Debt is one of those things that is almost unavoidable. If you want to buy a car, you’re likely taking out a loan to pay for that car. If you are looking to buy a house, unless you are extremely wealthy, you are going to be getting a mortgage on the home.
If you have debt, don’t fret—you are not alone. According to CNBC, the average American has about $38,000 in debt.
Some debts are good to carry, such as a mortgage. Others are not so good—think revolving credit card debt that never gets paid off. But if you’re trying to get out of debt, you may come across a lot of misinformation.
Here are 12 lies people believe about getting out of debt.
1. Everyone’s got debt
This one isn’t entirely false. Most Americans—75 percent—do carry debt. A lot of this can be attributed to student loans, mortgages for homeowners, and car loans.
The really unfortunate form of debt is the dreaded credit card bill that you can’t pay down.
For the purposes of this article, we are going to focus on non-mortgage debt. One could argue that a home loan isn’t good to have either, but a home can be a valuable asset if under the care of a homeowner who looks after and maintains the property.
The main debts we are really talking about here are credit cards, student loans, and automobile loans. While auto loans have finite terms, credit card and student loan debts could literally stay with you a lifetime if you don’t hunker down and come up with a plan to take care of them.
2. I don’t need to sacrifice
To be frank, I hate the term “sacrifice.” What you really need to do in order to free yourself from burdensome debt is to make an active choice to do so. Choosing not to buy the latest iPhone or smart watch is not a sacrifice. Jumping on a grenade in a war zone is a sacrifice.
If you think that you are going to get out of debt without making conscientious choices about the purchases that you make going forward, then you should stop reading now.
You are most likely going to have to say no to a lot of things. That dinner date with your friends at the fancy sushi restaurant, the new iPhone previously mentioned, that gym membership that you only use once a month, or the fastest internet plan your provider offers.
I listed this one first because if you have made it this far, it is time to make an active choice to take your debt into your own control, and make decisions from here on out to free yourself from the burden.
3. I have to eat food that’s unhealthy because it’s cheaper
While going to McDonald’s and buying food off of the dollar menu may be cheaper than going to the grocery store and getting some healthy alternatives, it is not a good life choice.
You can create extremely budget friendly meals at home that will not only be better for your body, but will taste better, too.
If you doubt me, here is a link to 15 recipes that you can cook at home for under five bucks! There are so many more that you can find on your own by just searching for key terms like “cheap, healthy recipes.”
What would be the point of getting out of debt if you can’t live long enough to enjoy the benefits?
No more excuses for eating that unhealthy fast food—well, at least not monetary excuses.
4. I need good credit
Your credit score is just a number that gives lenders a very quick idea of how trustworthy you will be to repay any loans that they give you. When you have a lot of debt already, more than likely, you are going to have a lower-end credit score and may even have bad credit.
Don’t worry, though—you absolutely don’t need good credit to accomplish anything in this life. Of course, having good credit can ease the process of getting a loan and may get you a better rate when shopping for lenders, but you don’t need good credit to get out of debt.
Once you can clear yourself from your debt, you will notice a big difference in your credit score.
5. I need to put stuff on my credit card to get the points
It is time for you to make a mental shift. You must stop using the word “need” for anything other than food and water.
Yes, you can stretch the word to a few other aspects of life, but you absolutely don’t need to purchase things with your credit card—with money you don’t have—in order to obtain some more frequent flyer miles.
Points are a marketing tool that credit card companies use for you to think that you are getting one over on them. Do not be fooled!
Unless you have the means to pay off your credit card at the end of each billing cycle, do not take that card out of your wallet unless you are fulfilling one of your most basic, true needs.
6. I need my new car so I can get to work
Oh, boy. Here comes that word “need” again. I am going to allow for the word to be used a little loosely on this topic, though.
If you are traveling to work, you will need a car, unless you live in an area that has a good transportation system set up, and you can save money by taking a bus or train to work.
That being said, you don’t need a new car. The best kind of car is one that is reliable and is paid off. At the very least, you want to owe as little as possible for the car you drive.
Sure, it may be a little more enjoyable having a brand new car. You may get some nice comments from your friends when you first buy it, and you may not have to worry about maintenance for a year or two. But remember that the average car loses about 10 percent of its value as soon as you drive it off the lot, according to Carfax. It loses another 10 percent the first year you own it.
Could you imagine taking a loan out so you could purchase a stock (don’t do this!), and then watch that stock drop by 20 percent the first year you owned it?
Get yourself a reliable car that you are comfortable driving and that you can either pay off in cash or take a very small loan out to purchase.
7. I am not going to have any fun
You may not be able to do the sort of fun things that you have grown accustomed to doing while you have been racking up credit card debt, but there are a lot of cheap or free ways to enjoy yourself.
You don’t have to go out to the nightclub and spend a bunch of money on dinner and drinks to have a good time. You might just have to change your perspective on things that you find fun, and you will probably be better off because of it.
Find a hiking spot near you and go out, get some fresh air and a little exercise. Purchase a puzzle, and spend hours upon hours putting that thing together. Look into events in your area that are free or cheap to attend. These are just a few easy ideas to help you find ways to spend your time, not just your money.
8. I’m not disciplined enough
It really doesn’t take that much discipline to get yourself out of debt. It will take some willpower, of course, and a long-term mindset. There are a few ways that you can “cheat” the discipline aspect of this, though.
You can set up a direct deposit as soon as your paycheck hits your bank account that goes straight toward whatever loan you are trying to pay down. Because you never really see the money, you won’t have to be disciplined not to spend it and can instead put it towards your debt consolidation.
Then there’s the age-old trick to cut up your credit cards. I wouldn’t recommend getting rid of every single one, though. You never know when you might get into a situation where you actually need to put something on credit.
You could get a second job or side hustle. Not only will you be earning extra money that you can put toward paying down your debt, but you won’t have as much time to be out spending that money in the first place. Win-win!
You will find that by creating a plan and executing it, you will become more disciplined as time goes on. This will help you continue to climb your way out of debt and remain debt-free once you have gotten there.
9. You need to be great with numbers
You definitely don’t need to be a numbers genius to get out of debt. You will, however, need to know a few basic numbers.
You need to know how much you make, and how much you have to spend on the things that you really need—that’s pretty much it. Take how much you make and subtract out your basic necessities, and the amount you have left over is what you can apply toward paying off your loans.
It really can be that simple!
10. I don’t make enough money
OK, there are people out there who have gotten themselves into debt, one way or another, and truly don’t make enough money to get rid of it. For the vast majority of us, though, this simply is not the case.
You just need to make some choices that will positively move the needle toward paying down your loans. Consider swallowing the bitter pill, going out, and getting a second, part-time job.
If you truly want to get yourself out from under the heavy umbrella that is debt, you are going to have to make some tough choices—bottom line. But they really won’t seem that tough when you look back once you’re free from the debt burden.
This leads us to the final myth.
11. It’s too hard
It really isn’t that hard. OK, it will be a little difficult. You have been living a certain lifestyle up until this point, but now is the time to make changes.
The hardest part, truly, is getting started and making the conscious decision that you are going to do whatever it takes to get yourself out from underwater.
There will be times that are going to be challenging, but just remember that it will be much better to experience some hardships now than to experience something worse later in life because you couldn’t make the choice to get out of debt today.
12. You’re 0ut, so you’re free to spend!
Congratulations on getting yourself out from under the burden of debt. Now you can take all of that money that you’ve been putting toward getting out of debt and buy a new car!
Of course, that isn’t what you’re going to do. At this point, you have a newfound discipline and desire to really become financially free.
The first step was to get away from debt. Your next step is to start using your extra money to make more money—through interest and smart investing.
Again, congratulations on getting this far and avoiding the common pitfalls of we who are indebted.
How do you plan to pay down your debts?
Let us know in the comments below!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.