Let’s be honest – there’s nothing fun about being in debt. Well, unless it’s tied to some investment venture that’s raking in the dough. I bet that’s a lot of fun, actually.
- Someone else is paying for on your behalf (like a rental property)
- Will increase your net worth in the long run
Some people are so averse to debt that they’d even turn down opportunities with the qualities above. And that’s fine – more opportunities for people like me.
Bad debt, on the other hand, has no redeeming qualities. It’s that insurmountable credit card debt, or those hundreds of thousands of dollars in student loans that you’ll never be able to pay off as a teacher. Bad debt is just how it sounds – bad. However, if you dig deep enough (and aren’t in a helpless situation), there are silver linings of being in debt.
Good Things That Come From Bad Debt
You discover what’s truly important in your life
You know what happens (hopefully) when you realize you’re in a bad financial situation? You take a long, hard look in the mirror (financially, of course). Oh yes… that’s the perfect time to finally make that budget.
When I decided to pay off $170k in student loans in five years, I had decisions to make. Here are the actions that helped me the most:
- Living with my parents
- No longer eating out
- Cancelling subscription services like Netflix and Amazon Prime
- Being more selective about drinking with friends
- Traveling on a tight budget
- Putting extra effort into my day job
Debt helped me discover that I value my family and career, above all else, but I also needed to travel and enjoy some time with friends. Thanks to my debt, I had a lot of extra time to spend with my parents, which I’m very grateful for. I also found out that ordering out and watching TV wasn’t that valuable to me.
Would I have figured these things out without being $170k in debt? Possibly. But it’s undeniable that my debt expedited the process a great deal.
Learning personal finance becomes a priority
One of the best decisions I ever made was committing to becoming more knowledgeable about personal finance. I mean, if you’re in debt like I was and still neglect personal finance, that’s just ignorance. Plain and simple.
When I began to really dig into the financial independence movement online, I was blown away by the amount of information out there and all the awesome people pushing the content. The best part? It’s addicting. Who doesn’t love to learn about becoming wealthier?
Before I became practically enslaved by debt, I couldn’t care less about budgeting or the difference between an asset and a liability. That’s why there’s a part of me that’s glad I was forced to take my education into my own hands. Learning about money became a top priority.
Future financial decisions become clearer
When you have a plan, it’s easier to make wise decisions.
I remember when I was about halfway through college – I couldn’t wait to get a job. Why? So that I could buy a car I couldn’t afford. I was so ready to dump my money into depreciating assets. After taking out my college loans, having the luxury of being able to do that dissipated quickly.
I learned many lessons in personal finance because my debt was so large and crushing. Remembering the feeling of that debt and having it hang over me is enough to never want to repeat those mistakes again. That helps me keep things simple moving forward.
You emerge from it mentally and financially stronger
Overcoming debt takes sacrifice and discipline, and the bigger the debt, the harder you have to work. If you’re able to make the kind of difficult but necessary changes in your life to conquer debt, you’ll benefit for years to come.
Eliminating debt increases your net worth, but that’s an obvious takeaway. The real value comes from your ability to budget and make clear financial decisions in pursuit of a goal. But what most people don’t realize is that becoming financially stronger derives from mental strength. It’s the mental commitment that allows the financial benefits to follow.
If you can beat debt once, you can do it again. Better yet, you can prevent it from happening again.
What’s Your Story?
Are you paying off a debt you regret? What lessons have you learned so far? If you’re struggling, I hope this article helps you keep your spirits up. There are good things that can come from bad debts!
All opinions expressed on this blog are solely those of Home at 30 and are in no way affiliated with any other organization or institution. The purpose of this blog is to give general education and information about investing, wealth, careers, and college; It is not intended to be professional advice.
Author: Josh Ramos
Josh has paid off $130k in student loan debt in 4 years. By founding Home at 30, he wants to help end the student debt crisis by helping students and young professionals make decisions that will reward them for a lifetime.