The Truth About Debt: Why It’s Holding You Back

Debt can be overwhelming, stressful, and sometimes feel hopeless.  It’s concerning to me that it seems many people view debt as a normal part of life. But what is the truth about debt? What is debt holding you back from achieving?

Truth #1: Not all Debt is Treated Equal.

I really don’t like the terms “good debt” or “bad debt;” however, I’ll use them to make some points.  “Good debt” is typically taken on to invest in something that will increase in value over time. For example, a mortgage, student loan, or business investment. While these debts still require careful management, they can be valuable long-term investments that help build wealth. 

“Bad debt” is usually associated with loans taken out to finance purchases that you could not otherwise afford or that might depreciate, like credit card debt, payday loans, and auto loans. High interest rates on this type of debt can quickly compound and spiral it out of control.

Truth #2: Debt Limits Your Ability to Save and Build Wealth

One of the biggest ways debts can negatively affect you is by limiting your ability to save and build wealth. When a significant portion of your income goes towards debt payments, it leaves less money available for other financial priorities, such as saving for a home, vacation, emergency fund, or retirement.

If you don’t have an emergency fund, it will be hard to ever get out of debt because you will need to turn to credit cards or personal loans in case of an emergency.  And if you're unable to consistently contribute to retirement accounts like a 401(k) or an IRA while managing debt, you're not taking full advantage of earning compound interest and long-term growth.

Truth #3: Debt has Great Psychological Effects

The impact of debt is not just financial—it's emotional and psychological as well. The constant anxiety caused by debt can negatively affect mental health, leading to stress, depression, and even physical health issues. These effects can impact many areas of your life such as relationships and your career.

Truth #4: A Key is How You Manage Debt  

Debt, when managed wisely, can be a powerful tool that helps you achieve your financial goals. The key is to differentiate between “good debt” and “bad debt,” create a manageable plan for repayment, and stay disciplined.

If you find yourself feeling overwhelmed by your debt and want help, please contact me.  Helping folks with a debt repayment plan is one of my favorite services.  It’s so rewarding to see a client’s reaction to how much they can save in interest and how fast they can pay off debt with a solid plan.  Visit www.riverbendfinancialwellness.com or email me at riverbendfinancialwellness@gmail.com to learn more.