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Debunking 3 Popular Myths That Keep You in Debt

Debt Myths That Keep Your From Your Best Life  | www.TheHeavyPurse.comOn Monday, I talked about how to stay motivated while you pay off debt. It is one of the more unfortunate ironies that it’s very easy to accumulate debt, but it’s much harder to get rid of it. It’s why it’s so important to find ways to keep yourself motivated and your resolve strong. Otherwise, a life with debt may seem like an acceptable alternative when compared to the years of hard work and effort it takes to eliminate it.

One common complaint I hear is that it took so long to wake-up and recognize that debt wasn’t your friend. That you let debt get such a stranglehold over your life and how you wished that you started your journey to financial freedom much earlier. Often times, this happens because we get stuck in old habits and beliefs.

3 Reasons Why It Is Hard to Break-Up with Debt

Today we’re going to take a look at some common myths or false beliefs that often keep people stuck in a debt cycle.

Everyone Has Debt, So It Must Be Okay

This is a biggie. Almost everyone has heard this at least once, twice or a dozen times in their life. This is a complicated myth because there is also some truth to it too. Most people need a mortgage to buy a home or a student loan to attend college. So yes, most people do have debt. I won’t pretend otherwise.

But that’s not the debt we’re focused on today. We’re looking squarely at consumer debt. Debt you create with a slide of your credit card to pay for vacations, big screen televisions, dining out and so on. The things you want, but don’t need. And apparently cannot afford if you are not paying your credit card bills in full every month.

You convince yourself that it’s okay because everyone you talk to complains about their credit card debt. It’s normal! Why worry over it? Just because people have debt doesn’t mean it’s okay or safe. Far from it in fact. You have to look past the slick marketing campaigns and peer pressure that make debt enticing and really take a hard look at how debt affects you. You may be surprised by how fragile your financial foundation is.

To Do #1: Calculate Your Total Debt

Add up all your credit card debt, mortgage, student loans, car loans and any other debt you may have. You may be surprised by the amount. Do not let your debt control you. Now is the time to take control back and it begins by understanding your current reality.

To Do #2: Have the “Everyone Has Debt” Myth Talk with Your Kids

It is something they will hear too, most likely when they go to college. You want to prepare them as best you can to handle credit cards and the pressure to live beyond their means. Do not just scare them or tell them credit cards are bad. They will see friends using them without anything “bad” happening, so they will assume you lied or were making a mountain out of a molehill, diminishing your credibility and influence over them for a period of time.

They Wouldn’t Give Me These Credit Limits If I Couldn’t Afford It

Some people like to blame credit card companies for their debt. While there is no question that they certainly make it easy for us to create debt, they don’t force us to live beyond our means either. We do it to ourselves, which isn’t always an easy pill to swallow.

What we must remember is that credit cards companies are a for-profit business. They make money because they can charge us interest when we don’t pay our bills in full. And they love charging us interest. Undoubtedly their preferred customer is someone who punctually pays the minimum amount every month and continues to carry a balance.

Do not be flattered by that 10K, 20K or 100K credit limit you have. It’s not a gift and it’s certainly not free money. It can be a very, very expensive loan when used unwisely.

Getting Out of Debt Means Giving Up My Way of Life

Many people subconsciously think this and it prevents them from saying sayanora to their debt. It’s very easy to grow accustomed to living beyond our means. Let’s face it: it’s far more fun to tell ourselves “yes” than it is to say “no”. Credit cards give us the ability to say “yes” to the things we want and it feels so good. The problem is that it’s an illusion. Eventually, you can no longer afford to say “yes” and when that time comes (and it will), you may be in a pretty precarious place financially.

I won’t lie: you will have to make changes. Some of those changes will be difficult, especially initially. You may face peer pressure to say “yes” from friends, family and your kids. You may have to make unpopular decisions, like cutting cable, canceling vacations, etc. For these various reasons, many people elect to stay in debt, hoping an easier answer presents itself.

But there is no easy answer. You have to find the courage and willpower to change. Those changes do not mean your life is ruined nor do those changes even need to be awful to be effective. One thing I hear repeatedly is how much happier people are once they take control of their money and make value-based or mindful choices with how they use it.

Feeling in control of your financial lives and truly using your money on the things that bring you joy feels incredibly good. You may not always be able to say “yes” to everything but you can say “yes” to the things that truly matter.

Let Go of Old Beliefs and Habits to Create the Life You Deserve

From ad campaigns to the exaggerated lives we see on TV and in the movies, it’s easy to fall into debt, believing we need all those things to be happy. We believe their life is the ideal and don’t stop to think whether it’s truly the life we desire. Don’t let these popular myths keep you in debt. No matter what they say, a good life doesn’t require consumer debt.

Shannon

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October 15, 2014  •  30 Comments  •  Uncategorized

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  1. Wednesday, October 15th, 2014
    Credit cards can be such a slippery slope, I think especially when you are young and have little experience with them. It only takes one or two months when you cannot pay it off in full, and pretty soon you are carrying quite a balance. It honestly took me years to break out of this cycle, until one day I told myself, "I'm too good with money to have credit card debt!" I paid it off and haven't had credit card debt since then.
    • Shannon Ryan
      Thursday, October 16th, 2014
      Exactly, Dee. I think that is how most people slip into debt. It starts small and manageable and before long it's too much. Love the attitude and I'm glad you're debt-free!
  2. Wednesday, October 15th, 2014
    I definitely believed that "everyone has debt, so it's okay" when I was in my early 20's. In fact, that's the way I rationalized my first new car purchase. What a terrible idea!

    Now that I'm older and wiser, I realize that everyone doesn't have debt at all. And a ton of people don't have car payments because they hate them.
    • Shannon Ryan
      Thursday, October 16th, 2014
      It's one of the most pervading myths out there, Holly. It trips up so many people and allows them to rationalize purchase. I'm glad you figured it out and are one of the people who can proudly say that you don't have debt.
  3. Wednesday, October 15th, 2014
    The "everyone has debt so it must be okay" myth is the worst myth that we're suffering from in the middle class, in my opinion. People think I am weird and crazy for paying so much more onto my student loans. I always hear "well, my loans are just there and they're going to be there forever, so why pay more?". This mindset is so harmful, and I'm so thankful I cannot relate.
    • Shannon Ryan
      Thursday, October 16th, 2014
      I agree, Natalie. People believing that debt is okay because everyone has it does so much damage. And it definitely lends to that mindset of why bother, which just makes the problem worse. I know it's not a mindset you have, and I'm glad through your blog you're helping other young professionals change how they view money too.
  4. Wednesday, October 15th, 2014
    The everyone has debt so it's okay is a horrible myth. Just heard that recently from my co-workers. They said that pretty much everyone is living paycheck to paycheck and using credit cards and blamed it on the economy and lack of raises at our job. Rather than taking responsibility and changing their financial outlook, they just sighed and chalked it up to things out of their control.
    • Shannon Ryan
      Thursday, October 16th, 2014
      So true, Andrew. People aren't willing to take a close look at how they spend their money and make changes. They assume it's out of their control and a universal problem that requires a credit card as the solution. It's unfortunate how deep this myth goes and the damage it causes.
  5. Wednesday, October 15th, 2014
    I think the credit limit myth is a real big problem. The first problem is that my clients think that they have the much money to spend. When I tell them they should only spend about 30% of it, they look at me like I am crazy. It is very misleading to feel as though you have that much money available, when the truth is that you don't.
    • Shannon Ryan
      Thursday, October 16th, 2014
      Yes, it makes people feel good to see big credit card limits and they forget it's not really their money. It's the credit card companies. The biggest mistake people make is to use their credit card as a lifestyle extender.
  6. Wednesday, October 15th, 2014
    "Getting Out of Debt Means Giving Up My Way of Life" I've heard this one a few times and I say, you don't have give up your way of life, you just have to make some changes and identify what part of your way of life is not bringing you any benefits.
    • Shannon Ryan
      Thursday, October 16th, 2014
      Exactly, Aldo! You do have to make the changes but ultimately those changes end up being for the better. You figure out what really matters and work towards those things. You found out happiness can be simple pleasures and you don't have to spend a fortune to live a good life.
  7. Wednesday, October 15th, 2014
    The 'everybody's got debt' reply keeps many people deep in debt and I think it's the most dangerous one. If you see all your friends/relatives doing the same thing as you do, it's not gonna make you change too much. And the fear of not being able to keep your current lifestyle is also something that prevents people from making the right move and start paying off debt
    • Shannon Ryan
      Thursday, October 16th, 2014
      Absolutely, it's hard to think it's dangerous when it seems as though everyone around you has debt and tells you to just put it on your card when you tell them you can't afford something. Changing one's lifestyle is something that a lot of people fear and it definitely keeps them in debt until they absolutely have no choice but to change.
  8. Wednesday, October 15th, 2014
    Those are certainly the myths society leads us to believe. There is a commercial that I hear almost every day on local radio from a car dealership. There are several versions, but the tag line is "Life is short, drive something nice" and they talk about all the ways you can get approved for a car loan even if your credit sucks. I think we start to believe we do deserve all the "nice" things and we want them right now regardless of whether we can pay for them or not. It's all fun until the payments take everything you work for and your freedom is non-existent.
    • Shannon Ryan
      Thursday, October 16th, 2014
      There are so many car commercials that target those with poor credit and those with a YOLO mindset. It's a dangerous combination! It is very easy to get in the habit to justify our purchasing with the "deserve it" mentality. And it is fun for awhile, but you're right, it eventually catches up with you.
  9. Wednesday, October 15th, 2014
    I think getting out of debt and giving up my life is a big one. Kim was just talking to me tonight about some clients that she is working with who have no business being in debt considering their income but they are considering filing for bankruptcy. The solution is simple...cut your style of living and get rid of the debt...but I doubt they will. It would mean sacrificing too much status in their minds.
    • Shannon Ryan
      Thursday, October 16th, 2014
      I imagine Kim sees all kinds of interesting things and so many people think bankruptcy is the easy answer to their money problems. And it's sad, especially since they haven't changed their money mindset and are likely to repeat their mistakes.
  10. Wednesday, October 15th, 2014
    The credit limit one is a tough pill to swallow, but an important one. It's not obvious to most people - myself included - why credit limits are so high for so many people. I'm sure it's based on some sort of algorithm involving credit score, credit history, etc., but in reality they are MUCH higher than they should be. Granted, a lot of people with high credit scores get high credit lines because companies know that you aren't likely to max them out.
    • Shannon Ryan
      Thursday, October 16th, 2014
      I'm sure credit card companies have some super secret formula they use. And unfortunately, there are definitely some people who believe they should fully utilize whatever their credit limit is. They forget that it's really not their money or free.
  11. Thursday, October 16th, 2014
    I think too often waste their energy blaming circumstances, credit card companies, anyone but themselves for their debt. The moment you take responsibility for it though, you regain control.
    • Shannon Ryan
      Thursday, October 16th, 2014
      I agree 100%, Stefanie! It's easy to blame others, but once you take responsibility you are in the position to actually make positive change.
  12. Thursday, October 16th, 2014
    You're so right about how we tend to think that just because everyone has debt, it must be OK. We use credit cards to get points, but we pay it in full every month. Honestly, I don't even like doing that. I've never been a fan of credit cards...while I do like the points I think I would spend less overall if I didn't carry it with me, haha!
    • Shannon Ryan
      Thursday, October 16th, 2014
      We use credit cards for reward points too, but we follow a strict budget to prevent from buying more than we normally would. That is definitely something people have to watch out for. Credit cards offer convenience (and rewards in most cases) but the risk outweighs the reward if you overspend. Thanks for stopping by and commenting, Sarah! I appreciate it. :)
  13. Friday, October 17th, 2014
    I remember thinking "ooh wow I have so much money!" when I saw my credit card limit or if it had been raised What a dumb way of thinking. Good thing I didn't test that limit too much, but I can see how it would look appealing.
    • Shannon Ryan
      Monday, October 20th, 2014
      So many people think the same thing, Tonya. We forget that it's really not "our" money. Glad you didn't test your limits like so many people do. :)
  14. Friday, October 17th, 2014
    I was totally "victim" to all 3 of these things at one point or another. You make some good points - we do need to educate people on these very common beliefs!
    • Shannon Ryan
      Monday, October 20th, 2014
      I think almost everyone has been victim to at least one of these myths. They are very prevalent today unfortunately. Without proper education, more and more people will fall prey to them as so many people believe them to be true.
  15. Friday, October 17th, 2014
    The credit limit thought used to be my way of thinking. But now, I know they are just trying to get me to use my credit card more. They send you that fancy letter and tell you how wonderful you are and here is your reward.
    • Shannon Ryan
      Monday, October 20th, 2014
      You're definitely not the first one to think that way. Many people forget that it's not really "their" money but treat it as such. And credit card companies definitely encourage that way of thinking and making it seem like a privilege.
Shannon Ryan SHANNON RYAN, CFP®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan
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