What I Hate Most About Debt

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We’re in the midst of paying off a large amount of student loan debt. In January of 2016 our loan balance stood at $27,000. Now, about 14 months later we’re down to $7,400 left. We can see the light at the end of the tunnel, but the weight is still there.

While I maintain a positive perspective as much as possible about our student loans, there are a lot of aspects to hate about debt. These include the interest that accumulates, the stress of having the weight on your shoulders, the mindset of knowing you owe someone money, and the postponement of your financial goals.

After reflecting about these negatives, I came to the conclusion that for me there’s one clear cut aspect of having debt that I hate the most.

The biggest problem with debt is that it limits your flexibility each month.

We’ve recently talked about figuring out your “bare bones” budget, which is a list of your baseline expenses. This includes necessities such as rent, food, utilities, etc. When you have debt, your minimum payments have to be considered baseline expenses. You can’t decide to cut back on them the way you can with other expenses.

For example, if a job loss or emergency health situation occurs, you could challenge everything and cut back on a lot of your non-necessities such as eating out at restaurants, cable, entertainment, among others.

Options Are Limited

Unfortunately, you don’t have this option when you’re in debt. You have to continue paying for minimum debt payments or your credit score will take a huge hit, and in some cases you could face legal action.

With debt, a portion of your future income has already been spent. It’s a frustrating position to be in. I love optimizing our budget, but there’s no cutting out debt payments until our loans have been fully paid off. This means there’s a smaller gap between our income and expenses, and we have less flexibility in our spending.

Another similar situation is called “golden handcuffs.” This is where your debt payments and expenses have grown to be so large that it cuts off your financial flexibility. You’re chained to your income and can’t easily pursue other job opportunities without causing potential financial turmoil. This most often occurs to people who succumb to lifestyle inflation, increasing the amount of money they spend as their income increases.

Debt is borrowing from your future to pay off the financial mistakes of your past. The sooner you can become debt free and stay that way, and the lower you can keep your expenses, the more flexibility you have in life.

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