4 Lessons I Learned from Being in Debt

4 Lessons I Learned from Being in Debt - picture of sad piggy bank with bandaid on face

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When I was in my late teens and early 20s, I was fairly indifferent to the amount of debt I carried. In my eyes, it was too early to worry about money or the future. I was young, dumb, and completely foolish about how the real world worked. Plus, I knew deep down that I would eventually make huge sums of money.

How? I wasn’t sure.

Unfortunately, the money I thought I would earn didn’t come until much, much later. Even worse, I made a lot of awful financial decisions based on my ignorant mindset – things like buying a $1,300 vacuum and financing a $25,000 car when I made $8.50 an hour. Not only did I fail to understand the gravity of my situation, but for some reason, I just didn’t care. I couldn’t fully understand the lifelong consequences of my bad decisions – or even why it mattered. Unfortunately, I paid out the nose for my silly purchases and splurges, often to the detriment of my long-term goals.

The first years of my marriage to Greg were filled with more of the same. We made plenty of money, but we had few plans for how to make that money count. Eventually, my husband and I shaped up. Even though we weren’t in serious trouble, we had student loans, car loans, and home improvement loans to contend with. Something had to change.

4 Lessons I Learned from Being in Debt

Once Greg and I realized that we wanted a better, wealthier life, we started tracking our spending. As painful as it was to learn we were spending almost $1,000 per month on food for two people, this was a crucial and life changing step. After that, we created our first zero-sum budget, which is the same type of budget we use to this day. Next, we began clawing our way to the debt-free lifestyle we enjoy now. Here are four lessons we learned throughout the process:

Tracking Your Spending is Crucial

When you don’t track your spending or create a monthly budget, your “extra” money can disappear in a hurry. Trust me, I’ve been there. I distinctly remember being perplexed at the fact that we weren’t saving more. Even worse, I had no idea what we were spending our extra dollars on in the first place. As far as I was concerned, most of our income was disappearing into thin air.

Related: The Best Money Tools You’ll Ever Use

Of course, tracking our spending changed all of that. Instead of assuming where our money was going, it showed me exactly how we were spending our hard-earned dollars. The fact that I didn’t like what I saw also motivated us more than anything else ever could.

When You’re In Debt, Stop Digging

Debt has a way of numbing you to the gravity of your situation. When you’re carrying around $20,000 in student loan debt, what difference does it make if you keep running up the tab? Unfortunately, the difference isn’t normally felt until you start paying it back. When you’re still digging, the effort required to dig your way out becomes greater. The timeline, longer.

Related: Student Loan Refinancing: Comparing the Best Rates

The most important step you can take in this journey is to stop making the problem worse. If you’re in debt, stop digging. Only then can you begin formulating a plan to make your situation better.

The Little Things Really Do Matter

When you aren’t making a lot of financial progress, it’s easy to assume that the little things don’t matter. Your satellite television bill only costs $50, so what’s the big deal? The big deal is that all of those little things can add up in a big way.

Over time, we learned to cut the things out of our lives that weren’t adding value. We also began focusing more on the frugal lifestyle we had enjoyed up to that point; we cut coupons, shopped around for deals, and looked for ways to save on items we planned to buy anyway. And at the same time, we took small steps like switching our bank account and starting a side hustle to raise extra funds.

Those small steps may not add up to much on their own, but together, they made a big difference to our bottom line.

It Never Pays to Care What Other People Think

When you’re too young to know any better, it’s easy to get caught up in what other people think. Unfortunately, that philosophy often works its way into our financial lives. If you listen to other people too often, you can wind up paying for things you never wanted in the first place. Trust me, it can happen!

But once you reach a certain point, you just stop caring. Fortunately for us, that change of mindset happened fairly quickly. While it’s okay to care what other people think or feel, you should never base your financial decisions on the desires or opinions of others. After all, your friends and family aren’t charged with funding your retirement, paying for your children’s college, or financing your dreams; you are.

The Most Important Lesson of All

Here’s the most important lesson I learned throughout the entire process – being in debt sucks. There’s no bigger buzz kill than knowing that you have to plan your entire life around paying various debts. Further, being in debt can hold you back from living the life that you truly want to live – whether that means traveling the world, going back to school, or simply switching to a career or field you love.

Unfortunately, the only way out of debt is through your own efforts, whether that means cutting your spending in order to free up extra income to pay it down or starting a side hustle or business to improve your financial situation over time.

Like anything else in life, the change in mindset required to get out of debt can only come from within. You not only have to want it, but you have to craft a plan to make it happen.

What lessons did you learn from being in debt? What lessons are you still learning?

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  1. The biggest thing I learned from being in debt is that debt owns you.

    It doesn’t matter who you are or what you do, if you have debt it colours everything. It robs you of your freedom and robs you of being able to make choices based on what’s right for *you*. Everything has to be about, “can I still pay back ‘x’ if I take that job, move to that flat, or get my car fixed?”

    And, that’s not a good place to be. Debt totally sucks!

  2. I had a co-worker friend who never could sleep at night. He had so much debt, still paying for his wedding 7 years later. The wife kept spending, he kept gambling, and despite the fact that we made really good money at our profession, he couldn’t keep up. He is making way more now, but l wonder if he still under water. I could barely sleep, and wasn’t nearly as much in debt. Now, l can’t sleep for another reason entirely.. How to spend all this excess money? :-). Debt is like a noose. It took some serious work like you detailed, but it’s totally worth it in the end. Enjoy your holiday!

  3. A lot of being in debt is mental/behavior, once you can change the way you think about money you’ve won half the battle. The other important think I learned is to talk about it with your partner and children. The money topic should be taboo. We are teaching out teenagers more about money than we ever knew at their age.

  4. I can really identify with your comment about debt numbing you to the gravity of your situation. Because when you have large debt, it seems like it will just always be there. I think that’s why we were so blasé about our debt for so long. We had so much of it, so what’s the rush to pay it off? We knew there was no way we could pay it off quickly- it would take many months.

    Thankfully we woke up and realized that we want and NEED it gone sooner rather than later, in order to achieve our other financial goals. We are currently in track for payoff in late 2016- can’t wait!

  5. Totally summed up by “being in debt sucks”! We were so miserable when we were buried in debt. Being debt free is so liberating and allows you to live life instead of just existing. Hopefully people are being awaken by your story and working on becoming debt free as well. Great article!

  6. I think you touched on one very key point, which is when you already have debt, you figure “what’s a little more?” But you’re right you sober up very quickly when you realize how long it will take to pay back or how much interest you are being charged.

  7. I couldn’t agree with you more on the impact of these lessons learned from debt. I have been through that as well, that is until I came to my senses. 🙂

    It was the early years for me where my error in thought was born. As I began to make more and more money from my paid job, I looked at debt only from a perspective of how much the payment was on a monthly basis. If I could afford the payments and they (the bank/ credit card/auto dealer) financed me, then it must be ok to borrow. Right?

    My thought process now evolves around asking why would I borrow money to buy something? Do I need it that badly now that I cannot wait and save for it?

  8. I definitely believe in the little things adding up. I never thought $5 here or there meant much, but when you don’t care about the little things, you definitely seem to make bigger mistakes. I rarely see clients who watch all of their money choices make big financial mistakes.

  9. Like Diane said, debt takes away your choices and freedoms. I may screw up, but it will be because I made the wrong choice, not because I was forced into anything because of debt hanging over my head.

  10. So grateful and bless to read this post about 4 Lessons I Learned from Being in Debt. It’s very great help for me. Thanks a lot for sharing.

  11. Been in debt for more than three years, I can say that I have learned much such as budgeting and savings the right and the right time. I notice that I have become a totally different persons because I no longer make impulsive decisions whenever I buy something and I save first before I spend.

  12. These are all really great, and true points. When I started tracking my spending at the end of last year, I obviously also started tracking my income. What was most shocking to me was not how much I spent on things (though that was interesting to see) but how much my income fluctuated month to month, and how I had never noticed that before! I was commission-based for years, and just made do with whatever money I had. I never realized my income fluctuated so much until then. It was totally eye-opening!

  13. This perfectly summed up everything that sucks about being in debt because debt really does teach you a lot. I know it sounds obvious, but I learned that it takes hard work and determination to free yourself from debt and delayed gratification will be your best friend. Understanding that you could have a better life and do what you want to do with your money is the perfect motivation needed to hold back on lifestyle inflation and eliminate your debt completely.

  14. I found that I sometimes had the mentality of “we’re already this far in debt, what’s another x-hundred dollars?” And that type of thinking can spiral out of control pretty easily if you don’t watch yo-self.

  15. Being in debt sucks and the interest on credit cards is horrible. It’s amazing that when I was in college, how much credit card debt I racked up and had no idea what APR was. All that wasted money… 🙁

  16. Wow, very insightful points. Although I’ve never been in debt, I’ve seen firsthand how people dig themselves further and further into debt because they couldn’t face the fact that they had to change their ways and face their debt problems.

  17. Yeah, being in debt does suck–it sucks the financial life right out of us! I agree that tracking your spending is a crucial starting point. Many people rationalize their way around this step, but the feedback we get from tracking where our money goes is invaluable. Setting priorities for our money is one thing, but making those priorities reality is pretty tough to do if you have little idea of where your money is going.

  18. Here here!

    Waking up to reality is so powerful (aka changing your mindset). What makes that difficult is that we’re lead to believe that being in debt is a normal part of life. NOT! Thanks for spreading this important message. I can’t imagine ever having debt again. I’d sell everything I own before that happened…

  19. I learned debt is not forever and that you can get out of debt, often quicker than you think, if you try. I am living proof of this after $40,000 debt I am today debt free and have an amazing life. There is always something comes up that can help along the way ( a tax return, inheritance or what have you….unexpected money) use it all to free yourself.

  20. Thanks for the insight. You touched on several points that hit home with me.

    Debt has a way of weighing us down to a greater extent than we even realize. It keeps us from enjoying life fully, from pursuing our dreams and living our passions.

    I’ve personally been struggling with student loan debt for a long time and you are right on point that it seems that it won’t matter if you take on more, but yeah, it really does.

    Anyway, thanks for the insight and keep rocking. I enjoy the blog.

    Laura Beth

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