5 Common Money Moves That Keep You Stuck in Debt

Foreign. This is Busy Getting Better, the podcast for women who are committed to prioritizing their own personal growth. I'm your host, Madison Day, a mindset and money coach, a first generation wealth builder and a woman on a mission to help you master your finances and live your best life. Money is not all we are covering though, because in order to live your best life, you have to become your best self. So we are diving deep into all things personal development and bringing you the mindset. Mindset shifts, money, tips and inspiration. You need to go out there, be bold and build the life you can't stop daydreaming about. It's time to get busy, babe. Busy getting better. What is up, you guys? Welcome back to the podcast. Today's episode, we are talking all about the boogeyman of personal finance. That is right. We are talking about debt. Obviously, if you've been listening to the show, you know I feel some type of way about debt, right? It is this chapter of your personal finance journey that becomes riddled with so much overwhelm and shame and negative emotion. And I just don't think that it needs to. When I think back about where I was at in my journey of paying off $70,000 of debt, if I could just go back and just tell this version of myself, hey, everything's gonna work out and all of the skills that you are building in this chapter are just going to set you up for success on what comes next. It doesn't have to feel so heavy. It doesn't have to feel so shameful. I just wish that the conversation itself wasn't so tab. I know from my story, I know from plenty of clients stories and every individual that I've spoken with that has debt is. It just feels like this thing that needs to hide in the shadows. It just feels like this thing that we can't talk about, like, it is so taboo. We can't admit that we are in debt. We can't admit that we have debt that is coming. We can't admit the way, like, it's just, it's for some reason this thing. And I just think that when we give that much power to something like, oh, I can't talk about it. I have to feel so embarrassed by it. That weight feels really, really heavy. And so I just wish that it wasn't. I feel like part of my big mission and something I'm really stepping into here is just creating spaces and places to have open and honest conversations around how we are leveraging debt in our life, whether it is even unwanted debt is an intentional debt. Because here's the thing about debt is debt has different uses. And sometimes utilizing debt to build a business or to build a rental portfolio or whatever is actually really positive. Maybe you bought a new car with debt and it' like all of a sudden it just feels like this negative thing, but it's not because it's giving you so much purpose and potential. So I just feel like the word itself, debt, like for me at one point was just like a full body recoil. It was like, no, we are not using that word or talking about it. It can just feel so heavy and feel so alone. I am just here to say I don't think that that needs to be our reality anymore. I think more than ever, women are coming together and we are building community and having open conversations around things that we used to not be able to do. I just feel like that is such a big part of my mission. Because when I think back to that journey, like I said, it was heavy, it was lonely, it did kind of feel like, oh my gosh, am I going to figure this out? Even though I knew deep down, right, I am the type of person or I will become the type of person that is going to figure this out and I'm going to navigate this and there will be an end day. Some days are really hard and some days that voice gets really, really loud. I just again, there's just not enough open conversations around how to talk about debt, how to utilize debt, what it means for us, and then just being really serious about taking that journey to be like, okay, you know, debt has been part of my chapter of my story, but it's not going to be my whole story. Let's really start to work together to rewrite that. So you are going to hear me being even more loud about debt because again, the amount of conversations that I have had with women in the last couple months about how heavy and lonely this feels. Let's flip the script on debt and let's really start to feel more empowered about this journey and what it can do for us. That being said, I want to talk about five common money moves that are typically keeping people stuck in debt so that you, if you are feeling like, okay, this has been a chapter, I want to start to build this intentional steps to get out of this chapter. Let's talk about some things that, again, were very, very prevalent in my journey with clients that I have. And just amongst conversations that I've had with so many women, let's get into it. The very first one that I want to talk about the number one money move that is keeping you stuck in debt is ignoring the big pict. Money is a very easy thing to ignore. It's really easy to just like set minimum payments on autopay. It's really easy to not really open up our student loan accounts because we just know what's going on in there. It's really easy to just like have your loans and your credit cards, statements and everything like a little bit out of focus. So the most important thing that you can do is to stop avoiding it, right? Stop avoiding it and to really put it all out onto the table. I'm talking about adding up all the balances across the board. I'm talking about looking at interest rates, looking at minimum payments, looking at how much of your current income is just going to minimum payments and really ultimately what that is going to look like. The average US household has over $8,000 of credit card debt with a 24% APR. 24% interest rate. Just want to like contextualize 24% interest, you guys, because that is criminal. I honestly do not know how banks are getting away with charging 24% interest. Like think about this from an investment perspective. Whenever we're talking about investing in the stock market, the goal is to beat what the average is of the S&P 500, right? So the S&P 510% year over year is the average rate of return, the average in interest that your money is going to be gaining from compound. That means if you have a credit card that has 24% interest compounding daily, you have 24% working against you, that's an additional 14% above what we can even invest. Being able to look at the full picture here of what kind of balances you have. Being able to categorize them one right into unwanted and wanted debt. Again, not all debt is created equal. Sometimes debt is used very intentionally. We call it leveraged on the like wealth building side of debt to go increase your net worth to go pour into assets. And then there's the other side which is typically categorized as quote unquote bad debt. I don't like using bad debt. Usually like unwanted debt. Like, okay, I would really love to pay off my car, I'd really love to pay off my student loans. I'd really love to pay off these credit cards, right? Those are going to be the most common types of quote unquote unwanted debt that we look at. And even within that category there is different interest rates. And so your first goal is to really figure out what Are the balances, and what are the types of loans that you have outstanding that have the highest interest on them? Those are going to be the ones that are working the hardest against you. The objective with personal finance is really right. We got to think about this like a game, you guys. You go out and you work and you get dollar bills, and then those dollar bills become like little warriors, little minions for you, going out and fighting the good old fight. For you. This could be just paying for things to live off of. This is investments. This is paying down debts. Like, we want to figure out what is the best place for your money to go. And your best place for your money to go is going to be going towards the highest interest debt and really starting to knock that out. So for the majority of people, we are going to be talking about credit cards. Credit cards are, like, worst in a sense of, again, just how criminal the interest rates are against you. If you have credit card debt, that does not mean you suck. That does not mean you're bad at money. That doesn't mean anything. It just is a fact if you have credit card debt. So we've really. First we got to neutralize this, right, and understand that life happens, right? Cost of living right now is high, you guys. It is very, very high. Sometimes we might just need credit cards to live life. We might just need credit cards to whatever. But if we're utilizing them as a crutch and we're not necessarily getting to the root of the problem and getting intentional about getting out of it, I just want you to be so cautious of how quickly you slip into that hole and how much this compound interest is working against you. So we've really got to understand that the very big first money move is just not seeing the whole picture, not looking at it in the face and just understanding what it is. And again, I get it. It's so much easier to ignore, because if you can't see it every day, if you're not looking at it like, oh, we'll just worry about that later, you know? But again, in the world of compound interest, that problem that you're kicking down the road to be a later problem is going to be a more expensive, expensive problem later. The quickest and most efficient way you can solve it is now. So lay them all out. Your first step here, if you're like, oh, shit, Madison, okay, I'm in my debt free payoff arrow, I'm ready to get to the end of this, is list out all the debts that you have, Categorize them, unwanted versus wanted and look at the interest rates and figure out where your starting spot is and figure out exactly what it is that you want to attack with it. So that's going to be number one. I just want you to remember on this that the more clarity you have about your debt, the more power that you have. Sometimes it can feel powerless looking at it. That's not how I want you to feel. I want you to be like, now I know what I'm working on, I'm working towards. I know what the objective is in front of me. Now you have the power to start making intentional moves towards your objective. The lack of power comes from not knowing what's going on. So if you are looking to feel more powerful and in control of your finances and to gain clarity on that, then I want you to list out all of the debts and I want you to stare them in the face and I want you to understand what your starting spot is. And that's all it is, a starting spot. Okay, Money move number two, that is going to keep you trapped in debt. Paying only the minimums. You guys, minimums are really like the majority of your payment. If you are just paying minimum payment, it's going to interest. So when we're looking at debt, you have the principal and you have the interest. The principal is the amount of debt that you took out. Let's say you took out a car loan for $20,000. The interest on that is going to be the interest rate that you agree to when you take out that car loan if you are only making minimum payments. And again, this goes even more so when you have higher interest debt to, like credit cards. If you're only making minimum payments, the majority of that payment is going just towards the interest, not towards the principal. So this is what happens when people are like, I don't know, I've been making minimum payments, but every single time I open up my account, the balance seems to be growing. You might be right. You literally might be right. You're making payments and the balance is still going up. How the heck is that? That's because it is designed to only be paying. The majority of that money goes towards interest, not the principal. Your objective is to start paying down the principal of the balance that you owe. That is how you're actually going to start tackling the debt and moving to get out of it. I found a stat that said if you were making just minimum payments on average, it's going to take you 17 years to pay off the average balance of a credit card. That is Wild. That is wild. So if you were looking at, okay, I'm only making minimum payments on all of my cards, I want you to just understand that you're probably not making as much of a dent into your debts that you think that you are. And so we can look at, you know, the snowball versus the avalanche method here with debts. And if you are taking the approach of one of these, right, you're going to be paying just the minimums on some cards. But you've got to pick one where you're like this, I'm battling you this month, these next couple months, whatever it is. And you've got to be pouring additional money onto that loan on top of the minimum balance in order for you to actually start making a significant, significant impact. If you are just making minimum payments across all of your debt, you're really just like kind of keeping things afloat. You're not really moving the needle too much. And again, that's okay if that's what you have been doing. But if you're like, hey, I'm ready to really start, take, take the reins on this debt that I want to get out of and really start to take this a little bit more seriously and more aggressively. I want you to pick one debt, right? Probably the one with the highest interest would be a really good place to start and to just get aggressive with it. Get aggressive with it. Put any extra money you can towards it. That's when you're going to really start to see the balance of that go down. And remember, you have compound interest working against you. So you need to be working harder. This is the name of the game. It really is what it is. Okay? Money move number three. I am so victim to this, you guys. This was like, what do you mean? This isn't solving my problems. Thinking more money is going to fix your debt. Most people think that they just need to make more money and then they can start getting out of debt. I just need to get the next raise. I just need to start the side hustle. I just need to bring in X amount more money and then I'm going to go start taking my debt payoff journey seriously. I'm going to tell you what happens. Because money is not a game of logic. Money is a game of emotion. Most people, when you start making more money, give in to lifestyle creep. It is so much easier than you think it is. Guys, I'm sure if you have had income increases and then you've been like, where the fuck is all my money going? And making more money than I ever have, but for some reason it just doesn't feel like it. And again, yes, a little bit of inflation there, right? Our money is not stretching as far as it used to. But what I want to talk about on inflation really quick is that it's not going anywhere. Inflation is baked into the game. The government has an inflation target of 3% every year, meaning that they are trying to make everything only 3% more expensive. But if we were to really look at inflation over the last couple of years in some of our core areas it is significantly higher than that. So I want to recognize like we do have extra forces outside sight of just compound interest really working against us right now when it comes to finances. But when we think that it's just like more money, what that does from a psychological perspective, we just keep kicking the can down the road like, oh well, once I hit that income goal then I'll start putting more money towards debt. The best thing that you can do is start to figure out how to work on that now, put the systems in place, build the plan, all the things and then when more money comes into the equation now you are able to add to the amount that's going towards that debt. So yes, I don't want to glaze over. Making more money is an incredible strategy. Absolutely. The more money the better. The more money that you're making, the more fuck ups you can have, the more money that you're making. Of course it's going to be easier to carve out and allocate more money to your debt. But what I don't want you to think is that that is the sole answer, right? Because here I am on my journey and I'm like, oh my God, once I hit six figures my life's going to be solved and you start making that money and again there is additional discretional income. But so, so quickly you start to spend it on shit. Oh my God. Well, I worked so hard to get here. Like I deserve this. Well, it's probably not going to be here for forever, so I better spend it on all the things that I've always wanted. Now while I have it, then you get the promotion and you make the more money. And it's like, I want the new car, I want the new clothes, I want the nicer apartment, I want to go on these vacations. We start to spend from an emotional point of view because money is not logic, money is emotional. 90% of the decisions that we make when it comes to our finances are rooted in emotion. And so emotions are going to Control what we do with our money. Yes. Making more money absolutely should be part of your strategy, hands down. But I just don't want you to think it's the only thing. And I don't want you to continue to tell yourself the story that you're going to wait until you make more money and then you will start taking your debt payoff journey seriously. Even if we are carving out an additional 50 bucks a month, like, whatever it is, like, how do we start to get more intentional about the money that we have now? Going towards it, there's a stat that says over guys, this one floored me, but also was like, oh my God, I feel so fucking seen. And I'm not crazy. Right? Over 51% of people. So over half of people that are making six figures are still living paycheck to paycheck. I want you to think about that because again, through the lens of if you're not making six figures or maybe if you are, maybe if you're making more, you're like, oh my gosh, this makes so much sense. Because if you just think that the six figure milestone marker is going to solve all your problems, I hope by now, if you've been listening, you know that's not true. So, yes, we want to make more money, but I want you to recognize the fact that a lot of people fall into lifestyle creep and not all lifestyle creep is bad. I've talked about this in other episodes. I definitely think that you should be able to expand your way of living as you make more money. Sure. Like, we're not trying to stay in scarcity for the rest of your life. I'm not eating box macaroni and cheese every meal now. Right. But, like, we've just got to recognize that that is not the only part of the equation and that you telling yourself that story is probably just going to keep you in debt longer. Money move number four. This is like one where again, if I could just go back and have a combo with younger me, going at it alone, feeling like you have to do everything by yourself, feeling like you can't have people that you can talk about your debt with, it makes the journey so much worse than it needs to be. So much more lonely. And also as you actually start to make moves and you actually start to pay off debt. Like, being able to celebrate that with yourself and with people around you is a game changer. Celebration is a strategy to rewire your brain. This is why whenever I'm building debt payoff plans, we want to talk about how do we Build milestone markers along the way. How do we have reward moments for you throughout the debt payoff journey? A trip that you've always wanted to go on, A place that you wanted to treat yourself like whatever it is. Like, let's set up milestone markers so that you can celebrate along the way. Every time you're celebrating, you are reminding your brain what it is that you actually want. And we're starting to rewire our brain to crave the debt payoff journey. If you don't have anyone to celebrate that with, that makes it even more lonely. And so I just think not hiding in the shadows, not letting debt just be this shameful thing that keeps us silent is a really important part to making this journey a lot more enjoyable. Making it go a lot faster. Just like, I don't know, having the accountability and having the people around you that can help you along the way, being surrounded by people with similar goals, like there is just so much here and I know over half the people are like really afraid to talk about debt. But what I wish you would know is that 65% is the success rate when you celebrate or I guess when you share a goal with somebody and you have an accountability partner, your ability to accomplish that task and to hit that goal rockets is 65%. And then when you have accountability, when you have check ins, when you have a place to go to actually work towards that goal, you guys, that step jumps to 95%. You are 95% more likely to achieve the goal that you are after if you are not doing it alone. And you are surrounded by people that are working towards a similar goal. And you have milestones, you have check in, you have accountability. You guys, this is why I fucking love coaching. Because it is. If I would have, if I could have coached my own little booty back in there, I mean, I guess I did, but without actual like coaching tools, it was just like brute force and just trying to figure things out. But like having the accountability, like like little check ins and just not making, making it feel so alone. I'm telling you, it increases your probability of accomplishing that goal by 95%. And also it just makes the whole thing a lot less lonely. So I would encourage you to find people that you can talk about money with, talk about debt with and build accountability. Like how can we gamify this? How can we work on this together? And how can we make the journey a lot less lonely? Because doing it alone sucks. It just fucking does. Money move. Number five is just blanket following generic advice like what is the most common advice I feel like we hear it's just budget better. It's just cut out your coffee, it's just stop doing your nails. It's just always about cutting things out. It's just always about spending less money, which, okay, obviously we need to be intentional. Obviously we need to look at why are we spending so that we can understand what are we trying to, to fill. Like what is the psychology behind your spending? That is a conversation that needs to be talked about more. Because when you can start to understand specifically what is leading you towards spending money. I talk about this all the time. A lot of times when you don't have money and then you do have money. We are not spending from a place of our future self. We're spending from a place of our past self. What do I mean by that? If you write like in my example of growing up and not having a lot of money, putting myself through cult, like that whole thing, I finally hit the six figure mark and I was just like, oh, I never had the cute clothes, like whatever it is like the clothes or I couldn't go on these trips. Like you're just, you're filling a void from your past self, you are spending from your past scarcity. And we really want to be spending from a future empowered you. And so when we're taking this like generic advice, this generic money advice that's just like, well, don't do this and stop spending money on this. But it doesn't actually address your own identity, your own values, your own goals, the life that you were trying to create for yourself. It's just like, okay, it's like in one year out the other, it's like telling someone to just like stop doing something because I think that you shouldn't be doing that. But you're like, well, this is actually really important to me. Then we're not really helping you address the problem. So just like taking blanket advice. This is why I really encourage you to build your own spending plan, to have a really good conversation with yourself about what are the goals that you have for your life, what are the values that you have and how are you spending in alignment with that and how are you starting to cut shit out that doesn't align with who you are trying to become. Even when we think about just like spending from a place of consumerism, like you are inundated with so many ads on a daily basis trying to influence you and convince you what you should be buying and what you should not be spending money on. I want you to get in the driver's seat of that. I want you to know exactly why you are and are not spending money on things. I want you to understand. Oh, that's interesting. I am trying. I want us buy this thing. I want you to have the level of understanding that there is the psychology behind it so that you can really start to piece together. Oh, like it's motivating me to spend money on this because of FOMO or because I never could have this, or like there's so much there, you guys, that's a whole thing, the psychology of spending. And when you can really understand that and not just be taking generic advice. Because the majority of people that download. Let's talk about like a budgeting app. It's like 70% of people end up falling off of that within 90 days. And the question is why? It's like, well, if you are just doing it to do it first, having the intentionality behind it of like, what is actually going to work for you? What are you looking out for? What triggers are you trying to avoid? How are you trying to spend intentionally? So like just taking blanket advice from someone is not going to work. You need to be intentional about building a plan that aligns with your goals, your values, and the identity of the version of yourself that you are owning, that you are stepping into of the future that you are trying to create. I just think that that is really important and why, again, generic advice just never works. And the annoying part of personal finance is that it's so personal because a personal, you know, no spend rule for me, or like a no brainer spend for me, it probably is the complete opposite for you. And so you've got to take the time to really understand that. And the last thing I really want to leave you with here of what keeps a lot of people in debt is really just focusing on the debt. I feel like that might sound a little counterintuitive, but if you are just sitting here thinking about debt, debt, debt, debt, debt, our brains are wired to just focus on that thing. And so again, a lot of the work is starting to figure out how to step out of this lens of just like a time suck, an energy suck, a money suck, of just thinking about debt all the time. And this is not going from like, okay, now we're avoiding it. No, no, no, no. But we're focusing on the outcome. So our brain really is like, it doesn't hurt hear the word, the negative words. It doesn't hear the don'ts, it doesn't hear that. It just hears the thing that you continue to talk about. And so we talk about this a lot with like goal setting. Instead of focusing on what you don't want, I want you to focus on what you do want. And so if you're continuously focused on debt, your brain is just, it's in debt land. Like all it sees things and hears is debt. And so that is the reality that you're going to continue to create for yourself is just more and more and more and more debt. So instead of thinking about debt, I really want you to think about the life that you're trying to create. And what does that look like? What does it look like to have money left over at the end of the month? What does it look like instead of money going to your credit card balances, it's going to investments in your 401k in your IRA. What does it look like for that extra money to go into a high yield savings account so you can start to save for a down payment for your home or for a vacation vacation that you've been dreaming of? What does it feel like in your body to wake up and have an abundance of money? What does it feel like to wake up and have an overflow of money to go out to more money to pour into your charitable events that you want to give to a family member, to a friend to have just an excess of money? If you're heavy in your debt era, I know it can feel like a lofty goal to have an excess of money. Like, that's crazy. What is this lady talking about? But it's a possible reality for you. I want you to start to get really clear on what that life looks like and what that life feels like and who that version of yourself is and how does she show up and how does she treat money. And the more that we can start to think about forward thinking about what you want to create, your brain is going to start to help you find opportunities, help you find evidence, help you find people, help you find new jobs, whatever it is to create that reality. But if you continue to focus on debt, that is the reality that you will continue to create. So we want debt to be the motivator of wanting to get out of debt can be your motivator. But we've got to have a forward shining light. We've got to have like a lighthouse that is guiding you towards the future. And that is what I want your reality to be. Again, I know it's so easy when you're in debt to wake up and to think about the negativity and the bills and how am I going to pay for this? But that mentality and that way of thinking is just perpetuating the cycle that you were in. We are here to break the cycle of being in debt. In order to break the cycle, we need to change our thought patterns, change the beliefs that we have, change the emotions that we're carrying, and change the focus of what our thoughts are. 90% of the thoughts that we think are the exact thoughts that we thought yesterday. So it's a slow roll here, but I want you to start to chip away at that. And so even when you start to say, ugh, I just want to be out of debt, I want you to focus instead of not on what you do want. What do you want? So if you're sitting here and you're writing your goals and you're writing your Q4 goals, you're writing your New Year's goals, whatever it is, and you're like, I just want to get out of debt. I want you to cross it out and I want you to write what you want instead. I want an extra $500 a month to go towards what? That's what I want you to think about. What do you want instead of what you were trying to get away from? And that will be a guiding light for you. So help you move towards debt and help you get out of it. So those are my five things, plus a little bonus for you. Because I couldn't just not talk about the actual mindset and how impactful this is to really shaping the new money identity that you have and the new money reality that you have of being debt free, building wealth and having a bit of peace amongst you. If you were someone who was listening to this and you were like, I need more of this. I'm so ready to take my debt payoff plan seriously. I am so excited to announce that I am not only running a free webinar. Again, I don't know when you're going to be listening to this. If you are listening to this the week that it comes out, you have plenty of time to sign up for it. If not, and you want a replay of it, DM me. And I would be happy to send you a replay of the webinar. The webinar is going to be called your debt free formula, your road to zero. This is going to be breaking down more than just spend less, more than just budget better. Really what it takes to get out of debt and to build your road to zero. And I'm going to be launching my Very first group coaching program. All around this mentality, I just have to mention, getting out of debt again was such a lonely journey for me. And when I think about why I got started as a personal finance coach, it was to help women feel less lonely on that journey. I have had this idea of bringing a group coaching program around debt into the world for a while now and initial feedback got to me of like, oh, nobody's going to want to share that. Nobody is going to want to be in a group container. You know what's so cool is the more and more women that I have talked to have just completely invalidated that. And when I think about where I was at and what I would have loved, I would have loved absolutely nothing more than to have women around me that felt the same weight that I felt to make that journey a little bit lighter and have people to celebrate those wins with and to know like we are all fighting the good fight. We might be starting from very different types of debt, different loan amounts, different entry, whatever it is, but you feel called to be serious about this and be more aggressive and to enter your debt free era and to make it less lonely again. We are so much more likely to accomplish goals when we share them with people. We are so much more likely to accomplish goals when we have accountability and we have structure around that and when we can build this into a really bite sized, digestible approach. Because again, it can feel so overwhelming. And so I have put together everything that you need to know and cut out everything you don't need to know about this journey that you're in. And I've made an incredibly fun educational community building effective momentum, building all of the positive things around this program and I just know it's going to positively impact so many people. I just think about me in that journey and again, if I could have just had something like this. And so if you were feeling the weight of debt, if you were feeling the loneliness of getting out of it, I just want to help flip the script here. I want to be able to provide a space and a place for you to feel safe life as you talk about this, maybe for the very first time, maybe it's the first time that you've really had a place to vocalize where you're at in your debt payoff journey and that you want to get out of it. And I just want to build a little bit of normalcy around this topic and give you the tools and the resources and the mindset shifts to become the version of yourself that pays off the debt. And has the most fun possible while doing it surrounded by people that believe in you and want to see you in and so if any of this is resonating with you, please shoot me a DM on Instagram and I would love to point you in the direction of resources. Again, whenever you're listening to this, whether it is the webinar, whether it is the group coaching program, or whether you just need somebody to yap with about debt, I see you. You will get through this chapter. It is not your entire story. And until next time, I will see you on the next episode.