Connie’s (Gentle) Guide to Stop
Equating Debt to a 4-Letter Word
by Connie Vanderzanden
As I sat down to write this post, my original intention was to discuss debt repayment and how that fits into an intentional cash handling system. You know -- a nice, safe, appropriate and respectable business conversation to have.
And then, my brain immediately started humming…
Let's talk about sex, baby (sing it)
Let's talk about you and me (sing it, sing it)
Let's talk about all the good things
And the bad things that may be
Let's talk about sex (come on)
Let's talk about sex (do it)
Let's talk about sex (uh-huh)
Let's talk about sex ~ Salt-N-Pepa
My ol’ gray matter was singing up a storm and side-tracking me into Google searches about sex and money; taboo topics we don’t talk enough about; finally landing on those faithful standbys: SHAME and GUILT.
Basically, you can’t talk about debt repayment without also shining a light on the money shame caused by the knowledge you created that debt in the first place.
Why do I call it money “shame”? Brené Brown describes shame as:
“..the intensely painful feeling or experience of believing that we are flawed and therefore unworthy of love and belonging - something we’ve experienced, done, or failed to do makes us unworthy of connection.”
As in, shame is the feeling caused by a belief that we are “bad”.
So, growing up, any time a parental figure or mentor told our younger selves we were “bad with money”, they were actually shaming us -- whether they intended to or not. And then that shame became embedded as a subconscious belief that we’ve carried with us right up until today. Because of course the people who raised us and the people we looked up to would only tell us the truth, right?!
According to Brené’s research, shame is not helpful. While guilt can be emotionally motivating, shame is what can lead us down paths of destructive and harmful behavior, to ourselves, our loved ones, and our credit ratings.
As in most of my blogs, this is one of those lessons I had to learn the hard, uncomfortable way -- and multiple times -- before I finally gathered the key ingredients to create the change I ultimately desired.
So, let’s talk about debt repayment and how to learn skills to cope with the shame you have around debt, so when you do pay it off, it stays paid off.
Like I said, this lesson happened many times before it finally stuck with me. While the facts may have changed depending on the situation, the results were consistent. (Hmmm, doesn’t Einstein have a quote relating something like this to insanity…?)
Something would trigger unexpected money to show up in my life - tax refund, inheritance, etc. Immediately that money would be used to pay down or off debt, normally a personal credit card. A HUGE sense of relief from carrying the weight of that shame would be lifted and life continued. (BIG sigh!!)
In fact, without that constant weight of shame around that debt, life was exciting and free. Since this was before I figured out I was a natural spender, I didn’t make the connection between the high I was feeling when I picked up the check for dinner, or randomly went on shopping sprees. (Obviously ALL pre-COVID) With no limitations, “I can’t afford that” was a thing of the past.
Sure there was always a little mental self talk, “Oops that was a little too much spending. Hee Hee. Good thing my credit card is paid off.”
At no time was there ANY type of pause or reflection around, “Well great - so how are you going to pay that off?” Or, perhaps wait until I actually saved up for the purchase? My inner three year-old wants what she wants, when she wants it. Instant gratification.
So many good endorphins were getting triggered by that spending! Life was good. Until all of a sudden, it wasn’t.
Actually, “all of a sudden” was more like 4-6 months later. There was all that credit card debt, racked back up to the original balance. Then that shame weight came back, and it was heavier than the time before.
Round and around the debt pay-off cycle I would go, and all the while it seemed like I was on an endless emotional roller coaster with my shame.
Thanks to a coach that pushed me to look at the co-dependent relationship I had created with my credit card, I finally took the time to look at what was underneath the shame. What was keeping me tied to this cycle? What was it about debt that served me? What about having debt made me feel whole?
When I shined the light on all those thoughts hiding below the shame, only then could I take action to pay off debt and it would stay that way. Let me be clear, it was not instantaneous, I am and will always be a work in progress.
What is hiding under that shame?
The big questions that started the shift in my relationship with debt?
How is debt serving you? How is it adding to your life?
What do you love about being in debt and having no money?
My immediate reaction was that it wasn’t adding to my life at all. In fact, it was suffocating me. In hindsight, several years later knowing that the immediate gut reaction, full-body, emotional “hell no” response, WAS exactly the spot where shame did not want me to look at. That spot. That was where, if I was willing to look, I would find the wound and could start to heal it.
For me there were several reasons:
- Kept me in a similar place as my family members, how dare I achieve anything different
- Anything worth having required getting into debt (buying a car, a house, vacation), or so I believed
- Everyone has debt, that’s just how life is
- Being “stuck” and feeling “comfortable” all at the same time
- My plan “B” - just in case I need it - wasn’t a savings account... it was debt
Basically, all the while I hated being in debt there was something on the other side of that coin that, even to myself, I couldn’t see or admit but that I secretly loved.
While I immediately wanted to throw myself under the bus for having these thoughts, in reality, the thing keeping me in that relationship with debt was simply that I had no awareness in the first place.
Forgive Your Younger Self
Next, forgive yourself for past spending decisions. We made a choice and now we have to find a way to live with it.
In my story, I had to take back my power that was hiding under that shame and take ownership for my decisions. The forgiveness was that I simply did not know any better back then. Now I do. So NOW moving forward, I simply DO BETTER.
One of the suggestions when it comes to changing our outlook around past spending decisions is to find the good that the spending created. My story was that the credit card allowed more adventure in my life. When I changed how I viewed the debt - it was my adventurous life card - the feelings I had around the debt were instantly lighter and I remember the fun I had. So instead of this dreadful debt, I was making payments for the solo adventures I was able to do. (In post-COVID I look forward to again.)
Ready to have money?
Without making your natural money tendency wrong, let’s say that many of us were raised to work for or to create money so that we can spend it. It allows us to get what we want, when we want it. (I see all you Spenders out there!)
Others were encouraged to put money away for a rainy day, the what-if XYZ happens, and by all means, don’t touch it. (Many of you Spenders may have found yourself in a relationship with an avid Saver)
Neither of these tendencies has created a relationship with money that allows money to contribute fully to the life that they desire. A relationship that allows for saving and spending. That allows Money (yes with the big “M”) to expand and add to the life of their business, their family, and to their community.
Would you be willing to,
- Pay attention to Money
- Appreciate and show Money some gratitude
- Create pauses in the flow of Money so it knows you want it to stick around
- Find the balance between foundational savings and spending that allows your life to flow
Action Plan in 7 Steps
How do you make a dent in your debt if there are not big lump-sum pay-offs in your near future? With a little patience and consistent actions!
1. Gather all your info about your debts. For each debt capture how much you owe, interest rate, end date if it’s a loan, and normal due date. You can capture that on a piece of paper or spreadsheet, whatever is easiest. Do this for your business and your personal finances. Let’s get it all out into the open.
2. Look at that debt and decide, would you rather pay-off the one with the most emotional charge or go for a quick win? Some financial gurus will suggest paying off the one with the highest interest rate which will probably be one of the unsecured personal credit cards you have. However, this is your decision. If you don’t have an emotional tie to reducing this debt, the first time you hit a roadblock you’ll go off plan and may not return.
3. This one debt you’ve chosen, let’s simplify this card. No new activities, no matter how much room is available on the card, you will not be using it moving forward. Any current recurring charges, move it to your checking account or a different pre-existing card. PLUS, stop carrying this card. You are going to leave it in a drawer.
Connie’s Tip: If you struggle with NOT using that card then you will need to take an extra step. You can cut it up or you can freeze it in a container of water. Since I had a co-dependency relationship with my plastic, cutting them up felt like severing a limb so freezing them helped me make the shift.
4. This is the point where you’ll need to create an overall financial plan for both your business and personal lifestyle. Your goal is to find the places in your plan that can wait, be trimmed down, or that can be eliminated altogether. Don’t forget, it’s not ALL about reducing expenses, you also want to look at what you can create or sell. In your financial plan use minimum payment amounts for all your debt that you captured from your first step.
5. Each month you’ll continue to pay the minimum payment on all cards. Consider setting up automatic payments for those minimum amounts so that you are never late.
Connie’s Tip: IF your cash flow won’t allow that, ASK for help. Having someone that is not emotionally attached to your situation will be able to see the numbers in a different light. This is a yes you will be adjusting to living within your means AND perhaps a debt consolidation loan or calling your debtors at the same time. If you don’t see a way out, get yourself some help.
6. Based on your financial plan you identified an amount that would be leftover from cost savings and revenue creation. Here’s the crazy part... put that money into a savings account! Figure out how to do that based on your unique style and needs. What works best for me - set percentage, calculated on every deposit received, once a week transfers. LET it sit in that savings account.
7. Every quarter, add-up the deposits made into the savings account. 50% will stay in the savings account. This way you start to become your own bank and will reduce the future need of using debt. The other 50% make a lump sum payment on that original debt you choose - because, well, lump-sum payments make us feel like we are making big moves.
Connie’s Tip: Make that lump sum payment at the beginning of the credit card cycle, within 2-3 days. Paying early can reduce the interest you pay overall. Here’s an example from Nerdwallet:
Say you come into a month with a $1,000 balance on your card. If you paid, say, $400 of that balance on the last day of the month, your average daily balance for the billing period would be about $987. If your credit card had a 15% interest rate, your interest charge for the month would be about $12.33.
Now say you paid that same $400 halfway through the month. In that case, your average daily balance would be $800 and your interest charge would be $10. You cut your interest payment by about one-fifth just by moving up your payment date.
Relook at your financial plan each quarter to make sure new extra money isn’t floating around without a purpose. Repeat the savings and lump sum payment process until you have paid off that original debt.
As each card is successfully paid off, remember to celebrate! It’s important to really congratulate yourself for this task. You have proven that you can function without debt AND you increased your savings at the same time.
Now, what do you think about canceling and cutting up that card? Your original goal was to become debt-free and having cards without a balance hanging out will just give you an excuse to use them, so don’t. Cut them up as part of your debt-free celebration.
One card down, now move on to the next debt and repeat.
Now, I actually do not think all debt is bad. It can be used successfully to leverage money for growth in a business WHEN we take time to create a repayment plan around it and have taken the steps to understand our needs and desires before saying yes to the debt. There are also other ways to become debt-free like debt consolidation loans, 0% financing card transfers, and even selling things you no longer need.
All of this comes back to creating an intentional plan so you know what you have to work with and crafting a strategy that works with your unique money personality and situation. That’s why I offer strategy and implementation sessions. Connect with me to learn more and to see if it will be a good fit for your needs.