AS YOU CAN TELL BY MY NOT-SO-SUBTLE, HUMBLE BRAG, I JUST PAID OFF MY STUDENT LOANS BABY!
Before I parade myself with congratulations, let’s dive into this uncomfortable topic. Debt is a heavy issue for most people because the weight we feel when we hear that word is as described…heavy. It weighs on us. And the shitty thing is, the more in tune to your financial standings you are, the more miserable it feels. This is why so many people ignore their debts, so they can live each day without wanting to bang their head into a wall. But you know as well as I do that is no remedy either.
Before I go further, let me first congratulate you on your recent or upcoming graduation. I do not want to dismiss that accomplishment. Not everyone can handle the mental rigors of school and social life while trying to find your life’s calling. That’s sincere and it is not easy.
Now, let me play bad cop for a second as I hit you with a reality check… You do not have a clean slate!
I get your enthusiasm for taking on the next chapter of your life is filled with anticipation and excitement, as it should be. You just conquered 20+ years of schooling and you’re fucking amped to get the ball rolling! But putting school behind you does not mean school is done with you. Unless you got a full scholarship (awesome job btw if that’s you!), or you are being subsidized by your parents (lucky for you), you are now responsible for paying off the enormity of your tuition rates.
This is why I say there is no clean slate. A clean slate of 0 dollars would be a welcome sight to the majority of college graduates ready to kick off their life into adulthood. The average student graduates with $30,000 of student loan debt. For advanced degrees, it can be way more. I know friends who are well over $100,000 in student debt, not including the consumer, home, auto, and medical debt they may also have.
If left unchecked, or managed without an aggressive plan to pay it off as fast as possible, debt will effect 3 aspects of your life.
1: BUSINESS. How do you scale your business or side hustle with a $30,000 weight around your neck that is growing every day? If you’re like most people, you ignore it, you scale anyways and add more debt to your pile, and you deal with the consequences later. Well, “later” happens much sooner than you think and your debt can grow to $40,000 or $50,000 (with compounding interest) in the blink of an eye. Now you can’t position your business with any leverage. You take jobs well below your ideal salary, and you work longer hours for shorter pay.
2: PERSONAL. Life is meant to be lived and enjoyed. But realistically, how do you afford the awesome stuff when you’re swimming in debt? After fixed costs like shelter, utilities, transportation, insurance and groceries, where is the leftover for you to afford the memories you want to build? Date nights, weekend getaways, vacations, wedding, honeymoon, dream home, children; do they all take a back seat? What about investing into your retirement? Can you afford to put 10% of my income into a 401k that might get me 8% return, when your $7000 of CC debt is accruing at 25% APR? The numbers don’t work.
But believe it or not, there’s an even bigger downside to debt than the math that is so obviously working against your business and life goals; it’s your mindset.
Severe debt will beat the shit out of your self-esteem and completely alter your attitude towards money, opportunity, relationships and life.
3: MINDSET. Yup, I know first hand. Being in debt turned an otherwise optimistic kid into a cynical, reactive minded asshole who blamed the system and took no responsibility for his bad choices. You see the world as one of scarce opportunities, no ability to make money unless you know the right people or you can dunk a basketball. You are filled with jealousy and envy of others who seem to have more, and you turn into the type of person you always resented, a closed off cynic who keeps every piece of information to him/herself.
Have you ever told yourself, “I’m just not a business person, I’m an artist”. Or have you said, “I just suck at money” and left it at that? How about this little gem, “the deck is stacked against me!”. Truth bomb bro; your mind is narrow and your attitude sucks. I get it, your confidence is broken. But I don’t believe it’s destroyed. You can piece this back together. You just need a plan and you need to decide that now is the time you’re going to CREATE your own clean slate. It will not be handed to you.
All you need are a few pieces of information to get started. 1) Your monthly income. 2) Your monthly expenses. Subtract your expenses from your income and whatever is left over, you simply throw on to your debts.
If you have no surplus, you need to change your lifestyle or get more work. Simple as that. Sell some shit, move back home, pick up a side hustle, whatever it is. Get aggressive and throw as much towards your debts as possible.
If I knew what I know now, I would have been able to pay off my student loans within 10 years. And if I never learned what I did, I would be paying it off for another 15. Debt does not die without a plan. Create your clean slate.