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For many people, debt can feel like one of the biggest obstacles to achieving financial confidence. But have you considered how it might actually help you reach your goals? Ben Appel, Financial Well-Being Project Manager at SunTrust, explains how and why you can shift your mindset about debt and stay in control of your finances.

It’s common to feel stressed by debt. But why can debt actually help people achieve financial confidence?

If you had to choose whether to have debt or not have debt, all of us would choose to not have debt, right? That being said, debt helps us purchase things that, without taking out a loan, could take years or even decades to save up for. It allows you to afford things that align with your values that would otherwise be nearly impossible to save up for and buy, like a home or a car. When you get a loan and go into debt, you’re trading interest over time for manageable monthly payments.

Why is it important to keep your debt manageable?

It’s important to focus on the big picture. If you have a lot of debt, loan payments and interest, you may not be able to live out your values in other areas of your life. You might get into a position where you have to choose between saving for your long-term goals, like retirement, and meeting your immediate needs.

You always want to think about living within your means. Maybe you’re living on a $50,000 salary. That means taking out a car loan for a $60,000 luxury car wouldn’t make financial sense, even if having a car may be critical to your career. It’s the same with a mortgage. You want to get a safe, secure home that aligns with your values. But you also want to make sure that it fits your financial situation.

Challenge: Make sure that no more than 30 percent of your take-home pay is going toward your housing costs. If it’s anything more than that, it may be hard to maintain all the other things that are important in your life, like your future savings.

How do your saving and spending habits relate to your ability to reduce debt?

To help pay off debt faster, you either have to make more money, or you have to spend less money—those are the two options. And while you can always look at other job options or increase your marketable job skills that might qualify you for a higher income, the easiest thing to do is look at your spending. 

Challenge: First, track your expenses, which will show you where every single dollar that you spend goes. Then figure out where you can make cuts. You’ll likely find some places where you didn’t realize you were spending money and be able to pick up some savings.

What words of encouragement do you have for people who might be struggling to manage their debt?

Think of how amazing and uplifting it would feel if you didn’t have any debt. But instead of thinking of debt as an obstacle, think of it as a tool that can really help you live out your values. No one wants to hold debt forever. While your goal is to slowly become debt-free over time, you can use debt to help purchase those things that speak to your values—your family, your friends, travel, spirituality, everything that might be important to you.


3 Key Takeaways
  1. Debt can be a tool to help you achieve financial confidence.
  2. It’s important to always be living within your means to help keep your debt manageable.
  3. If you do have debt, closely review your spending for places you can cut and apply to debt payments.


Challenge yourself

You’ll likely need a loan for items such as a home, a vehicle or your education. Keep reading: It’s key to understand the different types of loan options when you are considering taking on debt.

This content is educational in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
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