I’ll admit: it’s ironic.
Debt is one of the most emotionally charged money areas for many people. Debt can be a catalyst for starting our deep money work, inviting us to face our emotional patterns and financial literacy head-on. And it’s one of the more common reasons people arrive at my digital doorstep.
But I recently realized: I’ve never shared with you my whole, full-blown set of teachings on debt in one place.
Sure, I talk about debt often, in small doses — in articles and in my Art of Money community. But it’s high time I shared the entire, ooey-gooey, gluten-free cherry pie with you — not just a slice here or there.
So pour yourself a favorite beverage, cuddle up with a furry friend, or put on some soothing music. You’re in for some surprises, some depth, and just maybe a heart-opening insight (or three).
Let me show you how debt can actually be a surprising doorway into deeper emotional and financial literacy than you might’ve thought possible.
First of all: we need a more nuanced, less black-or-white take on debt.
Many financial experts (notably Dave Ramsey) promote a “no debt ever” policy.
Look: if this works for you, or if having this goal feels clear and good and right to you to reach? Awesome. I’m all for it.
But let’s take a step back for a moment.
Dave Ramsey — the “no debt ever” king — shares the story of being deeply in debt at one point in his life. Despite earning $250,000 per year, he also had a crushing amount of debt and eventually declared bankruptcy — and declared “never again.”
This was the genesis of Dave Ramsey’s whole money teaching model. And “no debt ever again” might be incredibly wise for him, given his history. It may well be wise for you and for many other people. And he does have some solid strategies for paying down debt (more on that below).
But, in debt as in every area of money — as in everything in LIFE, my friends — there simply is no one-size-fits-all model. Plus, I can’t tell you how many people have arrived at my work mildly traumatized by this kind of “tough love” money teaching! While these teachers have good intentions and may share smart tactics, we stay stuck when we forget the self-compassion part of the money equation.
Ready for an unpopular opinion? I believe you can CONSCIOUSLY take on debt.
We need a little more nuance here. Not all debt is the same.
If you’re barely making ends meet and numbing your stress with late-night Amazon Prime shopping sprees, putting designer clothes, ski trips, and bottles of Burgundy on high-interest credit cards while you swirling in a negative spiral of shame, late fees, and mounting debt … that’s one version of debt. And, YES, that’s problematic.
Or, if you’re earning a high income and overspending on those same things, keeping your head in the sand about spending more than you’re bringing in, while not saving well and heading into debt — that’s problematic, too. Overspending, overshopping, and swirling into debt can happen regardless of your income level. Staying numb is a human strategy, and people at all different income levels may choose it. {For help on overspending, I recommend April Benson’s book, I Shop, Therefore I Am.}
This happens to the self-employed, too. Some people have a hard time investing in themselves and their business, but some people find it all too easy. If you’re in business for yourself and signing up for one class after the next (or high-ticket coaching programs, workshops, and trainings), putting them on credit cards without a clear strategy for getting a return on your investment or implementing what you’ve learned before learning more — this is problematic, too.
By the way: the solution to this kind of debt and spending? Has nothing to do with yelling at yourself to “just stop it” or slapping your wrist with a ruler and aiming for “no debt ever” because someone else told you to. Shame keeps us stuck, keeps us in negative, numbing, addictive spirals.
The solution for this kind of debt and spending is multi-faceted and must include Money Healing, Money Practices, and Money Maps — more on that in a moment. But the entire journey begins with self-love. And more self-love. And more self-love.
Here’s a very different scene.
What if your daughter needs dental work, and you don’t have the cashflow right now — but the dentist offers a payment plan with a low or 0% interest rate?
Or what if you’re a wedding photographer and your beloved camera goes kaput right before your busy season? Do you cancel your gigs and lose money? What if the only way to earn what you need is to make an investment in your business — to take on a little debt, temporarily, with a solid exit strategy? Some liabilities become assets down the road.
Debt can actually be a smart move in certain situations and life moments.
I’m not suggesting taking on debt when you don’t need to, folks. But I do think we need to recognize: there are so many factors to consider, here.
For some people and for some situations, “no debt ever” simply isn’t a viable option. Health crises happen. Support systems break down. Big leaps and risks sometimes need taking — and need financial backing that we don’t have.
And there are larger factors in play that we simply can’t ignore, like our broken economic system, problematic tax burdens, the financial repercussions of institutionalized racism and multi-generational wealth gaps.
There’s only so much “bootstrapping” people can do. Debt happens.
What if you’re in debt and want out? You need a 3-phase approach.
If you’re new around here, allow me to introduce you to the Three Phases of my Art of Money Methodology: Money Healing, Money Practices, and Money Maps.
You see, most approaches to money transformation are fractured and incomplete. One “guru” might preach smart tactics for consolidating your credit card debt — but completely ignore the emotional component of looking at your money.
Other money teachers might load you up with emotional cheering-on, but neglect the nitty-gritty strategy — or fail to see the big picture of where you are in your life journey (and where you’re headed).
To create profound, sustainable money transformation, we need to look at the whole picture. Emotions, tactics, and your life as a whole. This is precisely what my Three Phase approach does.
Here’s how the Three Phases can help you address debt:
1. Money Healing.
I always, always start with Money Healing. See, I don’t care if you have the smartest financial strategy or slickest tracking apps or coolest support team or the swankiest spreadsheets. None of it will work (long-term_ if you’re too ashamed, overwhelmed, or stuck in self-sabotaging patterns to implement it.
In the realm of debt, you might turn to Money Healing and:
— Do Body Check-Ins when you get overwhelmed or scared. In this simple practice, you check in with your body, emotions, and mind. You stay connected to yourself. {Here’s how to do it.}
— Be gentle with yourself and manage your stress. People in debt show higher rates of depression, anxiety, anger, and stress, and the stigma around debt only exacerbates these mental health repercussions. Find stress relievers that work for you — and make them a priority.
— Give your nervous system some love. Money is hooked into our primal survival drives, so scarcity and financial stress can live within our very nervous system. Try resourcing or grounding from Somatic Experiencing … or explore ways to melt your fight-flight-freeze fear response (a long, hot bath works wonders for me).
— Uncover the roots of your debt. Do you have a pattern of under-earning? Is your debt a symptom of low self-worth? Perhaps it would be helpful to journal what attitudes and habits you’ve inherited around money from your family or lineage.
— Do you need to forgive? Forgive yourself for taking on a debt — or even forgive someone who owes you money? Forgiveness isn’t a one-shot deal: it’s a journey of self-healing.
— Create a Money Healing Ritual to release some old patterns — and welcome in new possibilities.
— Uncover the deeper themes beneath your debt. Because money is never just about the money. Yes, you might have been in an objectively tough position. But there are always deeper themes afoot, with money — like peace, scarcity, security, and enoughness. These aren’t the whole picture, mind you: money is also about the money! But if debt is a pattern or particularly painful to you, it may help you to get brave, break out your journal and some dark chocolate (or reach out to a therapist) and gently sort through some of the emotions that contributed to this debt.
— Most of all: please, un-shame yourself if you are in debt. Shame keeps us stuck. It’s a horrible, self-abusive pattern. Yes, look at your deeper patterns. Keep learning, adjusting, and fine-tuning. But also honor where you were when you took on this debt. Fill yourself up with compassion.
2. Money Practices.
Now it’s time to get nitty-gritty and practical. What are the steps, the tactics, the rubber-meets-the-road tasks of paying off debt? This is the realm of Money Practices. But don’t worry: you can do this in ways that feel good to you!
I know: crossing this bridge into Money Practices can be frightening! That’s why it’s important to start with Money Healing, so you have emotional and somatic tools to support you when you get scared, angry, or overwhelmed.
— Take yourself on Money Dates. Tackling debt (and getting your financial house in order) isn’t a one-shot situation. It is an ongoing life practice — a garden we water, regularly. Don’t try to tackle this all at once. Learn how to take yourself on a Money Date and do so regularly (once a week seems about right for most folks). Make this a habit, a practice, and stick with it.
— Get brave. Peek at your numbers. List out exactly how much you owe, where, and what the percentage rates are. Yes, it can be scary to do this. But many people are surprised by how relieved and clarified they feel, once they see all of their numbers.
— Educate yourself about different debt repayment strategies. Some folks recommend the “debt avalanche” technique, where you pay down debts from highest to lowest interest rate. Dave Ramsey recommends the “debt snowball” technique, where you pay down debts in order of smallest balance to largest. (This technique can take longer and be more costly, but he argues the psychological win of paying off a balance keeps people motivated and on track.) Suze Orman recommends a different approach — and this article compares all three.
As with any money practice: do your research, take in what has worked for others — but remember that what works for one person might not be best for YOU. Know yourself, your preferences, and your patterns — and honor them enough to create a plan that works for YOU.
— What about debt consolidation, negotiation, credit scores, interest rates, and even bankruptcy? YES there is so much to consider here! Do your research. Take breaks as needed. Gerri Detweiler — an Art of Money Guest Teacher — has a wonderful website with free books and loads of resources, and it’s a great place to start. Michael Bovee at Consumer Recovery Network is another solid resource and will get on the phone with you. You may also want to balance debt repayment with building your credit score — Cassie Price is a wonderful resource for that.
— Consider renaming your debt. There is so much power in a name — and consciously renaming something can deeply shift our relationship to it. What if you called your tax debt “community contribution” or “fiscal accountability”? What if that big credit card balance wasn’t “Citibank” in your budget, but rather, “My Grand Italian Adventure”? An older accountant once told me he changed “Medical Debt” in his budget to something that honored his wife’s health recovery and that they had more time and life together — this made a significant shift in how he experienced this debt. So feel into why you took on this debt, what you can honor about it, and find a name that sets you on a freer, clearer path towards repayment. {More help on renaming here.}
— Track your cashflow ins and outs. It can be hard to make changes to our cashflow when we don’t know what it IS. That’s why I recommend folks simply track their spending for at least three to six months without trying to change anything, simply noticing patterns. Then you’ve got some data to work with. Here’s a wonderful guide to our community’s favorite tracking systems. But remember: the right system is the one you USE. (And, yes: you’re allowed to like it!)
— Get support. I am a huge believer in building our financial support team. After all: we can’t know and do everything!! There are wonderful people whose entire job is helping you get your books in order, sort through back taxes, sit down with you and create your monthly spending plan, look at debt repayment options, or even gently delve into your emotional relationship with money. Reach out for help. This isn’t weak — it’s incredibly smart and resourceful. Sometimes bringing on one person — or having one consultation or conversation — can shift things in a powerfully positive direction. More on building your financial support team here.
3. Money Maps
Deep breath. Zoom out. Vision big. Money Maps is all about placing money within the larger context of your whole life — and placing this moment in your life-and-money journey in the larger context of your unfolding story.
So — where are you, in your life journey? What phase are you in, what phase are you exiting, and where are you heading in the next six months, year, five years, 10 years? How does that impact your values and strategies, dreams and practices? Are you approaching any big life transitions that impact your debt?
— Make a date with yourself to vision. Slow down, create a sacred space-and-time (light a candle or do what feels right to you) and allow yourself to dream. Where do you want to be, in one year? Five years? 10 years? Can you envision the most positive, joyful version of these times? Can you really sink into it? What will happen if you live your values most fully? The insights that emerge from this kind of vision just might surprise you.
— Create a rhythm that works for you and this phase in your life. Are you in a life phase when you want to put every spare penny towards paying off debt — or do you need to balance it with building your credit or funding savings (see point #2 here) … or even focus first on addressing your under-earning, so you HAVE spare money to pay down the debt? Take some time to zoom out and see the whole picture of this moment in your life-and-money journey, and feel into what money areas are most in need of your attention, over the next month, three months, six months, and year.
— Think about how you make money decisions — and what a “good money decision” might mean — according to YOUR definition, at this point in your life. There are so many different ways to make money decisions, but you might consider the 3 Pots Method (balancing time, money, and energy), these 5 factors, or your own framework (here’s more inspiration). Since we make money decisions every day, it’s well worth it to take a few moments to zoom out and consider your own “good decision criteria,” so you walk into your next decision or choice point a bit better equipped.
— For a wallop of practical inspiration, listen to my conversation with Bernadette Anat: a Millennial who paid off $50,000 of debt with a her magical, “Bye Felicia” Google Doc. She’s hilarious and smart and will 1000% inspire you to find your own way through debt repayment.
What about choosing to take on NEW debt?
At this point, you might think I’m a big softie on debt, so allow me reiterate: I’m not suggesting people take on debt willy-nilly!! I simply recognize that there’s a time and place for debt. But I am also very cautious and strategic about it.
I’ve taken on debt I didn’t love.
Around the second year of my business, I signed up for a big, pricey, year-long business coaching program. I didn’t have the money for it, so put it on a 0% interest credit card. Not long after signing up, I realized that the program wasn’t a great fit for me — but I was out a lot of money.
Even “bad” decisions are learning opportunities, though! I learned huge lessons from this money decision.
First, I vowed to make DARN sure any program I signed up for in the future was an excellent fit for me — and that I had a plan to get a significant return on my investment. I also decided I needed to pay this program off before I could take on any other debt for professional development.
I’ve also chosen to consciously take on debt in ways that felt really good.
Around year 3 or 4 of my business, I signed up for another business training program (which I put on a 0% interest credit card). But this time, it was a totally different experience, because I’d learned my lessons.
- I did my research. I made sure it was a great fit for me, my learning style, my phase of business — and it truly was. I got a TON out of the program.
- I vowed to implement everything from the program so I got a huge ROI (return on my investment). We need to be in the right place to receive what we’re buying, and I made sure I was.
- I vowed to pay it off within 3 months. Our criteria for how quickly we need to pay off a new debt can and will change, over time. 3 months was what I felt comfortable with, at this point in my money life, so I made sure not to take on a debt larger than what I could repay in that time.
Another conscious debt: my book.
I also took on debt to pay a co-writer/ghostwriter to help me write my book, The Art of Money.
This was a very calculated risk, with a ton of intention and strategy behind it. I took on this debt knowing that I could get a return on my investment: I already had a solid business model with a wonderful, year-long program in place, and I knew if I could get this book and my methodology into more hands and hearts, I had a strong structure in place to welcome them into my fuller program. This would allow me to pay off that debt and grow my income.
I also did a review after the whole experience. How did it go? Did I pay it back in a timely way? Was it a good decision? What did I learn?
I learned: I got the exact book I dreamed of. I paid the debt back in the time frame I set forth (well, it took one month longer, but was still a huge win), and the ROI worked with this investment/debt strategy. I’m a big believer in reviews like this, because they help us learn from every experience and make even better decisions in the future. {For a fuller explanation of the finances behind my book, listen to my interview with Caroline Donahue here.}
Debt can be a problem. Or a conscious tool … or doorway into transformation. It’s up to you.
I don’t think the key to debt is avoiding it at all costs.
Whether you want to pay down debt or are considering whether to take some on, the key is getting present with your life and making the smartest decisions you can possibly make: with open eyes, open heart, and a good sense of what will support you and where you’re heading.
This takes work, though! We have to get really honest about ourselves, our patterns, our dreams, and so much more.
As always, take one step at a time.
I’ve just given you a whole mountain view. But you only have to take one baby step at a time.
In fact? One step at a time is the only way to get anywhere!
So. Tune into yourself. What one baby step are you ready to take? Schedule that Money Date, light your candles, play some gentle music, and take one clear, mindful step for yourself.
You might be amazed at what doors open when you approach debt with mindfulness and love.
