Debt Management – Peace and Complacency

If you’ve been reading my posts here on DailyWorth, then you’ve already read my words on how unbelievably stressful debt can be. Sometimes I’m not even sure what’s worse: paying for debt in the amounts of insanely high interest rates or the emotional impact of that black cloud that follows you around day in and day out, taunting you at every moment.

That’s why I’m such a huge proponent of making peace with your financial situation. How else could we possibly move on and do something about it? The only problem is… too much peace can sometimes lead to complacency.

Recently I had a conversation with the wonderful and inspiring Paula Pant of Afford Anything (seriously, if you haven’t read her blog yet, start now) and she said something that really stuck with me:

You have to make debt an emergency.

Never before had I heard it explained this way. But as I let her words sink in, I realized how true they were. That was the moment I realized that I let peace turn to complacency in my life.

Debt Is an Emergency
I’ve battled credit card debt and student loan debt. Credit card debt felt like just about the worst thing ever and student loan debt mostly felt like a necessary evil. So I went into high gear to pay one off, then let the other slide into autopilot.

Every month I paid my student loan debt bill (yes, I saw it as a bill and not a debt) and put no more thought into it. Then one day I signed up for ReadyForZero and I saw just how much money this bill was going to cost me. In short, around $9,000 more than I thought.

Why? Interest.

In other words, my current balance due of $34,000 is going to end up being about $43,000 when all is said and done (if I stick to the standard repayment plan). And that’s only one of my student loans! While that’s nowhere near as costly as high interest rate credit card debt, I’d say it’s a pretty big emergency.

…Because nowhere on that promissory note did I see a notice “reminding” me of just how much debt I was truly signing on for once the interest rates over a set payment plan kick in.

Make Peace with It – Then Kick It In the Butt
To say I got mad when first seeing that number is putting it lightly. All this time I was chugging along, doing what I thought was right — only to find out that I was costing myself a ton of money in the process. It makes perfect sense in hindsight… but we’re just not taught to look at student loans this way.

So I said to myself, “Okay, if I stick to the plan, then I’ll pay almost $10k more than I borrowed. At least I know it’s debt that’s not going to grow more than that. And it was an investment in my future that I’ll never, ever regret. Good. Now it’s time to kick it in the butt!”

I signed up for biweekly payments. I started shopping around for better interest rates. I decided that peace doesn’t have to equal complacency. I can be mad but still be productive. I’m not mad at myself or the debt. I’m mad at the interest. So I’m going to beat the interest.

Empower Yourself

Now that I know the way to beat the interest, I’m not mad anymore. I’m back to feeling at peace — but not a complacent peace. I’d call what I feel a satisfied peace. I know that I’m doing everything I can to eliminate this debt while still balancing it with my other goals such as savings and retirement.

Are you ready to empower yourself? Take a long, hard look at your debt. How much is it truly going to cost you? And what can you do to minimize that cost? Find ways to pay it off faster, lower your interest rates, and even consider consolidating or refinancing to further optimize your payoff. Then you’ll have the power to beat that interest and feel good about your financial situation!

Shannon McNay is a member of the DailyWorth Connect program. Read more about the program here.

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