Personal Finance

12 Lies People Believe About Getting Out of Debt

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Man holding credit card and using laptop. Online payment

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.

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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.

Related: 6 Things to Ditch to Become Debt-Free in 2020

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.

closeup of tabletop with pile of fanned credit cards on wallet on cash

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.

Related: No Credit? Bad Credit? 6 Steps to Fix Your Finances

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.

dictionary entry of the word lie highlighted in pink

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.

Bored man watching tv and zapping

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.

male showing empty pockets implying moneyless

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.

Related: 3 Steps to Financial Freedom in 10 Years or Less

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.

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How do you plan to pay down your debts?

Let us know in the comments below!

Nathaniel is an active real estate investor and entrepreneur. He served in the Marines from 2003 to 2007 and got his bachelor's in Mechanical Engineering from Cal State Long Beach in 2016. It was s...
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    Barry H. Investor from Scottsdale, AZ
    Replied 23 days ago
    NATHANIEL - Excellent article which is indirectly real-estate related. Obviously, debt incurred for investment real estate can be helpful, such as a short term hard money loan for a flip, but that needs to be well-planned and managed. As for the other "excuse" categories - yes, I have heard all of them. I have never carried debt except when I was younger for my 1st home (a condo). I retired fairly young from an average paying career and invest full time now. The exponential benefits of avoiding debt are clear. There is no price on freedom. I think some good advice to append to your article would be to scorecard your thoughts and actions. If a person has more than 3 of the above "excuses" in play, just choose one behavior to stop, then another after you have mastered the first, and so on. Releasing yourself from working until age 80 and debt slavery CAN be done.
    Nathaniel Hovsepian Rental Property Investor from North Augusta, SC
    Replied 22 days ago
    Barry, that's awesome that you were able to see the path so early and get out of a W2 at such a young age. You are an inspiration for people to take a deep look into their finances and realize that anything is possible to accomplish financial freedom
    Wenda Kennedy JD from Nikiski, Alaska
    Replied 23 days ago
    I totally agree. I'm working really hard on getting debt-free -- that includes my investment debts for my properties. I'm a full-time investor. I retired 17 years ago. It's been an uphill slugfest to get to this point as an investor, and then to go on with my plan to work toward being debt-free. (Think free and clear properties generating good cash flows.) Somedays I just didn't think I could keep up the fight -- or have the patience to finish it. Other people looked like they had an easier life. A lot of my friends just shook their heads as they watched me struggle and then advised me to quit. There have been a lot of unforeseen events that have sidetracked me at times -- recessions, earthquakes ( a 7.1), a recent arson fire, terrible tenants who brought me their problems, extreme weather events, and family disasters... to name a few. Real estate is not the business for wimps or pansies. Anyone who tells you that it's easy, either hasn't been in the business long enough to know or is lying to you. Is it worth the struggle? In a word, YES. I retired 17 years ago...
    Nathaniel Hovsepian Rental Property Investor from North Augusta, SC
    Replied 22 days ago
    I am glad that you didn't listen to those people that told you to quit, and realized that what you were doing, and striving towards, was worth the struggle. Many of us would have listened to the nay sayers and just hung up the towel, but you were, and are, able to keep going through the tough times and make your dreams reality. Keep it up!
    Rebecca Jackson Rental Property Investor from Dallas, TX
    Replied 22 days ago
    I think the use of points for credit cards is misguided here. If you treat a credit card like cash(successful mindset), but you get extra value, I’ll take that any day. My husband is like a points jedi master and taught me how to maximize these benefits. I used to use cash for everything when I was younger- man what an idiot I was! We rarely pay for our travel anymore, we just use those hotel and airline points:) and if you combine that with RE expenses... you get the point LOL Avoid the interest, keep the points.
    Nathaniel Hovsepian Rental Property Investor from North Augusta, SC
    Replied 22 days ago
    You are totally correct Rebecca. You may have missed the "point" (see what I did there!) about that section though. This isn't about the person who uses their credit card as a tool to take advantage of the point system, but about the person who thinks that the points are more valuable than not carrying debt on the card. If you are paying for things with your card and at the end of the month paying said card off, then get your points! We use our cards all of the time, in different situations like Vaughn said to take advantage of which card gives better rewards in those situations.
    Vaughn K. from Seattle, WA
    Replied 22 days ago
    A lot of it depends on knowing ones self. Some people have the control to do this, others don't. My American Express card gives me 6% (Yes SIX) cash back at grocery stores... I'd be a fool not to buy all my groceries on that card. Playing the system works as long as you don't carry the debt and pay interest on it.
    Ashton Karp from Bonney Lake, Wa
    Replied 22 days ago
    I have squashed a majority of my credit card debt but still have have some debt to pay down. Unfortunately a lot of us have holes to fill that we dug in our adolescence or early adulthood. Anybody who has read an article like this start to finish has earned the shovel to fill that hole and start on the path to financial freedom which begins with paying off high interest debt and learning the differences between good and bad debt. One costs you money, the other makes you money. I am blessed to be on track to paying off my credit cards, investing in assets like real estate, and eventually living with financial freedom. Thank you for the excellent article, Nathaniel.
    Nathaniel Hovsepian Rental Property Investor from North Augusta, SC
    Replied 22 days ago
    Congrats Ashton! Getting out of debt takes a mindset change, and it sounds like you have accomplished that. With all of the tools that you now have in your toolbelt, you can approach any financial situation with a better awareness going forward. Get out and stay out my friend.