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HMM 96: Why Debt Does Not Deserve The Bad Rap

This episode may or may not ruffle some feathers. Yes I believe that debt DOES NOT deserve the bad rap it gets. My mission in this episode is to shift your thinking about debt.

What you’ll learn about in today’s episode:

  • The exact reason why debt doesn’t deserve the bad rap
  • The 3 classes of debtors
  • Why deciding what debt to take on is subjective
  • The 4 questions to ask yourself when contemplating taking on debt

The Exact Reason Why Debt Doesn’t Deserve A Bad Rap

Taking out credit / loans was created as a tool to allow us as consumers to have access to things (i.e. cars, houses) we didn’t have the immediate cash for. These companies created a solution to which in turn they make money on. That’s all businesses if you think about it. Businesses are created to provide solutions for problems.

Now debt is the result of taking out that loan, using that credit. If taken care of wisely there is no issue. The interest you pay is the payment for the company lending you that money.

The problem and the bad rap comes in paying it back. Everyone is wired differently, has different attitudes and behaviors around money. And of course money brings out a lot of emotions in us. Some are either not as responsible as others with it, some are at a point in their lives where there are a lot of challenges they are dealing with that makes it difficult to pay back and others pay it back no problem.

So, you can see there is a huge human component – the debt is not the one causing us to not pay it back. Of course I’m not saying it’s our faults as humans, but what I am saying is we need to get educated not just on money but ourselves as our own unique person. We need to know our history with money, if we are repeating any cycles / behaviors we saw growing up and so forth. We need to become our own money experts and of course this is not just about the money but ourselves.

3 Classes of Debtors

Compulsive Debtors

  • This is when you go beyond happy swiping that card, where it becomes an emotional issue similar to an eating disorder or a substance abuse issue. It is not necessarily for a lack of planning, or money management.

The Work In Progress

  • This person doesn’t like debt (ok seriously who does-not even the compulsive debtor does) but is not so good with managing money so he/she can find themselves getting into debt.

The Planner

  • This person is a huge planner and great money manager.
  • They either have been in debt and gotten out of it or have never been in debt.
  • They have no intentions on ever getting back into debt.

The kicker is at times it happens, life happens or opportunities arise you weren’t planning on and you have to make a decision.

A great example is me. Yep, we got back into debt  An opportunity presented itself that was not in our plans, but that we wanted.  So, we made sure we had a strategy for how to get out of it and by when, and went for it.  So no worries there.

This brings me to the next point which is…

Why Getting Into Debt Is Subjective

Who is to judge if making the decision to go into debt is a bad one.

For example, yes we got back into debt, but it is very temporary, and I’m not upset about it. Did it sting a little, well yes, but it was something that we wanted, the opportunity was there and we took it.

Some would judge and say it was a bad decision, but we who know our financial situation felt it was fine.

This is not to tell you or give you permission to get into debt freely. This is to tell you that you and only you know if that decision to get into that debt is a good one or not.

4 Questions To Answer When Contemplating Taking On Debt

#1: Is this a hasty decision I’m about to make or is it a well thought out one?

#2: If I take on this debt to I have a plan for it, does it fit into my monthly cash flow?

#3: Are there are any other options I can look into before taking out this debt?

#4: Why is this x that I am taking on this debt for important to me. What is it doing for me that is worth taking this debt?

Resources:

Mo’Money Podcast Episode with our very own Christina: https://jessicamoorhouse.com/listener-series-manage-money-smart-way-self-employed/

Link for session sign up: https://www.jenhemphill.com/session

 

I want to hear from you!  What was your favorite takeaway from this episode?  Please share in the comments below or come on over to our community and share with us there.

Abrazos + Much Love,

Jen

 

P.S. THANK YOU for listening!

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