.

Debt isn't permanent. You CAN eliminate it!

Yes, everyone’s life situation is a little different. Yes, there is the possibility your finances could be so tight that you barely have any money left over to pay down debt. If that is the case, though, you may want to consider ways to increase your income.

There are various side hustles online that could help you do so. Many people own real estate. Some people sell things online. There are honestly so many different ideas that I couldn’t possibly cover them all here. But the point is, it’s usually possible to earn some extra income if you so desire.

In the end, as long as you have some amount of money that your expenses aren’t erasing, repaying your debt starts to become a real possibility!

Your debt does not define you.

This is the last point I would like to make, but perhaps the most important.

I know pretty well how debilitating debt can feel. Be that as it may, just because you have debt does not mean you should somehow feel bad about it. You should never feel guilty, as though you’ve done something wrong.

Even if you signed up for it not fully understanding its implications, it’s okay. I was a victim to that scenario as well, but battled my way out of it through intentional spending and low expenses.

There were many times while I was paying off my student loans that I would look back and wish I had done things differently. But the thing is, I did things the way I did them. Until someone figures out a way to go back in time, we won’t be able to undo the past.

All we can do is make the most of the present and of the future. And, of course, learn from our mistakes. Because that’s what life is all about, right? I don’t know about you, but I for one am definitely figuring things out as I go. Luckily, though, I rarely make the same mistake twice.

That’s the beauty of it all. Live and learn. I know I have.

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This Post Has 24 Comments

  1. Another great post. I’m accepting of the fact that mortgage payment is a necessary evil for me. And you are right, debt is not permanent. However long it lingers, I’m looking forward to eliminating most of them from my life’s. Live and learn, eh?

    It’s amazing to hear you are using your degree and that it has helped you payoff the massive student loan it costed you to have. Success story in my book.

    1. Thanks so much for the kind words. I hope you you get that mortgage knocked out ASAP!

  2. If I knew then what I know now! Student loans are the devil! I would have went to a tech college for an associates, while paying for it as I went. Once obtained and I earned some income, I would have gotten my bachelors from a university. Time to keep chipping away at my college naive self’s spending…

    1. Yeah, they really kinda are. The more you know, right? But I’m guessing you won’t be taking out any more, so there’s that. 🙂

  3. I like the analogy comparing debt to drugs. Like drugs, debt starts with, “Come on man, everyone’s doing it.” Before you know it, a moment a joy can turn into years of hardship. You hit the nail on the head.

    1. So true Kris…especially the last part. Thanks for stopping by.

  4. Hey Bob. Hit another one out of the park.

    Never associated debt and drugs before so very creative analogy and it works. Only problem is society seems to tolerate being in debt far more than being on drugs. Both can be devastating if gets out of hand.

    But you are correct, you can battle your way out of debt and be none the worse for wear.

    1. That’s true. One thing I intended to mention although it kind of slipped my mind is that we shouldn’t shame drug users, either. Shaming is rarely an effective form of persuasion. Someone in a vulnerable position needs positivity, not negativity.

      Thanks for stopping by as per usual!

  5. Wow what a great perspective, I’d never thought of it that way. But it is all absolutely true. Congrats on “getting clean” from your student loans.

    1. Thanks! Working toward FI one win at a time. 🙂

  6. Honestly I’m surprised that the number is only 8 of 10 Americans when you factor in home mortgages. When you put it that way, we are still in debt as well, though our home has some serious equity in it and has saved us a ton of money as compared to the cost of renting.

    I wouldn’t be surprised if the shame of being in debt perpetuates the issue for a lot of people, because they don’t want to have to acknowledge it and figure out how bad the situation really is. Maybe breaking that stigma would help.

    1. Thanks for the input. I agree – it’s not something that needs to be stigmatized. And it’s tough to overcome problems if you’re busy beating yourself up over them.

  7. Wow I would definitely think that 10 out of 10 people are in debt or have debt of some kind. I love that you said debt doesn’t define you, it really doesn’t. I think how you overcome debt defines you. I understand your thought on “no good debt” however, I do kinda think a mortgage is good debt. I definitely couldn’t afford to pay for a house in cash, but I would like to think a nice new home for my family is a good thing. (But I understand, and can completely agree how so many people get so excited when they finally pay off their mortgage!) people can also regret their once “good debt!” My husband for example, regrets his truck, but were so close to paying it off so it’s exciting now. This was a great post Bob!

    1. Oh yeah, I didn’t mean you shouldn’t get a house if you need a mortgage. I was just arguing the terminology of it I guess. But I do agree that having a nice home for your family, even if you need a mortgage is still a good thing. 🙂

  8. From a financial standpoint, I should never have gone to college. I could have done everything I’ve done in life without it. However, there is something to be said for the enrichment and growth you experience because of the student loans debt many of us put ourselves in. The problem is that the world has changed a lot over the past half century or so. Getting a degree doesn’t mean as much as it used to. You don’t get the financial return that you did at another time in history because everybody is doing the college thing now. That’s one of many problems with student loan debt. A lot of people don’t make enough money to compensate because the market is so saturated with people doing the same thing.

    1. Exactly – it used to be that going to college was great, because very few people had college degrees, so it immediately set you apart. That meant that not only was it easier to get a job, but you commanded a higher salary. Nowadays though, so many people already have college degrees that both of those advantages have nearly vanished completely. It’s rough out there!

  9. I appreciate the perspective (sort of). As a parent of a heroin addict, I do have some issues with your using this analogy.

    Addicts typically start out with recreational drugs. Most don’t become addicted. Sadly, many do, including my son. The choice argument for addicts is a bad argument. Once addiction takes over, the brain is, quite literally rewired. Once the rewiring takes place, the choice is no longer there. The brain tells them it’s the drug or death. Because of the rewiring, relapses are quite common during recovery.

    Certainly, getting into and out of debt is a choice. Though there may be some added dopamine sent to the frontal cortex when something is bought with debt, the guilt afterward is much more easily managed. And the choice is still there. And you’re right, it’s temporary. The freedom that comes from being out of debt reduces the chance of relapse.

    I agree with all your points. I would prefer a different analogy, for obvious reasons. 🙂

    If you’re interested to read our story, you can find it here – https://moneywithapurpose.com/dealing-with-addiction/.

    1. No worries, I almost took that part out so as not to offend anyone. And of course, I could always do so in the future. Sorry to hear that about your son; I can’t imagine what that is like. But it must not be easy.

  10. Another great article Bob! I like your discussion about the “good debt” debate. You hear that phrase all of the time. Going to college is good debt….$200k later. A necessary evil is a better way to put it and I think it is spot on.

    Thanks for the read this evening!

    Bert

    1. Thanks for the input! I agree – I just think it’s a strange thing to call it; almost as if we’re being conditioned to believe debt is a good thing in order to take advantage of our vulnerabilities. Again, it’s true that most people are going to need to a mortgage to be able to afford a house no matter how good they are with their money, but like I said, I just really don’t like the terminology myself.

  11. Hi Bob!
    I never knew people took out loans to pay pets or to maintain a pet. The idea sounds crazy to me because originally, pet supplies, grooming and vet treatments are already super overpriced in the cities, yet pet owners need to add this to their cocktail of debts (you like my support for the drug analogy?). Worse are the financial institutions who come up with these type of loans.
    College education is the states is too high even for locals. In fact everything infrastructural it seems like building a future, building roads, overhead bridges seem to cost way too much. I don’t know if there are any groups lobbying to bring prices down?
    Anyway I like it that you tore debt apart and broke it down fact by fact for readers.
    That debt isn’t permanent, one can invest effort and time and build up a side income thanks to the internet, and debt shouldn’t be your sole identity.
    We’ve been through jobs and the times in between jobs can be sky high anxiety. So is the time of debt. But we can chip away at debt bit by bit. It takes time and discipline but we can do it.
    Kudos to all who set their minds to getting out of the red and tipping the scales in their favor.
    Connie
    http://www.sassy.mom

    1. Yep, there are a lot of crazy things going on when it comes to lending, no doubt. That’s why I try to stay a mile away from them if possible. At least nowadays I do. 🙂

  12. That last point really resonated with me. I think there’s often an element of internal stigma and external judgment when it comes to debt.

    I recently saw some folks very close to me dig out of a pretty deep hole. And, unfortunately, I really think debt is who they felt like they were for a long time, rather than a circumstance.

    I will work to give folks tangible tools to avoid consumer debt all day, but that journey shouldn’t have to be a shameful one.

    Keep it coming, my friend!

    -Mr. Thrifty

    1. Thanks, will do!

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