Debt is a delicate subject. If you have $100,000 in debt, is that a good thing or a bad thing? If it’s a mortgage, it might be good. If it’s a mortgage on a house that’s underwater, it might be bad. If it’s a high interest credit card balance, it might be really bad.
Here’s what it shouldn’t be — embarrassing.
It’s easy to be embarrassed about debt. The common belief is that people land in debt because they’re bad with money or their spending is out of control. There’s a sense of failure if you owe so much money.
But you shouldn’t be embarrassed to the point it affects what you do. If anything, put that embarrassment in your desk drawer and use that emotion to fuel good behavior.
1. You’re Not Alone
People happily share how much they spent on a car but rarely share how much they owe. It might not surprise you to learn that Pew Charitable Trusts found 80% of Americans were in debt in 2015, with the median debt load among Americans at $67,900. A lot of the debt was driven by mortgages, but Pew also found that 39% of the Americans it surveyed had unpaid credit card balances.
These statistics reveal that you have plenty of company being in debt, despite the fact that no one admits to it.
2. It’s Not Entirely Your Fault
Your debt is the product of your decisions but also your environment and the things that happen to you. While I’m not advocating you give up all responsibility for your debt, don’t beat yourself up about it. Our goal is to understand the source of the debt and help you pocket that emotion so you can deal with the debt constructively.
Before assuming all of the blame for your debt, carefully consider whether something like unemployment, medical expenses, or student loans were the source of your debt. Debt is debt but knowing the cause is helpful.
3. Embarrassment Won’t Improve Your Debt Situation
Embarrassment is making your debt situation even worse. When we are embarrassed it’s easy to hide from that feeling, to avoid thinking about it and dealing with it.
Hiding from your debt may seem impossible, but people do it all the time. You might avoid looking at statements and make the minimum payments. You could avoid talking about money with others because it reminds you about your situation. Or you continue spending as long as you still have room on your credit lines.
However it takes place, hiding debt from yourself is a surefire way to increase the amount that you owe.
Rather than hide from the debt, embrace it and know that to overcome it, you need to fight it.
4. Build a Strong Debt Payoff Plan
Once you’ve turned the emotional corner, learn how to use that emotion to fuel a plan that can help you pay off your debt. When Chris Peach paid off $52,055.15 in credit card debt, it was because he decided enough was enough. He saw how much he owed and realized he had to make a change in his life. His embarrassment fueled a resolve.
The cornerstone of any debt payoff plan is to have a budget. The easiest way to maintain a budget is to use a tool that can track your spending, like Personal Capital or Mint. Once you get your spending below your expenses, it’s a matter of finding additional sources of income (like selling your stuff) and sticking with the plan, which is no small matter!
And as you pay off your debt, you can track how it is positively impacting your credit score. You can get two of your credit scores for free each month on Credit.com to see where you stand.
5. Your Debt is Temporary
One big takeaway from every debt payoff story is that much of it is psychological. We all know math. If you spend more than you earn, you’ll go into debt.
The hard part about paying off that debt is that you need to change your habits, which is a combination of will power and adherence to a plan. Once you realize that, and put systems in place to help you remember, you’re more likely to keep with it and realize that your debt situation is temporary. It doesn’t define you.
By reversing the process — by beginning to pay down your debt — you create a whole new dynamic. In a real way, you are undoing the mistakes of the past, and replacing them with a solid plan for the future.
More on Managing Debt:
- How to Pay Off Credit Card Debt
- The Best Way to Loan Money to Friends & Family
- Top 10 Debt Collection Rights