Skip to content

Debt can be an aspect of our financial picture that relentlessly haunts our lives. The fear of mounting interest, upcoming due dates, or long-term commitments can send shivers down our spine. In this blog post, we’ll discuss how to face your financial fears head-on by helping to set achievable goals and creating a clear repayment plan.

The Cost of Overspending

Overspending can provide a short-lived sense of gratification but is usually followed by long-term stress. Financial debt can linger as a reminder of past purchases and financial decisions. Those purchases we decided to put on our credit cards can come back to haunt us when the bills arrive. Credit cards often come with high-interest rates, meaning when you carry a balance, you pay significantly more for your purchases over time. This can lead to a never-ending cycle of debt as interest accrues on the outstanding balance. Consider the following steps to take control of your money:

Step 1: Create a budget. Some people prefer the convenience provided by online budgeting tools, while others find the simplicity and control of a pen-and-paper budget more suitable. The goal is to create a positive cash flow by tracking your spending and cutting unnecessary expenses.

Step 2: Save up an emergency fund. Part of budgeting is establishing an emergency fund for unexpected expenses. Ideally, approximately 3-6 months’ worth of expenses are saved up as an adequate cushion. This fund will allow you a financial buffer that can sustain you through a time of need without relying on high-interest loans or credit cards.

Step 3: Redirect excess cash flow toward paying off your highest interest-rate debts first.

Step 4: Stay Disciplined. When working towards paying off high-interest-rate debt, it’s essential to stick to your budget as closely as possible. Avoid impulse purchases and monitor your progress toward your financial goals. Review your budget monthly and make necessary adjustments as needed. By acknowledging your past financial choices and taking control of your spending, you can begin to reclaim your financial future.

The Truth of “Good Debt”

Debt can often carry a negative connotation, but it’s essential to recognize that not all debt is created equal. Some types of debt can be considered “good” or “productive” because they serve more as an investment in your future. Often, these “good” debts can contribute positively to your financial well-being. Let’s discuss the positives of two common forms: mortgages and student loans.

  1. Mortgage Debt: By taking out a mortgage, you are investing in an asset that can potentially (and hopefully) increase in worth and build your equity. You are also forced into savings by regular mortgage payments. Over the life of the loan, you are steadily building equity in your home, which can be used for future financial goals or as a safety net.
  2. Student Loan Debt: Student loans can enable individuals to invest in their education, leading to higher earning potential and career opportunities. Higher education can equip individuals with valuable skills to enhance their personal and professional development. Student Loans can also be a way for individuals to build a positive credit history, which is advantageous for future financial endeavors, such as securing a mortgage or a car loan.

While mortgage and student loan debt can be considered “good debt,” they can indeed have a negative impact on your financial picture if not managed responsibly. Consider the following strategies to mitigate the adverse effects:

  • Budget: Maintain a realistic budget that includes loan payments to ensure they fit within your financial means.
  • Refinance: Stay informed about your loan terms and any potential changes in interest rates. If interest rates drop significantly, explore the option of refinancing to secure a lower rate.
  • Make Extra Payments: Consider making extra payments to pay down the principal balance faster, reducing the overall cost of borrowing.
  • Consult a CPA: Take advantage of any tax benefits associated with mortgage or student loan interest.
  • Emergency Fund: Maintain a health emergency fund to cover unexpected expenses.
  • Avoid Additional Debt: Try to avoid taking on additional debt while you are working towards your goal. This includes credit card debt or financing large purchases that could strain your budget.
  • Find Accountability: Seek professional help if needed, as advisors can provide personalized guidance and strategies to improve your financial situation.


Being proactive about debt involves seeking strategies that best align with your circumstances and future goals. Most importantly, it’s about cultivating a mindset that views debt as a manageable challenge rather than an impossible barrier. It’s crucial to strike a balance between borrowing responsibly and pursuing your goals, making informed decisions about the types of debt that align with your long-term financial plans. By facing our financial fears head-on and taking proactive steps to tackle debt, we can regain control and navigate a path to financial stability.  

Bridgeworth Wealth Management is a Registered Investment Adviser.

Bridgeworth is now a part of Savant Wealth Management as of 11/30/2023. Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois.