Episode Number: 252

Episode 252- Is Debt Good or Bad? Debt Payoff Strategies & Leveraging Debt to Reach Your Goals

listen to the Podcast on your favorite platform

Show notes

Listen on Apple PodcastsListen on Spotify Listen on Google PodcastsListen on Amazon MusicListen on Stitcher

Jamila Souffrant 0:02

No matter where you are, even the richest people, the most successful people, even myself, we have these wounds around our money. You're not the only one. And we have these, "Well should I have done that differently?" or "Could I have did that?" You're not alone in this. I promise you you're not. There is a way to turn it around if you want to.

Intro 0:26

T-minus 10 seconds. Welcome to the Journey To Launch Podcast with your host, Jamila Souffrant. As a money expert who walks her talk, she helps brave Journeyers like you get out of debt, save, invest and build real wealth. Join her on the Journey To Launch to financial freedom in five, four, three, two, one.

Jamila Souffrant 0:53

Journey To Launch is supported by First Republic Bank. Relationships really matter in your life journey AND financial journey. A lot of banks have great offers to attract new clients, but what about their existing clients? First Republic is always focused on creating and nurturing long-term relationships. Devising strategies, not tactics, and master plans, not transactions. That’s why every client gets their own personal banker — a single point of contact to call, text or email at any time for any reason. I love that I feel valued and supported as a First Republic client, long after I’ve already opened up my account. They value their customers and it shows. First Republic calls it, "banking beyond the offer," and it’s part of their commitment to extraordinary service. Isn’t it time to discover what a long-term banking relationship can do for you? Visit firstrepublic.com today to learn more. That’s firstrepublic.com. Member FDIC, Equal Housing Lender.

Jamila Souffrant 1:51

If you want the episode show notes for this episode, go to journeytolaunch.com, or click the description of wherever you're listening to this episode. In the show notes, you'll get the transcribed version of the conversation, the links that we mentioned, and so much more. Also, whether you are An OG Journeyer or are brand new to the podcast, I've created a FREE Jumpstart Guide to help you on your financial freedom journey. It includes the top episodes to listen to, stages to go through to reach financial freedom, resources, and so much more. You can go to journeytolaunch.com/jumpstart to get your guide right now. Okay, let's hop into the episode.

Jamila Souffrant 2:42

Hey, hey, hey, Journeyers. Welcome to the Journey To Launch Podcast. Here I am again. Another solo episode. I hope you are enjoying the solo episodes. I've always said I wanted to do more and here I am. I think I've done three so far this year, or maybe more, I'm not even sure. But I'm excited to talk to you. It's going to be one on one. So me and you together, and we're going to be discussing a very important topic. And that is debt. I have a list of topics that I want to discuss over the next year, honestly, as solo episodes. With this debt episode or me discussing debt with you was important, because I know that I talked about the over arching goal: The moon goal, as I like to call it, of financial independence. reaching a place where you don't have to ever work again, because you have enough money, from your investments, from passive income, that allow you to live your life. That it pays for your living expenses. And while that seems very lovely, I mean, who doesn't want that? The reality is, many people, you, possibly listening, you're starting at a place where, maybe you can't imagine what that looks like just yet. Maybe you can. That's great if you can. I love it. That's why you're here. And if you can't imagine it yet, I want you to keep listening. And if you can't imagine it yet, because you currently are in debt. And in a lot of debt, I want to talk about that. This is one of those episodes, we're going to drill down more and get more specific with strategy. And what I like to call the tools in your toolbox that are allowing you or preventing you, maybe, from reaching your goals. Tools you need to leave behind. Tools you need to sharpen, so you can use better. Tools you need to understand better, right? Sometimes we'll have tools laying around or things laying around that can help us, but we don't understand it. We don't know how to use it. And in some instances, we don't even want to use a certain tool. It's just like, "You know, no thank you. I'll use something else that's easier." And that's kind of how I see debt. That's what we're going to talk about today, All right?

So, what I wanted to cover and I do have an outline. I don't know if I'm gonna stick to it might just go off the riff a bit, is debt. Is it good or is it bad? What should you do you currently have debt? How do you factor that in to your overall journey? What are some strategies to pay off debt? Should you be investing while you have debt? And then ways in which I've interacted with debt in my life and on my financial journey, and how I'm still changing my mind and/or using debt, depending on where I am right now in my life, and where I foresee myself to be.

So first, is debt good or bad? Honestly, I think it's neither. I believe that how you feel about debt is going to be dependent on how you view it. If you view it as something that helps accelerate you. And this is gonna sound crazy, because I think for most people, debt is not a good thing. And I agree, but I do see how debt has been beneficial to me in many ways. Let me explain. And you'll see a lot of people in the personal finance space, whether it's, like, the big name, Dave Ramsey, who hates debt, he believes that you shouldn't even invest while you're in debt. You should work to pay off your debt first. That it's horrible. And I actually have a lot of friends within the personal finance space, or just people who are not even personal finance bloggers, podcasters, or influencers, who just don't like debt. They may be currently in it. And they're like, "Once I get out, I'm never going back. I don't care, I'm not opening up a credit card again." And then I have friends or people in the space, who are fine with debt. If it's strategically used. And I've actually interviewed people most recently, Kumiko, The Budget Mom, she's gonna be on the podcast in a few weeks, you'll hear that episode. She was able to buy or build her dream home, cash, with no debt. People who work to pay off their mortgages early, because that's how much they don't want debt. And then I have people who strategically use debt, including myself, depending on, you know, what their interest rates are, to leverage debt, to help them reach goal. Or, for example, using credit cards to, and paying them off every month, to gain credit card points for travel or other bonuses. So is debt good or bad? It depends. It depends where you are right now on your debt journey. It depends on your tolerance to debt. And so it's going to be up to you. I think it's neither. It depends on who's asking. And it depends on who answers the question, honestly. And I think what you'll need to do when it comes to, like, debt payoff strategies and how you use debt within your life, you listen to podcasts like this, you listen to me, but you find other schools of thought and see what resonates with you. And if you decide that debt is not for you, like it's you really honestly not for most people, then that makes sense. If you decide that you're at a place in your financial journey where you can use debt strategically, then that's your answer. So, we're going to talk more about that.

For you, if you have debt, I think it depends on, like, if you're in the middle of your debt payoff stage, it's going to depend on your stage. So within my content, I broke down the Journey To Financial Independence in five stages, because I love breaking things down in stages and steps, I think that makes things more achievable. And that's how I visually see things, in steps. And so, I'll just review the steps now.

Step one, or stage one, is The Explorer Stage. That stage is where you are working to become financially stable. You may not be able to pay your bills every month or your minimum debt payments. You're putting things on a credit card, accumulating more debt, or you really feel out of control with your money. That will be Explorer Stage one.

Stage two is what I call The Cadet Stage. It is the working on debt freedom stage. So after you graduated from stage one, where maybe you feel out of control with your money, you can't make payments on things, you're putting things on credit card, but you're able to get that organized, get some sort of money plan together, and you're at least now able to cover your expenses. That doesn't mean you're out of debt at all. But you can then move to the second stage, which is what I call The Cadet Stage or debt payoff stage. This is the stage in which you pay off your consumer debt. In this stage, I include, typically, the credit cards because they're your highest interest rate debt, and personal loans and just debt in general that you want to pay off. I don't typically include student loans or mortgages in this category. You can if you want, but those debts tend to be larger and can take decades to pay off, depending on your situation and the rates tend to be lower than the other debts. So you may strategically want to keep it in. It may not be feasible to not continue on with your financial independence journey until you pay off that debt, because it may take you 30 years to pay it off. So you can choose what you put into your debt payoff goals, but in this stage two, it's typically going to be credit card debt, the personal debt that you want to get rid of.

Stage three is what I call The Aviator stage. It's where you're building financial security. So in this stage, you paid off most of your debt, the debt that you want to get rid of, and you, mayb,e still have some strategic debt. Maybe you're like me, and you're you spend on credit cards every month, but you paid off every month. But your goal in the third stage or The Aviator Stage, is financial security. So this is where you're able to build more wealth, you're able to buy more investments, and build your portfolio, because you don't have the obligation of paying credit cards, or you're stable enough that now you can accelerate your journey, because most of your money now is going to your living expenses, and your investments, not debt. So maybe a lot of what you're doing in stage two is paying off your debt, some investing, because I do believe in investing, even though you're in debt. But then stage three, your money's freed up. So you choose what you do with it.

Stage four is what I call The Commander Stage. And that's the stage where you reach work flexibility. And that's the stage I'm currently in. So, it's not complete financial independence, but you have a handle on whatever debt you are currently holding. And it's strategic, you actually, like, want to have it. And you have work flexibility, meaning, if you wanted to leave a job, leave a situation, do something different, you had the room to do that. If you wanted to take a break, you can do that. You have enough money in an F-U fund, or just stability in your finances and investments, that you're on the right track.

And stage five is The Captain Stage. That is ultimate financial independence. You don't ever need to work again if you don't want to, because you have enough in your investments to live off of.

So when I talk about debt and the stages that you're in, so if you can identify where you are, in what I just said, right? Where are you right now? Are you stage 1,2,3,4, or five. If you're stage one or two, so stage one and two: One was working on financial stability. Stage two was working on paying off debt. If you're in those two stages, then the priority would be paying off your debt. I don't believe you should be taking on credit card debt or trying to travel hack and just open credit cards for points, because you're just not there yet. A lot of the issue with debt currently, apart from not being taught anything about debt, when we were pushed out into the real world, when we went to college and all the credit card companies were on campus giving us credit cards or taking out more student loans than we needed, because we did not understand how that will impact our lives. What's really happening is that in these stages, we're trying to get stable. We're trying to get out of debt and the strategies that people like myself, or people who are using debt for good, quote unquote, they're at further stages. So they're at stages where, I previously said, I was in The Commander Stage. I have a handle on my debt. I have discipline with my debt, meaning anything I put on my credit card, it gets paid off in full, every month, right? If you're in the beginning stages, you can't use those strategies just yet. Not saying you can never use those strategies, but what happens is the credit card companies, they give you these bonus points for rewards to sign up to get the points, right? And you have to spend a certain amount of money in that timeframe. And many people are not able to do that. They're not able to pay off their debt. They're not able to control their spending, because it's invisible money. And so this game that some people win at, maybe it's like 10%, or 20% of the population wins at, the other 80% loses at. And I don't think if you're in the 80% that has been caught up in this, meaning, you have credit card debt that is astronomical, or not even astronomical, you just have credit card debt that you cannot pay off every month. Then you are not prepared or ready to use debt in a way to leverage it for other opportunities just yet. And what I love about the stages, what I love about this journey is, you don't stay in a stage forever. Unless you want to. I don't know why you'd want to. I mean, I think once you get to level four or five, you can actually choose to stay in level four if you want, but really level one, two and three, you don't have to stay in those stages and you don't have to use the strategies that you've used from the beginning. What you-- when you know better you can then deploy different things. So is debt bad? I hate using the word bad. Is debt bad for people in stages one and two? I think it's something where, no, you should not be using debt-- or you shouldn be wanting to get out of debt as fast as possible, because in the stages, it's not just about paying off the credit card. It's about the discipline it takes to pay off the credit card. It's about the discipline to say to yourself, "Well, I have this debt that I can pay off, or I can do this thing. What's more important to me?" And, kind of, once you go through this, to me, it's almost like a training field, even though it's not training, it's like real life. Once you're able to get out of it. And if you decide if you choose, at the later stages, to go back into strategically held debt, for your benefit, like points, or you're leveraging the market, because rates are so low, and you can invest that money, instead. You have learned you have the discipline. You know thyself to do that. People who I typically talk to, who do not like that, sometimes they've never been in it, which is fine. A lot of times they were in the struggle, they were in level one and two, and they do not want to go back there. They know themselves. And they just hate it. And so it doesn't matter how many points they can get. They don't care about a free trip to Fiji. They never want to be in that position again. Almost like someone who maybe it's like had a really bad stint with, like, getting drunk one day or overnight. And they're just like, "I'm never drinking again," right? There's some people like that. So I think it's gonna depend on your experience with debt, who you become through the paying off debt and if you feel confident and disciplined enough to use it going forward. Now, if you are in later stages of the financial independence journey, so maybe you are in The Aviator Stage, so that's stage three. Or the word flexibility stage, Commander Stage four, or stage five, like, you have enough money. If you didn't want to work, you didn't have to. To me, you have demonstrated to, if you've gotten to that level, a level of discipline that would allow you, if you chose to, to use debt for what you want to use it for. So is that good or bad? It depends, again. It depends again, on where you are, and what you want to do. And then also, yes, you can listen to me. You can listen to other people, but it's going to be a really individual answer based on your personality, based on your goals and what you want.

The other thing I want to talk about when it comes to debt is, let's just say you are in the beginning stages, and you want to pay off your debt. And maybe in the future, you do want to travel hack and do all these things. Then how do you do that, right? How do you pay off debt? How do you get to the next level? Well, that's gonna take some discipline, as you're ready already talked about, but it's really gonna take understanding how much debt you have. So this is gonna seem really, for me, it seems simple for me to say it, because I feel like I've said this many times before. But it's not as simple for people to do. I always like to say, you know, financial money is easy, but it's not simple. If it was simple, everyone would be doing it. It's not. There are reasons why we're not sitting down and doing the things we should do. But one of the things you should do, if you are currently in debt, and you are at that stage, where you're trying to get out of debt, is to understand all your debts. What debt do you have? I know that there are some people who have no clue who they owe, how much they owe, the interest rate. And that is the first step. And once you figure that out, the goal is to get out of the higher interest rates debt. So that's going to be mostly your credit cards. And so you have to do some strategy. You can choose to do this Snowball Method, which is where you pay off your lowest balance debts first. Or you can do the Avalanche Method, where you're paying off your highest interest rate debt first, right? Those are two strategies that you can employ in terms of paying it off. But when you look at that, if I was listening to this, and I was in debt, you know, I'd say to myself, "Well, you know, if I had the money to pay off the debt, I would, I would have did it, Jamila." So it's not just about knowing the debt that you have, and wanting to pay it off, but like, what, what do you do? You know, even if you have a strategy in place, and you're like, "Okay, I'll pay off the lowest balance, like what happens next?" How do you get the money to do that?

And going back to the basics of the formula that I've talked about before, it's income minus expenses. That is basically what it is. It's your income, and your expenses. These two life forces in our life that give us life, meaning the income that we are receiving, most likely, is from the work that we do, for most of our lives or days, right? Most of the hours of our days. The expenses that we're spending, that is, like, what accumulates to be our life, right? Like where we live, what we do for fun, what we eat. And so in order to pay off debt, especially if you have been struggling to do that, or you don't know how to. Either one or both of those things need to be adjusted. You're gonna have to find room between the difference of your income and expenses to put towards an accelerated debt payoff strategy. Not the strategy, like, you know, the credit card, just like they would want you to stay in debt forever because they're getting so much interest off of you. So you have to employ a strategy where you can squeeze more money from different of your income and your expenses and put it towards your debt. And if you listen to this podcast, and if you're so new here, you can listen to a whole bunch of other episodes, but there's going to have to be some increasing of income if possible, or I always think increasing your income is possible, it's exponential, actually. And then there's going to be a need to look at your expenses. And while I am not an advocate of cutting it down to where you-- it's not sustainable, in terms of your expenses, like, it's not reasonable for a family... I would talk for myself. My family of five to, you know, go down to a $2,000 budget, based on our needs, and where we live, New York City, hello? That you need to be more intentional with the way you spend. And again, nothing has to say the same way forever. So there may be things you can't do in the meantime, because you are working to pay off this debt that you have. But you can pick it up, you know? Like maybe vacations are not something you can do right now. Maybe you need to take staycations or vacations and not trips to Mexico, and the beautiful island just yet, because the cost. You cannot, you can't afford that yet. If your priority is paying off debt, and you have to make those, in the moment decisions, for the long term benefit. So when it talks to, "Jamila, like, how do I get the money to pay off this debt that I have?" It has to either be from your income, or your expenses, or both. Based on how you feel or what you feel is the first step to you know, you want to accomplish the take that, you choose. I like going from it from both ways. I typically find that most people, especially if they're new to this, like new to caring about their money, new to even listening to Journey To Launch, expenses is, like, the quickest way to see the overspending. If they are overspending, right? Because if you haven't been aware of your money before, you, then you don't know where it's going. So you really have to sit down and create a spending plan, AKA a budget, you know, the "B word," to figure out what it is that you're spending on. Doesn't matter to you? Can you cut it out? Or back? Can you cut back? You know, instead of the $500 restaurant budget line item that you've had, that you even know you were spending on. Can, for now, in your season of paying off debt, can it go to $200? So yes, there will be some sacrifices. There will be some deliberate intention, and you'll have to do some work. But if you're in this stage of wanting to pay off your debt, you're going to have to be deliberate in how you do that. Also, I know that I'm talking about, like, high level strategy here. And it's, like, a lot of doing. You know, like, I'm talking about sitting down, looking at the numbers, writing out your debt, figuring out a way to increase your income, figuring out a way to cut back in your expenses, in the meantime, for you to reach these debt payoff goals. But a lot of the work is actually emotional. It's inner work that you need to do to reach these goals.

So many of us have financial money, whether it's trauma or memories, and a mindset in which we hold money. In which we think about money. And it can be positive, or it can be negative or a mixture of both. And so there's a lot of emotional work with debt. I know a lot of people and maybe you feel this, you feel shame around your debt, you feel shame that you're not further along. Maybe you feel like you're a certain age, and you should have known this and look at you now. And so I really think the biggest hurdle for most people and their debt is how they feel about it. How they feel about what caused them to get into debt. There may be some resentment there. There may be some self sabotage. You know, there's so much emotional spending going on. It's a crazy world, okay? And we get so many messages on who we should be, what we should have. And a lot of times we're putting band aids on ourselves in the form of external things to try to heal some of our internal wounds. And while the numbers are important, and the work is important, in terms of the external work, the internal work is important. So I want you, if you do have shame around debt, to know that you're not the only one. Whether it's because you feel like you're too old to have a certain amount of debt or you made a silly mistake, silly meaning quote, unquote. I'm not saying your mistake was silly, but maybe you feel it was silly. Maybe you invested in something that and you lost your money or you were scammed out of money, and someone lied to you. Or you are supporting family or lent money to a friend and never got it back and that put you in a hole. And then maybe shame around like, why did you make that decision? And I'm really here to tell you that no matter where you are, even the richest people, the most successful people, even myself, we have these wounds around our money, you're not the only one. And we have these, "Well should I've done that differently?" or "Could have did that." You're not alone in this, I promise you you're not. There is a way to turn it around if you want to. On this debt payoff journey I do believe debt can be used for good after a certain stage. But for most people, you're going to have to work to pay off your debt. Don't get sidelined by the flashiness. And the advice from people who are further along in the journey, because they may be giving advice based from where they are, that, "Yes, I'm using travel points, I'm doing all this stuff." But that's because they're at a certain point. And don't get caught up in a way in which it keeps you stuck at a level. And it's not about being stuck, because being stuck, meaning, you can stay somewhere for a long time, like, in these stages, but it will take a long time to get out of some of these stages, especially the debt payoff journey. I always have people come to me and say, "You know, I want to get rid of this debt immediately, as fast as possible". And I'm like, "Okay, but how long did it take you to get into debt?" You know, like, it could, it could have taken you 5,10, 15 years, depending on your experience to put you in the position you are now, listening to this podcast. And so you're going to expect you're going to wake up and tomorrow all your debt is going to be gone?

Now, unless you have just a lot of money or the income to cover it, that may be the case. But I know for most people, you don't have money laying around to just wipe it out. And so the realization, also, is that this is going to take some time. It's gonna take some time, so expect to be in your debt payoff journey, depending on what your income is, and your expenses are and how hard you're willing to go for this, in the moment, like, paying off the debt, that it can take some time. So one of the things that we talked about just now was, you know, listing out your debt, deciding you know, what your debt payoff plan is. Is it going to be The Snowball Method, Avalanche Method. And typically, when you do that, right, like you can figure out, "Okay, how long will it take me above the minimum payments on these debts that the credit card company or whoever is telling me I should pay overtime? If I put #200 $300 towards this debt when can I pay it off?" Right? So you can create a payoff plan with a timeline, a realistic one based on your budget, and figure out that, "Wow, it can take one year to pay this off, or it can take five years." And you may look at that five year payoff plan and say, "Oh, no, I don't want it to take this long." And then that means you got to do some work back on, you got to back into now, where's the income? And where are the expenses going to help you get more money towards your debt to make that debt pay off shorter.

So, again, it's really, really about understanding and giving yourself grace, for how long this takes. I know, there's some people who are like, "Listen, I'm gonna pay off this debt by any means necessary, and go hard, hard, hard, hard in the paint. Cut out everything." And it works for them, you know, it works for them. And they feel amazing about themselves. And if you are that person, kudos to you. And you may be a person where you say, "Well, I just know myself, and it's not as sustainable for me to cut everything out. So I've created a plan in which it may take a little longer, but I'm going to be disciplined about what I'm doing, because I see where I want to go with my life." And it takes you a bit longer, but you understand the payoff for that.

So we talked about, like, is debt, good or bad. The debt according to the Journeyer levels, so stages one through five, how to pay off debt, I did talk about, like, overall strategies, and then, but really, I want to stress that it's the emotional work that needs to be done. So I want to just give a couple more resources, or at least ways in which you can do the emotional work.

So, I said one was, it can just be forgiving yourself, and releasing the shame understanding that you're not alone on this journey, when it comes to debt. The other thing is to educate yourself, and to surround yourself with knowledge and inspiration of people paying off their debt, right? A podcast. If you're listening to this, that means you're super excited and in tune with getting to your goals. And also, like, following social media accounts. There's so many people in the debt payoff community. If you search that hashtag, debt free community, where you can follow and not maybe everyone is your cup of tea, but, you know, you find accounts that really encourage and motivate you. You create accountability with the people around you, if you can. I can assure you right now, the friend that you go to brunch with, if you still going to brunch, because you know pandemic, but, you know, has some debt too that they're not talking about that you can recruit with you on this path and be accountable for together in this whole journey. Or siblings, or cousins, or whoever, you know, someone in your real life that you can reach out to and talk about this, because they probably want to do this too, also with you. Or joining groups in which you feel comfortable to talk about this with. So that some of just, like, the accountability and the work that helps fuel you to some of your debt payoff goals.

But now, I want to talk about debt as it relates to me, and how I've used debt, and how I've had a relationship with debt in a way in which I feel like it's helped me. But I've also-- I also feel like it's coming from a place, because I had a starting point, at which I was not a big spender, or someone who got wrapped up in the credit card cycle in college. So I was lucky there, that I didn't graduate college with a lot of credit card debt. I mean, I did have student loans. And I always say, while people hate their student loans, and I can definitely see why, especially if you got a six figure student loan debt, and was promised something that was not given. The job market did not deliver what it was supposed to, or you were taken advantage of when you went to college, not understanding. For me, personally, if I did not have the access to debt, I would not have went to the college that I went to. And for me, it was a beautiful experience. Being able to stay on campus. I stayed on campus for the first two, three years of college experience. And I can tell you, I would not have been able to do that without debt. I do not regret it. Luckily, I did have scholarships. So I didn't take on as much debt as I would have without the scholarships. But I graduated with debt. But I also graduated with a income that was relative. I remember, I think my, my starting salary when I graduated from college, undergrad, was $50,000. So that was back in a day, okay? But-- so it was a healthy, it was a good amount of money. For my age, I was 22 years old, again years ago. But even though I had, I think at the time, it was about $30,000 of student loan debt, it was manageable based on the career that I went into. I went into the investments field, right? So you can imagine for me, I was able to manage that. But I don't think that I would have gotten the opportunity that I got in terms of the internship within the roads, or the education that I got without my student loan debt. So for me, I don't regret taking out student loans. But my situation is a bit different. But those student loans for me is what was an investment into the future that I have now. I did eventually pay off my student loans. I did that before age 30. I was paying the minimum, you know, I was like, "Why pay this off?" Because again, I did not understand any of this world when I first started working. I did not care about investing. I didn't know about financial independence. So for me, I was, like, happy to keep my student loans forever, because I didn't understand that I could really pay them off earlier. It wasn't until I got to my late 20s that I decided, "You know what I'm gonna take this bonus that I have and just pay off my loan." That's just what I did.

Now, when it comes to buying, I bought my first property-- I think that's the other thing-- that we need mortgages and loans to help us buy the biggest things that we have, or investments in our lives, like property. So for me, I did that at 22, when I went into contract for my apartment in DUMBO, New York City. Wouldn't have been able to do that without a loan. And now that is my biggest investment that I've ever made. I always like to say, I don't know, I feel like I've always, I'll always say that, because it was such a turning point in my life, to be able to own something that young. Debt allowed me to do that. Now, I know, I'm talking about the bigger debts, like the student loan and mortgage. But when it relates to credit cards, I now, I can say-- I mean even back then, I spent on my credit cards, but I paid them off every month. And now I do the same thing. And I have tons of reward points that I can't wait to cash in, when we can travel or we feel comfortable going places. But for me, it's beneficial. I have a few credit cards that I use. I rotate between. I usually use one or two every month. Even the Starbucks card, I typically, kind of, post about this when I get my free Starbucks every month, is that I have a Starbucks card. And when I opened it, I believe they gave me, they give you, like, 5,000 points. However many points I got, I think it equals to-- I think it was 40 free drinks. And I still have those points. I like treat myself, once a month to a free drink on Starbucks app from the card. And there is a fee. That's the other thing, right? So what people are not also, maybe, saying or talking about when they talk about travel hacking is sometimes there are fees to this. Annual fee. And for me, it's worth it to keep some of the annual fees for my cards, because the points or the benefits outweigh that. And even just now, I got a free drink from Starbucks, because they load typically a free drink every month on my card. It's worth it to me. Even with, even with the annual fee of $49.

For me debt is something that I'm comfortable with. And it's manageable, because I have the discipline to pay it off. And you may also be in that lane. One of the more recent things that I've done, and I'll share more about this when I do an episode of what I've learned from working with my financial team. So I have a financial advisor now. They don't help me, or they don't choose investments for me, but they're helping me, I guess I should say, not advisor, financial planner, so they help my family and I plan out all the things we want to do. All the amazing things we want to do in our life that involve money. How do we bake that into our financial plan or investing and saving plan? One of the things that we're working on now is renovating our basement. And we eventually want to move to renovating the backyard this year. Now, we had cash to renovate the basement. And I was going to cash flow renovating the basement. When the first conversations we had with a financial planner was about our goals and what we were doing. And when I mentioned to them that what I was doing, I was using the cash to fund the project. They were like, "Well, what about if you did use debt to do that, because the interest rate on debt is so low?" And I can tell you the first time I heard that I was like, "What? Debt? Why would I do that, I have the cash?" So even me, like, I know the math behind it. Like debt interest rates are very low, right? Investing, and what you can make in the market is higher. And so it was almost like I had a choice, because we were talking at this point about what to do with the money in my accounts. Should we invest? Should we fund this project. And they were like, "Listen, mathematically, it makes sense to actually either refinance and cash out to get some money for this, these projects that you have, and then take that cash you would have spent and invest it, or take out some lower interest rate loan to do this work." Again, I gotta tell you, at first I was like, "I don't know, like, I'm debt free, other than my mortgage. Like I use my credit cards, but I don't want to take on additional debt." But when I started to do the math on it, it made so much sense. And that's the other kind of takeaway from if you are using debt, a barometer of if you should use debt for certain purchases is, can you actually pay for this in cash and you're choosing not to? In our case, we could pay for the renovations that we want to do in cash. We can cashflow them, but our money is better deployed investing it, which is what we're doing. And so it was an easier decision, especially with the rate of debt being so low, that by the end of it all, we are able to take out money, cash out refinance and still have the same payment on our home, because our rate of our of our previous mortgage was so much higher than the current rate. Again, that's gonna be a whole another episode. But for me, now I'm investing in my home, that we plan to be here unless you know your girl becomes a millionaire and we want to upgrade a bit and get a bigger space, I plan to be here. I'm-- this could be my forever home. And so I want to invest in my forever home and be comfortable. Have an office, which is, like, my dream instead of right now I'm sitting at my kitchen table, looking at the fridge. Not a problem, you know? But I'm just saying, I want to have a space, I want to feel amazing when it-- when I go into my basement of a larger place for us to be as a family. And plus have my own space in my office, right? I want my backyard to be some somewhere where it's an oasis. And so I'm willing to invest that money. It's worth it to me, for all the cost, because, you know, I'm obviously I'm not saying everything with the cost. That's a whole nother episode with the mortgage. But it's worth it to me. And I know there's some people who would say, "Oh no! I would never do that. That's not in my you know what, like, in my plan, I want to pay off this debt as fast as possible. I don't want more debt. I don't care about interest rates." And that's fine. But you'll learn as you continue on this journey, just as I have that with better information, with more exposure to people like me sharing these things and your community sharing this with you and your friends, the more you talk about this stuff, the more you learn, the more you you do make mistakes, and decisions that you'll be better informed to make the next decision that you need to, to get you to where you want to be. It doesn't mean every decision is going to be right you can change your mind, I can tell you that my mind has changed since I started this journey. About how I feel about debt, how I feel about how long I wanted it to take for me to reach level five. I kind of hinted at it that, you know, you can choose to stay in level four and have that work flexibility stage if you want. Or you can choose to move on to financial independence. I think it's all going to be relative to your desires, your goals, and that's the beauty. That's the beauty of the journey. That we can learn from each other. We can pick and choose what works. We can make mistakes, knowing that they won't knock us down forever. I promise you they won't. I promise you they won't. And with that, hopefully, we live our best lives. So that's my hope for you, Journeyers, is that something from this episode just now, either affirmed you, or maybe gave you an inkling to do some more research on something. Hopefully get you in a place, not that you're comfortable with your debt, but I don't want you to feel bad about it. I don't want you to have shame around it.

Listen, we're all in this together at different stages, striving for something, right? But I want you to enjoy the journey too. And with that, that's the end of this episode. The end of this shows. So, if you got something from this, if you learned something if you were inspired, if there was something that stood out for you, please let me know. I'm @journeytolaunch on Instagram, Facebook and Twitter. So just tag me. I mostly hang out on Instagram. Let me know. I will share more of, like, my basement renovation project as we continue on. I share most of that usually over @JamilaSouffrant, so you can follow me on instagram over there if you'd like, but until then, keep on Journeying Journeyers.

Don't forget, you can get the episode show notes for this episode by going to journeytolaunch.com, or click the description of wherever you're listening to this and you can still grab your Jumpstart Guide for free to help you on your journey to financial freedom by going to journeytolaunch.com/jumpstart. If you want to support me and the podcast and love the free content and information that you get here, here are four ways that you can support me in the show: One, make sure you're subscribed to the podcast wherever you listen, whether that's Apple Podcasts, that purple app on your phone, your Android device, YouTube, Spotify, wherever it is that you happen to listen, just subscribe so you are not missing an episode. And if you're happening to listen to this and Apple Podcasts, rate, review and subscribe there. I appreciate and read every single review. Number two, follow me on my social media accounts. I'm @journeytolaunch on Facebook, Instagram, and Twitter. And I love, love, love, interacting with Journeyers there. Three, support and check out the sponsors of this show. If you hear something that interests you. Sponsors are the main ways we keep the podcast lights on here. So, show them some love for supporting your girl. Four, and last but not least, share this episode this podcast with a friend or family member or co worker, so that we can spread the message of Journey to Launch. Alright, that's it until next week. Keep on journeying Journeyers.

(This post may include some affiliate links)

In this solo episode I tackle all things debt: the tools you need to use or sharpen to pay debt off, the controversial question, “Is debt good or bad?”, why debt may be preventing you from reaching your money goals and the importance of understanding yourself when it comes to using debt as leverage.

If you’re wanting to dive deeper into learning more about debt and how it can affect your financial independence journey, this episode is for you!

In this episode I discuss:

  • Whether debt is “good” or “bad”
  • The 5 stages of financial independence
  • Knowing thyself when it comes to deciding if you want to use debt as leverage
  • Specific strategies and tools to manage or pay debt off + more
Episode 252- Is Debt Good or Bad? Debt Payoff Strategies & Leveraging Debt to Reach Your Goals Click To Tweet

Other related blog posts/links mentioned in this episode:

  • Join the waitlist for my signature course, Map Your Way To Financial Independence, here.
  • Check out my new personal website here.
  • Join The Weekly Newsletter List
  • Leave me a voicemail– Leave me a question on the Journey To Launch voicemail and have it answered on the podcast!
  • YNAB –  Start managing your money and budgeting so that you can reach your financial dreams. Sign up for a free 34 days trial of YNAB, my go-to budgeting app by using my referral link.

Connect with me:

Love this episode? Share it!
Share on facebook
Share on twitter
Share on pinterest
Share on linkedin
Share on email

Leave a Comment

Your email address will not be published.

free assessment

Unlock your future financial path.

Take the quiz to get a shockingly accurate description of where you are and where to go on your journey to Financial Independence.