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How to Get Out of Debt Series Part 2: If you have debt, are you in trouble?

To read Part 1 of How to Get Out of Debt Series, go here.

If you have debt, are you in trouble?

I can’t stand how most financial experts talk about debt.

Like I really, really hate it.

There’s an overarching assumption, or insinuation, that someone who has debt isn’t financially smart or stable.

When I meet someone new and tell them I’m a financial coach, I’m often met with a proclamation of something similar to:

“Oh…I’m doing pretty good with my money, I don’t have any debt.”

Debt, and whether or not someone has it, has become an identifier of the person’s capabilities, financial position or future potential.

The thought many people carry is:

If you have debt, you’re in trouble.
If you don’t have debt, you’re doing good with money.

So many things are wrong with this.

Over the years, I’ve had a handful of clients who are amazingly successful with money. They make smart, calculated decisions, they never assume too much risk and yes, they sometimes use debt in a very strategic way.

They are financial rockstars and they have debt.

And I’ve had a whole bunch of clients who never, ever use debt (or never used debt again after getting out of it). They, too, are smart, strategic and are growing their wealth in a way that feels really great to them.

They are financial rockstars who simply choose to reach their goals without debt as one of their financial strategies.

Debt is not the determining factor of how strong, solid, savvy or confident someone is with money.

I cannot ignore what I’ve seen with my own eyes.

Please know – I’m not saying “YAY! DEBT IS AWESOME! HERE’S A CREDIT CARD FOR YOU! AND A CREDIT CARD FOR YOU! CREDIT CARDS FOR EVERYONE!” 

Absolutely not.

The key is that in order to use debt successfully — you have to be strategic, intentional and self-aware. I wish we’d just say that.

“Having debt” and “Leveraging debt” are two very different things.

By positioning debt as some “great evil”, being “debt-free” has become a badge of honor, or some arbitrary indicator of success that I think can actually be quite dangerous.

Mr. Fiscal Fitness and I have leverage debt.

We have an auto loan that’s at 0.9% interest. I’m earning 4.25% in my savings account right now on that money instead.

We use credit cards as part of our money management system. We earn points and I pay the balance every Friday.

We have a mortgage.

We have a rental property that also has a mortgage (it has an interest rate in the low 4’s) and cash flows over $1,000/month. We put this money into our investments.

We have debt, because when I looked at our other financial goals, leveraging debt actually sped up our ability to achieve them.

We are strategic and intentional about how and when we use it. I accept the added responsibility that comes with choosing to leverage debt – and this is something we talk through with all of our clients.

We choose to leverage debt because it works for us and I’m proud to say, I’m a financial rockstar too.

Whether you have debt or not, having your own debt strategy is key.

If you want to pay off your debt, pay it down, or simply become more strategic with it, I hope you will enjoy reading this 5-part series.

For too long, getting out of debt has been talked about in an overly-simplified way and it’s not working for folks like you. A lot of financial experts do this because they think you can’t handle complex situations or that you can’t think critically about your money. I beg to differ.

In this 5-part series, I aim to address your debt from a few perspectives so you can devise a strategy that works for you.

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