Do you hear the word “debt” and instantly think of it as shameful, bad, or even scary? If so, you’re not alone. According to the latest statistics, the average American household has $135,768 in debt — including mortgages, student loans, car loans, and credit card debt. On top of that, 7 out of 10 people say that debt is necessary in their lives, but they wish they didn’t have it.

Most of us have debt, so why is it something that we want to get rid of (or feel ashamed to talk about)? This week on the podcast, Dustin and Danielle are talking about debt: why it’s not as bad as you thought it was, how debt can actually improve your life, and what you can do to tackle it.

HERE’S WHAT YOU’LL LEARN 

• • [02:17] Danielle’s experience with credit cards

• • [04:50] How interest can work for or against you

• • [06:00] Why debt isn’t always bad

• • [09:27] The definition of good debt

• • [10:10] How student loans can be both good and bad

• • [11:20] What counts as “bad” debt

• • [12:07] Why high APR credit card debt is Enemy of the State No. 1

• • [13:50] Four ways to tackle your debt

• • [14:12] Why reframing “debt” as “leverage” is so important

• • [15:45] Using debt to increase liquid assets

• • [17:11] How debt can be used to help you save for future goals

• • [17:40] Why you need to prioritize debt (and how)

• • [20:44] A bit about debt consolidation

• • [21:33] What the 3:1 ratio is

• • [22:32] Why the financial crisis of 2008 was so bad for people

THE DIFFERENT TYPES OF DEBT

Do you think of debt and instantly think “Bad!”? Well, Dustin and Danielle are here to bust that myth. In this week’s episode, they talk about all the ways that debt can be useful in our lives. They also talk about the good, the bad, and the ugly of debt and give specific examples:

• • Good debt: Could you afford a house without a mortgage (aka debt)?

• • Bad debt: Are you paying a crazy-high interest rate for that new car?

• • Ugly debt: Did you put that weekend in Cabo or that shopping spree on a high interest rate credit card… and only pay the minimum?

Which kind of debt do you have? Most of us have a mix of all three.That’s why Dustin and Danielle are sharing their tips for prioritizing and evaluating your debt so you feel more empowered and less stressed.

4 WAYS TO TACKLE YOUR DEBT

In this episode, Dustin and Danielle evaluate each type of debt and how it may be working for you. With their insights, you’ll be able to better determine which debts you might want to keep, which debts you want to pay off, and which debts to avoid all-together.

If you’ve got debt you’re worried about, Dustin and Danielle also share 4 ways to tackle your debt (and how you feel about it):

1. Reframe and redefine debt.

Some debt allows you to do great things with your life, like those student loans or that investment in your business. In these scenarios, it’s important to reframe the word “debt” and turn it into “leverage.” Leverage helps you get to new places you couldn’t go before, which is why some debt is actually a good thing.

If you’re not sure which types of debt count as “leverage,” tune into the episode.

2. Prioritize your debt.

When you have multiple types of debt, there is a hierarchy you can use to determine which ones are good, bad, and ugly. In the episode, Dustin and Danielle talk about the importance of evaluating interest rates to determine which debt you can leverage and which debt you should pay off ASAP.

3. Keep debt at bay.

A lot of “financial gurus” like Dave Ramsey will tell you debt is dumb. And while Dustin and Danielle don’t agree on everything Dave says, they do agree that it’s best to avoid debt where possible. Dustin shares a tip for keeping your debt to income ratio low — and how you can calculate it — in the episode.

4. Start to look at people as either leverage or debt.

It’s not just money that counts as debt, and it’s not just money we can use as leverage. Dustin and Danielle talk about how debt is a mindset, and how it overflows into the relationships you have with people. Are you surrounding yourself with people that make you feel weighed down or emotionally in debt? Or are you making an effort to build relationships with people who help you move up in the world?

REFRAMING YOUR RELATIONSHIP WITH DEBT

If you’re like most of us and you have debt, whether student loans, credit cards, or mortgages, you’ll definitely benefit from listening to this episode. You’ll learn the 3 types of debt and how to tackle them, but you’ll also walk away with a more balanced view of your money and how you spend it. Hopefully, the insights in this episode relieve some of the guilt or shame you have surrounding debt, as well as give you tools you need to offload the debt that’s not serving you.

As Danielle says in the episode, “Not all debt is bad.” Make sure to listen to this week’s episode to hear all of the great tips and insights Dustin and Danielle provide.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

Resources & People Mentioned

• • “Leverage”

• • Archimedes

• • “Liquidity”

• • Dave Ramsey

Connect With Danielle and Dustin

• • Ask Your Questions

• • On Facebook

• • On Twitter
  • Connect with Dustin on Twitter: @DRGranger

     

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