5 Valuable Lessons Learned from €40,000 of Debt Accumulated over 12-Year
Debt increases your risk-tolerance, but it’s not a reason to start with it in the first place.
My debts were a bit like smoking cigarettes. I knew all these years that it was wrong. I was trying to get out of it without success. So I continued to do what I did best: live beyond my means and hold jobs that gave me the illusion that I was putting a system in place to get out of it.
I don’t come from a wealthy family. Modest surely. Bordering on poverty, at times.
“No, we can’t afford that,” was music to my ear during my years in school and until I started working. It was like listening to a broken record, stuck on the same note over and over again.
Though, my mom gave us her absolute best. I went to an outstanding school and then college. But during all these years, I had this craving to belong. I always hung out with kids who were far better off than me. All this time, I was scared of not being enough just because of how much (or not much) I had on my bank account.
So I kept up appearances because I was desperate to belong to the “cool kids.” The first time I overdraw my bank account, I was 17. And it all went down from there.
This led to 12 years of financial difficulties. 40,000 euros in debts later, I can tell you that it taught me valuable lessons for life. Here a the five lessons I learned from it.
Money doesn’t make you more worthy of being loved
I lived through my teenage, high school, and college years with this feeling I didn’t belong. That I needed to prove to anyone who was not my family I was worthy of being loved.
And I measured it with how much I could afford. How many times I could go to a party. How often could I invite the whole table for dinner? Even if I couldn’t afford it, putting myself more in debt every time.
This belief was so ingrained that I took it with me after my studies, first job, second job, etc. After a while, you don’t even know why you’re doing it anymore.
It’s a single, deep-seated feeling of discomfort that has been anchored for years and which becomes an unconscious reason behind all the decisions you make about money.
But I missed the point. People who love you regarding how much you have on your bank account are not worthy of your attention or time. And surely not worthy of the anxiety caused by your debt.
In many personal finances books or blog articles, the authors always write about finding out your limiting beliefs about money. When in debt, try to identify why you’re making poor decisions.
Is it linked to a fear of not being loved or not being considered?
Go at the roots of all evil, they say. But really, just do it.
Money gives you the freedom to choose
I started working in 2012. For seven years, I chose to take jobs, not for the impact and value I could bring, but for the money I could earn to pay off my debt that kept piling up.
I never allowed myself to chose a job because the description sounded like something I would love. I decided based on the prospect of success in repaying my debts, without allowing myself to wonder if it would fulfill me.
Two burnouts later, I can tell you:
Money doesn’t buy you happiness, but it surely gives you the freedom to choose something you love doing.
Today, I’m off debt. When I took my last job in consulting, one goal was to pay off my debt and be free. I paid everything back before my maternity leave, and now I have returned to a field that suits me better.
I enjoyed the consulting and the exceptional people I worked with. But what I’m doing now is more aligned with my values.
I wouldn’t have had that freedom of choice, with my debts hanging over my head like a Damocles sword.
Money is time you’ll never get back, so spend it wisely
Time is money says the proverb, but turn it around and you get a precious truth. Money is time. — George Gissing
It took me ages to understand this. When I was younger, I often heard the phrase “time is money” in the sense that if you are wasting my time, it is time during which I could have made money.
But it goes well the other way around too. Money is time. Let’s take as an example this period when I worked jobs I didn’t like for companies that were not in line with my values.
Every time I spent my money (including the money I didn’t have), I had to extend the period during which I had to give my time to these companies.
So, when you’re about to buy the next shiny item you think you need (but clearly you’re about to increase your debt), ask yourself if it’s really worth your time.
Because all the time you have to work, that extra money is time you won’t get back. It’s time taking you away doing stuff you love or spending moments with your people.
Being bad at math is not a valid excuse for not educating yourself about personal finance
Math has almost nothing to do with personal finance. During all my in-debt-years, I hid behind excuses like: “I don’t know anything about finance” or “Anyway, math and I isn’t a love story” or “ew, numbers.”
It took a massive project during my time in consulting to make me change my mind. I was in charge of managing the budget. The goal? To make sure I had enough cushioning between the given budget and the spent budget.
What an irony for someone who always lives above her means.
This influenced me and my thinking about money. I became more interested in the field of personal finance. So I started reading articles when waiting for the plane to take off.
And gosh, why the hell didn’t I come across it sooner!
Today there are so many blogs and good books (some simple, some more complex) on this topic that it’s almost impossible not to learn about it.
Nobody tells you about personal finance in school. If you’re lucky enough, your parents did. But if not, I’d urge anyone to make that investment in themselves.
As by-product, debt increases your risk-tolerance
Nobody should go into debt. It’s something that keeps you awake at night and twists your stomach. It’s a shadow that hides behind you every time you draw your credit card.
But I am still thankful I went through this experience. One of the best by-products of me living with debt for 12 years straight before paying everything back in less than a year is my increased risk tolerance.
My debt was horrible. I almost got a banking ban status where your financial situation simply becomes a nightmare for the next 5 years minimum.
But the thing is: I’ve always managed to be ok. In one way or another, I have lived with those risks for years. But the worst never happened. Today, I look at things through different glasses than before.
For example, I’ve always wanted to be my own boss. A bit difficult when you’re in debt, I’ll give you that. But now that I am free, I don’t see the problem to try. Yes, there is a risk to not succeed. But when I make the list of all the worse things that could happen to me for trying, I don’t see anything that is not manageable.
Because if I fail, the worst thing I can do is go back to a job temporarily to fill the bank. And I think there are worse things in life than that.
Your take-away
I am grateful for the valuable lessons I learned from my debt. But I wish I had never started with it in the first place.
Fortunately, there is an end to it when you decide to be aware of what’s going on around your money management and decide to take action.
Deciding to go out of debt is the first important step. So remember this on your journey to the debt-free-you:
- Try to identify the roots of your money management. Do you think it’s your way of feeling that you belong? Do you believe you are more worthy of love if you have money?
- Debt will take away your freedom of choice to do something you love. So before spending money you don’t have, ask yourself if you’re ready to take on a job you dislike to pay it back over a career that fulfills your soul.
- Every time you spend money, you’re selling your time. Is the money you’re spending worth it?
- Math has almost nothing to do with your ability to manage your money. And personal finance is more than just budgeting. So start educating yourself about it. If this intimidates you, begin with blog articles and slowly increase your volume by choosing one or more books on the subject.
- Whatever happens, this challenging time will teach you some valuable lessons for life and help you grow. I became more resistant to risk, for example.
Every time I think about how I paid my debt in less than a year, I feel like a fraud. But looking back, I chose to take a tough job, I decided to work 100+ hours a week, so I’ll get the bonus I deserve and need to pay back my debt.
After living above my means for so long, after living the easy life for 12 years, I finally chose to live the uncomfortable way at a given time, to live a better life in the future.
So can you.
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