dealing with debt after college

Dealing With Debt

Student loans, credit cards, car payments — it can all pile up on us fast. Debt can feel like a two-ton backpack weighing us down every second of every day. It’s exhausting, scary, and can leave us feeling hopeless. Debt, and how people respond to debt is also leading cause for divorce in America. It’s not good — but it’s something we’ll likely all deal with in one way or another. So, if you relate to this — here are some tips on dealing with it.

1. Get To Know Your Debt

Many people don’t even know what they owe on their credit cards, their student loans, or their car payment — let alone the interest rate. The first step is to actually put together a balance sheet, and list up all of your assets and your liabilities (the negative stuff, like debt). Dig into your statements and figure out your remaining balance on each loan.

Once you know what you owe, it’s important to know how your debt is structured. What is the interest rate? Are there pre-payment penalties? What are the terms of the loan? What is the duration of the loan (if applicable)? After understanding the structure of each debt, you’ll be able to have a better understanding of your situation. It may not be pretty, but it’s a vital first step to conquering debt.

It’s also important to know what you’re currently paying. I have several friends who thought they were paying off their debt, when in actuality they were only paying the minimum payment — which was going entirely to interest! They weren’t even scratching the surface on their debt. This is highly common with credit cards.

2. Don’t Let It Define You

Your debt is not your identity. Don’t let it define you — your financial situation doesn’t make you better or worse than anyone else. If you’re swimming in debt, that’s an issue. But, we all have our own unique issues. Don’t let your self-worth be correlated to your balance sheet in any way shape or form. Coming to terms with this can be freeing in and of itself.

3. Find A Plan That Makes Mathematical Sense (Not all “gurus” do so).

This is a big one for me. I’ve sat through several budgeting and/or “get out of debt” classes from the gurus — the famous ones, and the not-so-famous ones. Each have things I agree with, and things I don’t. And, as someone who was securities and insurance licensed working in financial planning at the time, I actually got quite impassioned about the topic of debt repayment (if you can believe that). 

Here’s the thing — don’t confuse opinion with truth. You need to have a plan, but your plan also should make mathematical sense! Some financial experts teach that we should pay off the smallest debt first. This sounds great in theory. But, this strategy completely ignores the interest on the loan! Hear me carefully — pay off the loan with the largest interest rate first. I can say this with full confidence because the math works — you’ll have more money. It’s really just simple math. I understand the desire to have a “win” quickly by paying off the smallest interest rate first. But, if you can drive a truck through the difference in the interest rates on your loans, I really don’t care how small the remaining balance is — pay off the largest interest rate first.

End rant.

4. Baby Steps One Day At A Time

Debt can feel overwhelming if we look at it from a 30,000 foot view. We just see a massive number — be it from a student loan or credit cards that have piled up. When we look at the big picture of debt, it can seem like an insurmountable mountain. 

Remember this — success is simply doing what you need to do consistently, one step at a time. Day by day, making good choices to stay in and cook dinner instead of going out, to opt for water instead of a cocktail, to shop sales even if it takes more time, and to go without a treat even though you want it. Those wins add up. The more we stack up wins on top of one another, we begin to slowly summit the mountain. That progress feeds our motivation. You can do it. Keep going.

5. Celebrate Milestones

We all need a win every now and again. It’s important to celebrate your wins to keep yourself motivated to keep moving forward. Whether you payed off a debt, or you just went a week without eating out — it’s worthy of celebration. Treat yourself to a cocktail, a dessert out, or go do something you love to do. Just don’t celebrate in a way that puts you back to where you started. That would, of course, defeat the purpose.

6. Seek Help If Necessary 

People seek personal trainers to get in shape. They seek coaches to help them succeed in business. So, there shouldn’t be any stigma around seeking help in your finances. A good financial planning professional can be all the difference you need to stay motivated to reach your goals. They can offer other strategies and provide a clear plan so you know what to do every day, every week, and every month. If you need help — get it. There is absolutely no shame in doing so. The courage it takes to get help is admirable and shows great maturity. 


Would you add anything to this list? What’s helped you deal with debt? Drop us a note!

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