Debt is one of those words that can stir up all sorts of feelings. For many of us, it’s a word that’s synonymous with stress, guilt and even fear. “I can’t afford my MOT this month so I will have to put it on a credit card, and that’s debt. Debt = bad, right?”. Well, not necessarily. Not all debt is the same – there’s good debt vs. bad debt. Plus, our relationship with it can be shaped both by lots of factors. How our parents or other family members viewed debt and our own personal experiences with it… If you’ve ever felt overwhelmed by debt or struggled to see a way past it, you’re not on your own! 

In this blog, I’ll be taking a deeper dive into how we perceive debt and why it evokes such strong emotions I’l also share how you can reframe your relationship with it. Together we’ll work to shift your mindset so that you can approach debt with clarity and confidence.

Common feelings about debt

For lots of people, debt is an emotional toll as well as a financial challenge. Fear and anxiety are often the first emotions to arise when debt starts to feel unmanageable. Perhaps they worry about missing a payment or struggling to meet monthly obligations. Those worries can lead to sleepless nights. These emotions can quickly spiral into a sense of shame or guilt, especially in a society that often equates financial success with personal success. And on the flip side, links financial struggles with personal failure. The stigma around debt can make you feel as though you’ve done something wrong, even if your debt was taken on for entirely valid reasons… And that sometimes leads you to feel inadequate or irresponsible. This might even stop you seeking help or addressing the problem.

But debt doesn’t always carry negative connotations. In fact, in certain situations it can even be a source of empowerment or pride. A mortgage, for instance, is often seen as a step toward stability and security. A business loan can be a means of achieving a lifelong dream. 

Hopefully those examples help you see that how you perceive debt often depends on its context in your life and the outcomes it enables. Understanding the difference between “good debt” and “bad debt” can make a huge difference in how you approach it. Let’s delve a bit deeper into that…

Good debt vs. bad debt

• Good debt: This is usually an investment in your future or debt that has the potential to improve your financial position over time. A mortgage means that you can purchase a home that costs far more money than you have right now. Similarly, a business loan can provide the capital needed to grow your business and generate more income. When managed well, the benefits of good debt often outweigh the risks.
• Bad debt: This type of debt might involve borrowing money for purchases that depreciate in value or don’t contribute to financial growth. For example, you might put a holiday or new outfit on a credit card when you know you can’t pay it off in full the next month. Credit cards can become a problem if you only make the minimum repayments. Interest charges can quickly spiral out of control. In some cases, people might put unexpected costs on a credit card because they feel they have no other option – like the MOT costs I mentioned in the introduction. While a credit card can be a safety net, you will end up paying more in interest if you can’t clear the debt quickly. 

Reframing your relationship with debt

The way you think about debt matters. Instead of seeing it as an enemy, try to view it as a tool. Here are some of my tried and tested strategies to help you shift your mindset:

1. Focus on what debt has enabled you to achieve

Think about the opportunities your debt has afforded you. Perhaps it’s the roof over your head, the car that gets you to work or the education that’s opened doors for your career. Recognising the positive outcomes can help reduce feelings of guilt or shame.

2. Create a debt repayment plan

One of the best ways to take control of your debt is to have a clear repayment plan. What’s the maximum you can repay each month while paying your bills and allowing for a few unexpected costs? A month or two of being disciplined will help you see the fruit of your labour, and if you can start chipping away at debt, you’ll feel more optimistic. Plus, breaking any problem down into manageable steps not only makes it feel less overwhelming but also gives you a sense of progress and empowerment.

3. Don’t let guilt or fear take over 

I mentioned this earlier in the blog, but emotions like guilt and fear can cloud your judgement and stop you from taking action. Remember, you’re not alone and there is a path forward. Focus your energy on practical solutions – perhaps looking for ways you can reduce your costs.

4. Seek support 

You don’t have to navigate this journey alone. Working with a coach or financial adviser can provide you with tools and strategies to manage your debt without the emotional overwhelm. Sometimes, just having someone in your corner can make all the difference!

5. Recognise that financial growth Is a journey 

Changing your financial situation will take time, and that’s okay. Just remember that every step forward counts and be patient and kind to yourself as you work towards a healthier relationship with money.

Shifting from fear to empowerment

I hope this blog has helped you understand that debt doesn’t have to be a dirty word. Good debt vs. bad debt – there is a difference! By reframing how you think about it and focusing on actionable steps, you can shift from a place of fear or shame to one of empowerment and clarity. Remember, your financial journey is uniquely yours, and it’s never too late to take control.

If you’re struggling to see past your debt or feel like you’re stuck in a cycle of stress, I’m here to help. We can create a plan that works for you, so you can move forward with confidence and achieve the financial freedom you deserve. Follow me on Instagram for more tips or get in touch to chat.