Dealing with debt without shame

5 tips to understand your debt and choose your next move without giving into budget culture’s reliance on restriction or shame

Last week, I shared highlights from my appearance on the Queer Money podcast back in June. But today, I want to zoom in on the main reason I was invited on the show: to talk about dealing with debt.

Debt shaming is one of the pillars of budget culture. It’s a way to keep most of us from accessing resources that are readily available to others, and it’s a way to encourage restriction as “responsible” money management. Through the budget-free framework, we explicitly reject not only debt shaming but also the premise that debt payoff is an important priority at all.

You can deal with debt in any way that makes sense for you — I support any strategies that make debt less of a burden on your life. Beyond that, carrying debt is morally neutral, and you don’t have a personal obligation to the bottom lines of credit card companies and banks.

Here are the five tips I shared with David and John for dealing with debt without shame or restriction.

1. Don’t ignore it

If you have overwhelming debt and no resources to pay it off, your instinct might be to ignore it.

When I was in my 20s with $50,000 in student loan debt, I buried my head in the sand for years. I knew I couldn’t make the monthly payment on the Standard Payment Plan, and I didn’t know my other options So I ignored the debt until this wonderful woman from my alma mater’s financial aid office called to let me know I could consolidate my loans and get on an income-driven repayment plan. Learning that was invaluable, and I was able to get out of default for the first time.

Don’t be afraid of your debt. Trust that there are ways to deal with it that won’t require you to drain your reserves or suck up all of your resources. Google “how to deal with [type of debt]” to learn more about your rights and options, and contact your creditors and debt servicers to make a plan that works for you.

2. See who holds your debt

In order to contact anyone, you need to know who services your debt. That can be tricky, especially if you’re dealing with debt you haven’t looked at in several years. Credit card debt might have been sold to a debt collector, and student loans might have bounced from servicer to servicer over the years.

To know what you’re dealing with, you have to get a lay of the land. You’re entitled by law to a free credit report every 12 months from each of the three major bureaus from AnnualCreditReport.com. Those come from TransUnion, Equifax and Experian. They include all of the information the bureaus have about your outstanding debts, but they’re kind of wonky documents that might be hard to decipher.

To get the same information (plus your credit score) in an easier-to-read format, use an app that gives you a free credit report. Some popular options:

• Credit Karma

• Credit Sesame

• CreditWise from Capital One

You can probably get your FICO credit score from your a bank or credit card company you currently use, too, but they might not offer a detailed credit report like these apps do.

A credit report will let you know how much you owe as well as the company that holds the debt, so you can seek out contact information to start dealing with the debt.

3. Let go of the shame

I’ve heard from countless people that they avoid looking at their bank account or credit report, because they don’t even want to see the financial situation they’re in. Internalized budget culture can conjure up so much shame for your financial decisions that you’d rather not deal with them at all.

Letting go of that shame is important to honestly seeing where you stand and deciding what to do next.

As you review your credit report to understand your outstanding debts, notice the feelings that come up — listen to what your body tells you. Do you feel expansive, celebrating your access to resources and the ease your debt afforded you? Do you recoil or tighten up, feeling guilty for your circumstances?

Once you recognize your reaction to debt, you can work on letting go of the shame so it doesn’t dictate your actions. You can read your credit score with neutrality and without judgment.

Empowered with that information and that neutral approach, you can simply look at where you have control or influence to make any changes you want to make and create a plan.

4. Know the consequences connected to each of your debts

Once you’re crystal clear on the debt you hold, look into the impact it can have. To make an informed decision about how to deal with debt, you have to understand the consequences of different ways of dealing with it.

• What’s the benefit if you pay everything back in a lump sum right now? Are there any remaining drawbacks?

• What happens if you don’t make any payments?

• What happens if you start making monthly minimum payments right now?

• How much interest is the debt accruing each month you don’t pay?

• How is this debt impacting your credit score and/or ability to access other resources?

• Who else is directly or indirectly impacted by you carrying this debt?

• When will the debt fall of your credit report? When does it reach the statute of limitations for a lawsuit?

Map your debt to give yourself a clear picture of what you owe and the consequences you face. Then you can prioritize.

A lot of debt payoff methods skim the surface of this step when they consider which of your debts have the highest interest rates and encourage you to repay those the fastest. But take it a step further, and consider the greater breadth of consequences, not only to your finances but to your life and your mental health.

For example, if something goes to collections, is it going to ruin your life to be dealing with calls from debt collectors all the time — or is that something that's easy for you to ignore until you can settle or find another option?

5. Learn your options for dealing with each debt

Finally, know your options for dealing with the debt (and how the consequences change depending on which you choose).

Different kinds of debt come with different repayment, deferment, consolidation, settlement and bankruptcy options. Just Google “repayment options for [type of debt]” or “bankruptcy options for [type of debt]” to get an idea of what’s available to you. (You can check out my guides for dealing with credit card debt and student loans in the meantime.)

Making peace with your credit card debt

You Don’t Have to Pay Your Student Loans If You Don’t Want To

Learn the ways you can live peacefully with outstanding debt, get it out of your life or deal with it in whatever way makes sense for you.

Ask how things work

I had the privilege of learning about personal finance by working as a journalist — so I was able to spend 40 hours a week getting a master class in how to understand and deal with my own money. I know not everyone has that kind of time to dedicate to untangling these things — and they can be complex!

You can filter through the noise in the personal finance space by honing your questions. Instead of asking “What should I do next?”, ask “How does this work?”

There will always be people who’ll tell you what they think the next right move is. But they don’t know you, so they can’t know what’s best for you. If you focus instead on learning how your financial products work, you can listen to yourself and decide the next right move for you.

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📍 Build your money map and let go of your debt shame through my personal finance class

The Budget-Free Fundamentals series gives you everything you need to gain a fresh perspective on your relationship with money. In a few short lessons, you’ll gain tools to use money the way you want without relying on restriction, succumbing to shame or following advice rooted in greed. Paid subscribers have full access to this and all Healthy Rich classes.

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some things you can try next…

🎙️LISTEN

Get practices to tune into your body and use what you learn to heal your relationship with money from this episode of

Somatic Wisdom

by

Cristy De La Cruz

.

(Listen anywhere you follow podcasts.)

⚒️ USE

If you aren’t already, sign up for one of these services to get your free credit report, updated at least monthly:

• Credit Karma

• Credit Sesame

• CreditWise from Capital One

Note: These apps make money by offering credit card and loan recommendations from advertisers, so be wary of their “advice” to improve your credit score. But the easy-to-read reports are a great tool!

💡 REFLECT

How do you feel when you think about your debt or review your credit report? How is that feeling tied to your relationship with money throughout your life? How is it tied to your broader experience, like your relationship with work, your parents or your friends?

Image by Yan Krukau via Pexels