Need Help with Debt?

You are in debt. I see you and I hear you. Debt can be a heavy weight.

Before I can help you deal with the debt, we need to understand your story.

Take a journey with me for a moment. You have a backpack and a suitcase in each hand. There are very important things in each bag. Now imagine that you are suddenly thrust into a river with your backpack and suitcases. If you are going to survive, you need to let go of the suitcases and swim. The backpack is the debt and each suitcase represents shame, anger, fear, or regret. You are going to be most successful tackling your debt if you let go of the shame and anger suitcases. Release the regret suitcase and acknowledge fear. Next, lets reframe your situation – the debt does not define you and this is just step (0) along your financial prosperity journey.

Each person is on their own journey with a unique set of circumstances, so the real solution to attacking debt – to be most effective – also needs to be tailored and unique to you.

Here is an example:

Cheryl (name change) went through a painful divorce. It took 2.5 years and $55,000 of debt.

For Cheryl, she has experienced loss of her relationship and future relationship. Just like the debt does not define Cheryl, neither does her divorce. Cheryl and I talked about the feelings of anger, loss, and shame. It was and is important for Cheryl to feel those emotions and acknowledge them. The emotions, like grief, will come and go. We then followed the following process:

Step 1. Cheryl and I worked together to identify the full debt picture. We put everything on the table. We listed her debt and the interest rates. For some people this is the hardest step – accumulating and acknowledging the full debt balance. This can also be freeing. If you are Afraid of your debt, then knowing the full balance is knowledge. That knowledge is power.

Step 2. We explored Cheryl’s resources. What funds are available to pay down this debt? For some, there are no resources and the debt pay down will all come from future earnings. For others, a 401k might be available or a loan from relatives. A home refinance might allow homeowners to access home equity for debt paydown. My job is to help Cheryl think through the pros and cons of any resources that might be used to pay down the debt. Cheryl is ultimately in control, and I help her make the best-informed decision, including immediate tax consequences and long-term financial consequences, if applicable.

Step 3. Paint a picture of success. It was important for Cheryl to see exactly how long it would take to pay down the debt, assuming she could contribute $500 each month toward the debt (it would take over 15 years) vs. $1,500 monthly debt payment would shorten the paydown period (less than 4 years). Interest rates matter.

Step 4. How do we help Cheryl find the money for the paydown. We got creative here. This is where Cheryl finds her real power! She is in control and making decisions. Will Cheryl find a second income? Will she sell her house and downsize her lifestyle? We talked about all sorts of ideas and potential solutions. Cheryl was working as a school nurse, a job she loved, but the pay wasn’t as good as she could get working in a hospital. After much debate, Cheryl didn’t want to leave her job, but she came up with her own solution! Cheryl decided to work during the summer as a traveling nurse. She earned $20,000 more and applied everything toward her debt balance. She now feels more powerful because she is in control and choosing her priorities, and she understands the financial impact of her thoughtful decisions.

If you are struggling under a heavy debt load, Look Both Ways Financial can help you chart your own path forward. It will not be easy, but it will be rewarding on the other side. No shame, no guilt – just solutions!

AI was NOT used for this article.

Kaki Perdue, Founder and Financial Advisor at Look Both Ways Financial is a CPA and a CFP. Kaki is a Fiduciary 100% of the time.

Look Both Ways Financial is not a CPA firm.