Debt Isn’t the Enemy: Understanding and Managing Financial Anxiety

Financial fears and anxieties can significantly impact how we manage our money. Among these fears, one of the most common and paralyzing is the fear of debt. While this anxiety is valid, understanding and reframing our perspective on debt can transform how we navigate financial decisions. Let’s explore the roots of this fear, its impact on our lives, and most importantly, how we can begin to shift our mindset to overcome it.

Understanding the Fear of Debt

The fear of debt doesn’t appear out of nowhere; it’s deeply rooted in personal experiences, societal norms, and a lack of financial education. To confront it, we first need to understand its origins.

The Weight of Past Financial Struggles

Many of us carry the echoes of past financial struggles—our own or those of our families. For example, I vividly remember when my father bought his first car, a hatchback Daihatsu. Watching him drive it home was a moment of pride and joy. However, a year later, the car was gone. My father had defaulted on the loan, and the bank reclaimed it. That experience left an indelible mark on me; I resolved never to rely on loans.

This mindset followed me into adulthood, leading to heated arguments with my wife when we were expecting our first child. I insisted on buying a car outright, despite the strain it placed on our savings. My fear of debt blinded me to smarter financial options, creating unnecessary stress between my wife and me.

Many of us would have grown up seeing our guardians stressed over debt just like this.

Lack of Financial Education

“What we don’t understand, we fear.” This rings especially true for debt. Growing up, I believed credit cards were financial traps. I refused to get one, convinced it would lead me down a path of ruin. Looking back, I realize my fear stemmed not from experience but from a lack of understanding. Once I educated myself about how credit cards work—and the importance of paying off balances on time—I saw them for what they truly are: tools that, when used wisely, can help build financial stability.

Social Perception

Debt carries a stigma in many societies. Social media amplifies this, creating a culture of comparison where “debt-free” lives are often showcased as the gold standard. This pressure can make us feel ashamed and prevent us from seeking help. But the truth is, debt is a tool—and like any tool, its value depends on how it’s used. Not all debt is bad. In fact, many of us wouldn’t have been able to afford college, start a business, or buy a home without it.

Treat debt as the ladder that can help you to achieve your goals.

A Mindset Shift: From Fear to Freedom

Debt doesn’t have to be a monster under the bed. By changing how we view it, we can move from fearing debt to understanding and using it wisely. Here are three ways to start shifting your mindset:

1. Differentiate Between Good and Bad Debt: Good debt, like student loans or mortgages, can help build your future. Bad debt, such as high-interest credit card debt, often arises from impulse spending. Educating yourself about the differences can help alleviate unnecessary anxiety.

   
   

2. Focus on Control, Not Avoidance: Instead of avoiding debt entirely, focus on managing it. Set clear repayment plans and avoid borrowing more than you can afford to repay.

   
   

3. Seek Support: If you’re struggling, don’t hesitate to seek help. Financial coaches, online communities, and trusted friends can provide guidance and reduce the shame often associated with debt.

   
   

What’s your earliest memory of debt?

How has it shaped your financial choices?

Take a moment to reflect on these questions and consider whether your relationship with debt is helping or hindering you.

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