Debunking Debt Myths For Financial Freedom

Hello and welcome to today's episode on the Wealthy After 40 podcast, What No One Told You About Debt. So today we're debunking myths, limiting beliefs that you may have or have heard about debt. You might be wondering, you might be thinking, Are those true? The three specific ones we will be covering today is all debt is bad. Debt should be avoided at all costs and debt is forever. Reminder, if you are on a journey to pay off debt, join my five day debt challenge starting February 20th in my Facebook group. link down in the show notes where we will cover the strategy, steps and tips you need to create a debt payoff plan. Final day will be a Q and a where you can ask specific questions so you can create that personalized debt payoff plan. So debt is a very complex and often misunderstood in the show Financial concept, right? This is truly because there's not enough conversations around money. There's a lack of financial education. We hear things. We learn things. Really, these beliefs started because one individual. Maybe with their spouse or partner, but one individual, they had a bad experience. And so they made the statement, like, all debt is bad. They had a statement and they were like, oh, all debt is bad. Then they continue to pass that down generation to generation. Nobody else challenges it, explores that, wonders if that's really true. And so that's how these limiting beliefs and myths get started and stay within, you know, the financial, personal finance realm and where you hear and you learn. But if you are over the age of 40, And you have anywhere between about 23, 000, 27, 000 non mortgage debt. So we're talking vehicle loans, credit card debt, maybe even student loans. On average, this is an average number, that is what that age has. So you are no You know, you're not weird. You're not by yourself. You're not alone. It's a very, very average thing to have debt. Now, it's not a fun thing, but it is something that we need to learn more about, that number one, for ourselves, and number two, we can educate our children. We can help them plan better and be better and not believing these myths that are out there. So I have three that I've already shared. We're going to debunk them. What I'm truly doing is helping you understand why that statement is not true. And then from that, I'm hoping you will create your own rule around it, your own belief for yourself. Again, Personal finance is personal, so it's got to be a personal statement. And so when you share it with somebody, make sure you add on to it why you believe what it is. So that is the healthy way of sharing these ideas around personal finance and being supportive instead of just declaring and making a statement because of a bad experience and then passing that on from generation to generation to generation. All right, myth one. All debt is bad. We've heard it. This is a very common myth, that debt is bad. So in all forms, It's not necessarily bad. Strategically, you need to plan on how to take on debt. High interest consumer debt. So this is typically your credit cards. You know, high interest. We're talking 25, 30, even higher percentage. Payday loans would fall into this realm. They can be detrimental to your financial health. And next episode, I'll go into it just a little bit more, but it's because of the cost that you're taking to pay that back. So while we will never escape this life without debt at some point, you will have to engage in, you know, taking out a loan, taking on debt. You need to distinguish between what is good and what is bad for you, right? So one person may be able to, because of their financial situation, take on more you know, type of debt than you can. And so understanding that, creating your good, your bad, for what your situation is right now, is very important. And so when I said, you know, create your own rule, and then when you share it, This would be when you share, well, the reason why I chose this is good and this is bad is because, and then you continue into it. So the person can learn and create their own rule, create their own statement for them instead of just creating this limiting belief this idea that is just blanketed and becomes a really, really poor. And so in conjunction with that, the next myth is debt should be avoided at all costs. So some people do have fear and some people share this with their children. So I want to share with you a story. I was connecting with a mortgage lender and we were talking about how we could help one another. She expressed that she had just had some clients come to her office. They had saved a down payment. They were ready to buy their house. And their wage met that, but they had never had a loan. They had avoided debt at all costs. What was the conclusion? They were unable to get that mortgage loan. They have not proved themselves in the loan. industry to be able to borrow and pay back in, you know, a timely manner in, you know, commitment. That is how we build up credit is we borrow, take on debt that we can manage and we pay back. Accordingly, and we we commit to this. We show our commitment. It gets paid off. Others can see that others are willing to then loan to us. So this couple had failed to do even this. My sister in law was in a similar situation. Not because she was avoiding debt situation. She wasn't really making a lot. Single mom making really little money, really sticking to cash, surviving for herself. So she was looking to buy a house. We went to go with her to be co signers, which we ultimately did not need to be. But in that first meeting with the lender, she says, everything looks great, but I need you to have a loan on your report before we close. And she says, Are you looking to buy anything in the near future? She says, I need to buy a car, but I have the cash. And she said, Okay, what I want you to do is go get a loan, whether it's with the dealership or whoever. And I want you to make one or two payments and then pay it off. Therefore, you have just shown you can get a loan. You can pay it off. You've just built credit. So thinking about it in that respect. As opposed to avoiding all debt that at the point we know we need to because unless you're rich, unless you have an inheritance, unless somebody else buys your house, more than likely everybody will engage in a mortgage loan. With the exception of those who are only going to rent for their lifetime. That's fine. But you still need credit. to get a rental, right? So in a sense, you do not want to avoid debt at all costs, but obviously being prudent, being aware, understanding that and as I said, there will be one more episode next week where we'll dive into actually what is debt. So as you're working through some of these ideas, some of these thoughts, and paying off your debt, really learning about number one debt, what it is, what it means, all the little terms are important. And then what is credit that can also help build that up. So, all right, the The third myth that I want to share is that some people feel like debt is forever. Now you buy a house, and that's probably the largest loan that you will ever get, right? Add that to all of your other debt, it seems like it is never ending. I totally understand that. From the very beginning, I think everybody feels like that. Especially when you make those first few payments on your mortgage loan and 20 is going to principal. How am I going to ever pay off the house when nothing goes to principal, right? But learning that and understanding why that is helps you see that debt is going to go away eventually. And it truly can. Debt is not a life sentence, debt needs to be a priority when you pay it off, and you need to learn how to manage debt. All of those things help create this not forever feeling and not this forever situation. But it's important not to get in that mindset either, because if you're very complacent that debt is forever, then you won't make strides. You won't be able to even think about paying that off. So, I have a family, a family friend. Who kind of is in this, you know, in this myth area, living life very much like that, like that's just the way of life. Debt is always a thing. Debt is forever. You can't get free of debt. But the same person back in the early 80s when he was being let go from jobs for, you know, layoffs or other reasons. that he would take out his 401 because he would never live until retirement age. And so just living in that scarcity mindset, both of theirs, those are a scarcity mindset is that. When you reach that point and he's there, there is no option. There is no choice. You have limited, you've restricted you can't make these really wise financial decisions because you're number one, you're in this scarcity mindset and you've It created such scarcity. There's nowhere to turn to, there's nowhere to change, there's nowhere to fix, and you're on that brink of retirement. So change that. Make sure you get out of that that mindset that things are forever in every aspect with money, but definitely with debt. Debt is not forever. I have paid everything off except for an investment mortgage I have, which Probably about 10 years ago, I was in the same situation. Everything was paid off with the exception of my home. It was just the timing, the way things fell, what the way we were purchasing. It just is what it is and everybody's journey is different, but understanding that it doesn't always have to be and that it's just a way of life. Make debt work for you. Make debt obtainable in that you can pay it off. that it will be something that will go away, that will free you up. There's several levels to financial freedom. You have financial independence, financial security, financial stability, before you reach financial freedom. And so being in that scarcity mindset, you really struggle to move through those levels to be able to ascertain and reach. That financial vision that you truly want with your money. So what are the next action steps? I want you to go back and listen to these, or if you remember them, and reframe those rules to fit you. So instead of thinking that debt is forever, how are you going to think about that? What is your view going to be? How are you going to share with others? That that's not my belief. And my belief is this because make sure you include that because again, right? And then we're all raising Children or most of us are raising Children or have an influence, whether it's on our nieces and nephews as well. So how are you going to explain and share that with them? So be sure that you finish that out. You have instead of just a bold statement like I just don't believe in that, that you have a little bit more that explains your personal swing on it to help others be able to create their own rules and put their own swing on it.