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Debt doesn’t have to burden

By David Domzalski · Bankrate.com
Thursday, December 8, 2011
Posted: 11 am ET

When I was 25, I finished an 18-month paydown of $20,000 in student loan debt. I committed myself to this goal, not because I was thrilled to practically endorse my paycheck over to Citibank, but because I saw the long-term impact of the decision.

Debt's effects can be felt over a lifetime. I wanted to reduce that obligation if I could in my own life. Not having to pay that loan -- while many of my peers will do so well into their late 30s or early 40s -- is a huge relief for my budget.

Paying off the student loan debt as fast as I did opened up a lot of my income for other things. For instance, my fiancee at that time (now my wife) and I were saving up for a down payment on our house. This gave me a remarkable sense of accomplishment.

Take it from me: Don't look at debt as a burden you can't overcome. Instead, I like to think of it as a challenge. That change in perspective makes all the difference.

As a burden, debt is overwhelming. As a challenge, paying off debt becomes an obstacle. When something is overwhelming, we tend not to want to deal with it. We will put it off.

However, if we look at something as a challenge -- as something to pursue and conquer -- we can motivate ourselves to be victorious over it. Paying off debt can can also prepare you mentally when you are met with another obstacle.

Tips for getting rid of debt

You must focus on tackling each loan one at a time. I always suggest going after the smallest one first and working your way up. This way, you begin to steadily see that overall number decrease. This helps you get a little more motivation each month to stick with your plan.

Another thing I recommend is to try not to use the automatic payment features. I know many personal finance gurus will say you should. However, in my experience, you need to be proactive in managing your money. You cannot expect some computer to do it for you. You don't learn this way. Get in the habit of checking your account daily.  (I'm not kidding.)

Make it a point to pay extra on the principal each month. And again, do it yourself. Seeing and typing in those large amounts will have a lasting impact on your future. You will remember how it feels to pay such monstrous amounts of money that it may very well deter you from getting into consumer debt.

Lastly, hang on to the statements -- whether paper or electronic. You never want to be accused of not sending in a payment. Plus, you'll want to hang onto that pay-off letter. It's a wonderful sense of achievement and something nobody can take away from you.

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David T. Domzalski is the founder of the FinancialBin.com. The company released its first book, "Entrepreneur Intervention," in November 2011.

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4 Comments
Patricia
December 09, 2011 at 10:20 am

Kudos to you! Not only did you do the conscientious and ethical thing to pay it back quickly (many can't due to unemployment), but you learned something and felt good about it. Plus you won't be counted among what is estimated to now be $845 billion in outstanding student loans....our next financial crisis!

Dmitry
December 08, 2011 at 4:57 pm

Deceptive headline.
If debt is not a burden - why get rid of it.
I expected article to be more focused on positives of having debt - such as interest deductions, higher return opportunities, how short term debt enables one to acquire what's necessary to secure long term opportunities, etc.
If you can get low interest debt, of course.