Life on the Other Side of Debt

For the longest time I wasn’t willing or able to see a way out of my debt. The weight of it was slowly pushing in from all sides, exacerbating my claustrophobia. It was an underlying dread that lived in my bones. I could hear the police sirens behind me and was just waiting to get pulled over.

This feeling was with me every. single. day. 

When you’re in it, you don’t realize it. You don’t realize that you’re always on edge and never able to be fully present. It becomes an anxious and resigned way of being. 

It’s been a long road, but I finally understand the importance of long-term thinking when it comes to personal finance. Being responsible about money is not about creating wealth. It's about designing a life that prioritizes freedom and flexibility.

Financial literacy is not being taught in school so it’s up to parents, adults, and entrepreneurs to impart their wisdom and knowledge on young people in order to prepare them for life. It has to start at a young age. Otherwise, adults in their 30s - like me - will only discover personal finance when they’re trying to dig themselves out of a hole. 

How you grow up impacts how you handle money.

When I was young and my parents got their bonus checks from work, that money was always used for something: a vacation, a car, an upgrade on the house. That money was for spending. Immediately. The idea of saving money was less important than how to spend the money you do have. 

Since I was never given an allowance I was very precious about my babysitting earnings. In order to spend money I needed to make money. But I only thought about instant-gratification purchases like clothes and concert tickets. I didn’t know it at the time but I was emulating my parents and their relationship with money. 

I did intuitively know that I never wanted to be in debt. I only wanted to spend money that I had, so I didn’t ever want a credit card. Mom explained that no credit was bad credit. I could get a small credit card - to Victoria’s Secret - and make sure I paid it off every month, so I did that. 

Then I was introduced to paying the minimum balance, which seemed like a great way to spread out the cost of over time. Unfortunately, it would be years until I understood compound interest. 

Moving away from home forces you to figure things out. 

Everything costs money. This becomes crystal clear when your parents no longer provide the essentials like rent, groceries, and toiletries. You don’t realize just how much your parents paid for while living under their roof. 

But I had good instincts. I created a spreadsheet to keep track of how much income I was earning vs how much money I was spending. I knew I needed to earn more than I made, but I didn’t include debt. That was separate. 

I had over $30,000 in college debt and $10,000 in credit card debt. I was punctual with all my bills but only paid the minimum balance. I had no idea about interest rates and I was almost 30 years old. 

And of course I never thought long term. I never made a plan to figure out how many years it would take me to pay everything off. It was too overwhelming and daunting. I focused on one bill at a time. 

In the back of my mind I told myself that someday I would “make it big.” I would make so much money from acting or writing and not only pay off all my debt but pay off my siblings’ college debts and support my parents in their old ages. My unrealistic dream felt like the only viable option.

Coming to terms with your debt can be an impetus for change. 

But this is easier said than done.

When I met my husband Sam who works in finance, I was willing to learn more but felt lost and embarrassed that my life had come to this point. Sam understood money in ways that I still can’t grasp. He was the person who patiently held my hand and walked me through it, step by step. I could feel the lack of knowledge and incompetence tingle as shame on my skin. 

It was during these conversations that Sam opened my eyes to the snowball effect of compound interest. I was at first disheartened because I realized my debt was slowly growing. But by making small changes and focusing on one credit card or one student loan at a time, I could actually make compound interest work in my favor.

A deep understanding of the power of compounding allows you to tackle the seemingly impossible. You start to understand that microscopic changes can have profound long term impacts. There was a life for me on the other side of my debt and I had the power to change it. Not by winning the lottery but by making a plan of action. 

I had thought it would be too scary to face. Too scary to deal with. But it wasn’t. I could feel the debt loosening its fingers around my neck. The more easily I could breathe, the more clear-headed I felt. 

Adults are responsible for teaching kids about personal finance.

Recently, my friend opted out of my family’s summer vacation because she would have had to defer her mortgage payment. My mom didn’t understand why she wouldn’t just defer the payment. 

It was a moment of clarity. My mom and I view personal finances very differently. 

I don’t blame her or my dad for not giving me better guidance along the way because they didn’t know any better. And I don’t blame myself for not figuring things out sooner. Some people get lucky with this type of education and some people don’t.

But as I approach parenthood, I want to equip my son with the tools necessary for a healthy relationship with money. 

Schools are not teaching personal finance so it has to start with the parents. If you’re not a parent, you could make a huge difference in a young person’s life by showing them the way.

The diagram below helps break down what kids should be learning at what age, with specific apps to help aid parents in teaching these lessons to their kids.                   

Financial literacy is the key to financial freedom. 

I always thought debt was a regular part of life, but debt is a heavy burden that most people do not need to carry. Lifting that burden has allowed me to be fully present with the things in life that bring me joy. There’s nothing hanging over me any more. There’s no paranoia when I look in the rear view mirror. 

Financial freedom is not just getting rid of your debt. Financial freedom gives you the mental flexibility and space for happiness and love. Without the weight of debt, you can finally breathe.