How a Shift in Debt Mindset Can Spark a Financial Transformation

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Debt has been a part of my life since college. 

It started as something I accepted as a normal part of being an adult.

Debt was simply what happened when I made a big purchase.

And as long as I thought I could pay back the loan, I didn’t think twice about financing my larger purchases. It was no big deal. 

But as the years went by, I started to question my blind acceptance of debt. Something about debt didn’t feel right. 

And I began to wonder what my life could look and feel like if I made an effort to avoid unnecessary debt.

This shift in thinking, although gradual, was the beginning of me feeling more confident and less stressed about my finances. It was the spark I needed to start taking charge of my money. 

So here is my own debt story. 

It’s not one of the amazing “I paid off $100,000 in debt” type of stories that are out there. It’s a story about my own experience with debt and how a shift in debt mindset has transformed the way I think about my finances. 

My Debt Story

The Beginning of a Life With Debt: Student Loans

As with so many of us, my experience with debt started when at 18-years-old decided to take out loans to get a college education.

I worked throughout college, including two summers at a local steel cabinet factory, to help keep my loans down. 

And at the end of four and a half years, I had $9,500 in student loan debt. 

I felt fortunate that my student loan debt was relatively low, but I was still starting off my adult life in the hole.

Next up: The Car Loan

Right out of college I bought my first car. A brand spanking new $18,000 Honda Civic. I can’t recall the details, but I know I had some money saved up for a down payment. The loan was likely around $15,000. 

I drove the car for three years, and then decided I wanted something else. I traded it in for a $25,000 Volkswagen Jetta TDI and come out with an $18,000 car loan.

I talked myself into this car purchase by vowing to put extra money towards the car to pay it off early. 

Four years later, I had paid off the loan.

And after paying off the loan early, I started to save up for my next car to hopefully avoid a car loan in the future.

This was a turning point. 

Looking back, this was the first instance where I remember actively disliking debt and working to get out of it as quickly as possible. And then I took it a step further by working to avoid future debt by saving money specifically for another car. 

My mindset was starting to shift.

But I was still finding my way.

Next Up: More Student Debt

This next life decision is one that I look back on and wish I hadn’t made. But you can’t change the past, so here it is: 

In 2010, I thought it would be a good idea to pursue a Masters in Business Administration (MBA). 

My previous education was in Food Science. As I found myself moving up the ranks in management, I thought it would be a good idea to get a better sense of business. So, of course, an MBA was my answer.  

My employer offered tuition assistance, but it only covered enough to pay for one class per year. 

Therefore, to cover the costs through the years, I raided my savings accounts, including my Roth IRA (gasp!), and also took out an additional $8,000 in student loans. 

When I made the decision to go back to school, I don’t recall thinking twice about how much this decision was going to cost me. 

I didn’t look at the potential return on investment. 

There was no intention behind the decision. 

It was simply something I thought would look good on a resume. 

Taking out loans for education was such a normal thing that it never occurred to me to question whether or not it was in my best interest.

Side Note: If you are thinking about whether an MBA is right for you, check out this great post: Is An MBA Worth It.

Next Up: Financing Furniture

After moving into a new apartment, I decided I needed some new furniture, which included a couch. At this point, it had been nine years since college and it was time for an upgrade. 

I found a $4000 dollar couch that I couldn’t stop obsessing about. I knew it was a huge expense and hemmed and hawed about it for a while. 

But back then, when I set my mind on something, it was pretty darn certain that I was going to get it. Even if it meant taking on debt. 

There was a financing option for the couch where I wouldn’t have to pay interest if I paid off the debt in full by a certain date. I figured as long as I wasn’t paying any interest, what harm could it do? I went for it. 

I never once thought about finding a couch I could pay for upfront, or simply waiting until I could save up for the couch. I wanted it now. 

But I had a steady job and making those monthly payments was doable. So it seemed like a no-brainer. 

A few years later, I moved into my current house, and I did the same type of financing for another couch and a chair. 

Taking on debt was simply how I handled large purchases. 

Next Up: The Mortgage Debt

Five years ago, in a misguided attempt to save a relationship, I took out a $140,000 loan to buy a house. The relationship ended and here I am stuck with one heck of a mortgage. 

At that time, I didn’t think about the implications of being in debt for 30 years. Adults own houses!

And while I don’t regret my decision to buy a house, I do wish I would have made the decision with more intention—with more awareness of how the decision was going to impact my life. 

Years later, I thought about it again. This time with intention. And while I don’t love having mortgage debt, keeping the house currently makes financial sense to me. 

Current Debt Situation

Slowly, but surely I worked to pay off all of my debts outside of my mortgage, which currently stands at $112,000. 

I paid off my last car loan in 2013, my last student loan in 2017 (15 years after I graduated), and all of the furniture before the interest kicked in. And I have not taken out any additional loans since the mortgage in 2014. 

But besides being free from debt outside of my mortgage, the biggest change that has happened throughout the years is how I think about debt.

And it’s this shift in my debt mindset that is helping me make decisions that will help create financial freedom in my life. 

Note: My debt journey was made a little easier by the misguided efforts of Volkswagon. The car I purchased in 2009 ended up being recalled due to some faulty emissions reporting.  In 2018, I was given $12,000 to sell my 9-year-old car with 150,000+ miles back to Volkswagon. I used this money to help pay off my student loans more quickly and buy my current car without taking on debt.

A Shift in My Debt Mindset

From the beginning of my journey with debt, I have felt uneasy.  There was something about it I didn’t love.

I often worked to pay off my loans sooner than I had to. I attribute this to the feeling inside of  me that was uncomfortable with being in debt. But I didn’t quite know exactly why I felt so uneasy. 

And because I didn’t know why, I continued to finance my purchases without much thought. 

Thankfully, a few years ago, I started to realize why I felt queasy when it came to debt.

Debt is a Risk

Eventually, I started to think of debt not as a way to get what I want now, but as a risk. 

It’s risky because I am spending money I don’t have. 

And this girl struggles with taking risks.

For me, it feels like gambling to ask my future self to pay for something I want now. 

Sure there are many reasons why someone may want to take on this risk. Maybe it’s for a new business, to further their education, or any number of other reasons. But it is still a risk. 

Deciding whether taking on debt is worth the risk is for each one of us to decide on our own. We all value something different. 

For me, seeing debt as a risk and not simply as a way to get what I want right now helps me evaluate whether or not debt and any resulting interest is “worth it” to me.

Debt Steals My Freedom

When I commit myself to loan payments, I rob my future self of the freedom to make her own choices. 

This is because past me had already decided what I am going to spend my money on. 

This realization has been a major motivator for me to say no to new debt. I want to have as much control over my money as possible. And when my money is committed to paying off debt, I lose that control.

I want the freedom to change my mind and the ability to roll with any punches life throws at me and not feel the chokehold of debt. 

Spark That Financial Transformation

Simply thinking about how taking on debt affects your finances is a step towards financial transformation. It’s a step towards thinking intentionally about your money choices. 

When I started my post-college life with debt, I had no clue how my decisions to take on debt could affect my life. I didn’t make a calculated risk. I simply put a blindfold on and jumped right into a pool of debt with almost everyone else I know. 

But now, thinking about debt as a risk and a stealer of my freedom helps me make intentional choices around debt to create freedom in my life. 

Believe me, making a choice to say no to debt is not always easy. It tests my patience and I often feel frustrated. 

But I also feel a lot of freedom.

With more freed up money at my disposal, I can fund my other priorities as I wish. And with lower monthly expenses due to fewer debt payments, I feel more confident that I can weather the storms life throws at me. 

This financial freedom is what makes saying no to debt worth it to me.

Honestly, though, I can’t say that I will say no to all future debt. Someday an opportunity may come along that I determine is worth the risk of debt and interest costs. Or something comes up and it’s just not possible to save up enough money in time. 

With that said, I believe that everyone has the right to make their own decision on the role debt is going to play in their lives. Everyone has different goals and desires. And for some, debt may be a worthwhile way to achieve those goals.   

But what I urge everyone to do is to make their choices around debt intentionally. Make calculated risks and know what you are committing yourself to. Don’t put that blindfold on and jump in the pool. It’s too easy to drown.

You Got This

Debt is a big deal. 

I challenge everyone to think about the role they want debt to play in their lives. 

Thinking intentionally about debt is the start of a financial transformation.

What does your life look like with and without the debt you are considering? Or if you currently have debt, what would your life look like if you got rid of the debt you currently have? 

By simply taking time to reflect and make an intentional choice, you’ll feel more in control of your money and confidence in your decisions.

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Picture of Melody Creator of Cash for Tacos

Hi! I’m Melody and I want to help you create a vision for your life and provide you the necessary tools to use your money to make your vision a reality. 

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