On the surface, aggressive debt repayment is a good idea. If you can wipe out all your debts today, most of your worries will disappear too. Or so the logic goes.
In reality, it’s not that simple. Sure, you can lower your interest tomorrow when you pay some of the principal today. But going overboard with repayments isn’t the answer. When you’re bent on getting out of debt no matter what the cost, there are consequences.
In an eye-opening piece for Forbes, Stephanie Hood talked about how she cleared her $90,000 student loan debt within three years. On the upside, she had a supportive boyfriend who kept her grounded during her journey to debt freedom.
On the downside, she made several sacrifices along the way. She gave up her cable subscription, gym membership, “happy hours” and even a phone plan that allowed her friends to text her. Eliminating these expenses might’ve made her life less convenient, but she acknowledged that these sacrifices were necessary.
For Stephanie, keeping expenses down was only half the battle. She also needed to boost her earnings from her nine-to-five job. So she took on babysitting, mystery shopping and other odd jobs that gave her extra income.
Granted, everything worked out for her in the end. She was energetic enough to juggle several jobs and motivated enough to accomplish her debt repayment goals. But the question is: Can you do the same things she did without cracking under the pressure?
Carrie Smith had a decent income. She earned $37,072 as a full-time accountant and $5,000 from side jobs. At the same time, she owed $1,833.17 on one credit card, $909.12 on another and $11,342 on car loans. Her debts totaled $14,084.29.
As someone who didn’t have a partner/spouse, Carrie had to go through her financial situation alone. Because of this, she wanted to quit her debt repayment plan many times. Lucky for her, her readers and blogging community supported her, and gave her the strength to see things through to the end.
Not everyone is as lucky as Carrie, however. When Dr. John Gathergood studied the link between debt and mental health, he found that people who struggle with indebtedness are twice as likely to experience anxiety and depression. If their problems are left untreated, these people are at risk for suicidal behavior.
When your finances are in dire straits, it’s natural to feel angry. It’s natural to want to lash out at everyone else about your situation. Unfortunately, that’s not the productive thing to do.
Money problems are the main predictor for divorce. When you always blame your significant other for your debt, they’ll feel resentful too. Eventually, they’ll get fed up and leave. If you’re already struggling on your own, losing your partner is the last thing you need.
So, What Now?
The good news: aggressive debt repayment isn’t your only solution. If you want your credit to stay out of the red, and maintain a great quality of life at the same time, follow the tips below.
- Check if it’s feasible to scale down your debt payments. For example, if you decide to pay your monthly loan in $500 installments instead of the usual $600, calculate how much longer it will take you to eliminate your debt, and by how much. If the difference isn’t significant, give your new plan a shot.
- Surround yourself with people who support your financial goals. They may be hard to find, but they’re worth it!
- Treat yourself once in a while. You worked hard to stick to your debt repayment plan, so it’s okay to be compensated for your trouble.
The bottom line: Don’t let debt get you down. Yes, debt is a valid problem, but you shouldn’t allow it to take over your life. If you always stay positive, you’ll be better equipped to handle any problem — debt-related or otherwise.