10 Reasons Why Being In Debt Sucks

After being in debt for some time you find yourself struggling to remember what it feels like to not owe anyone. Unless you have been deep in debt, it is hard to describe the feeling to others. At times it feels like a tractor is parked on your chest, and other times it feels like two tractors are parked on your chest.

The best way I can sum it up is to say that being in debt sucks. Sorry, I know that’s a bit crude, but when it comes to debt all rules of verbal civility must be tossed. Without further apologies, here’s my list of reasons why being in debt sucks.

1. Debt limits your opportunities. How would you like to pick up and move across the country, or maybe just closer to relatives, or to the beach, or to the mountains?  Perhaps you would like to make a career change, go back to school, or take that international assignment for a couple years. Forget about it. You are in debt.

2. Debt forces you to put up with more crap. Debt forces us to put up with bad jobs, poor living conditions, broken down cars, and cubicle creeps with headsets, also know as debt collectors.

3. Debt is the first thing you think about each morning. Seriously, you know you are in trouble  when you hit the alarm clock at 5:30 in the morning and think, “Hey, that’s the same amount as my car payment – $530. And I have no idea how I’m going to pay it this month!”

4. Debt is the last thing you think about each night. Money problems is a leading cause of insomnia. Instead of drifting off to sleep counting sheep you lie there counting the months until you will be debt free.  You obsess over it.  You worry over it. And the reality that you can do little to get rid of it right away leaves a feeling of helplessness that is truly depressing.

5. Debt eats away at future earnings. For every dollar you pay in interest on debt it is a dollar that could have been spent on something else, and a dollar taken away from your earnings.  It’s like a little debt monster snatching $100 from each paycheck and depositing it in their bank, laughing all the way!

6. Debt makes you desperate. There is a reason people applying for positions with financial authority are scrutinized more carefully. Of those who commit financial crimes, it is not unusual to find out they were deep in debt. It has a way of challenging your morals for the promise of freedom.

7. Debt affects your entire family. Kids may not fully understand the financial ramifications of debt, but they recognize Mom and Dad sure fight about that “d” word a lot.  They don’t know what debt is, but from listening to you they think they’ll always be in it, and being in it must be bad.

8. Debt is a lousy employer. When you are in debt, and over half of your income is going towards repaying that debt, you might as well consider yourself working for the debt. And debt is a lousy employer!

9. Debt plays by its own set of rules. Don’t believe me? Try carrying a large balance on a credit card. One month your statement reflects an APR of 6%, the next 29%. What did you do to deserve it? You just appeared risky to their scoring model.

10. Debt makes even the sweetest life events taste sour. Getting married, buying a house, and having a baby should all represent some of the highlights of your life. But if you are deep in debt, these event only provide temporary relief. Until the bills arrive, that is.

If you find yourself deep in debt, you’ve probably experienced some or all of these feelings.  I hope you are working to get out of debt. If you are not in debt, or have never been in debt, consider this ten reasons to never go into debt. Trust me; it sucks.


  1. Thanks for all your great posts and musing, and what a great list! As someone who has avoided debt like the plague (must be the child-of-depression era-parents gene I inherited)I feel compelled to comment on your first point that debt limits opportunities. Yes. But most people I know, my family included, are MORE limited by the LACK OF HEALTH CARE in the United States. We are tied to our jobs, away from family, in a place we would rather not live because our health care is tied to our job. Hmmm. Just think of all the amazing and creative things so many people would be free to do if they could live anywhere/do anything and not have to worry about health care for their children or themselves. It sucks to be in debt. But it sucks even more to live and then die in debt because you couldn’t afford the treatment you (or someone you love) needed.

  2. Wow, dude. I’m declaring you king of the lists. Everytime I see Frugal Dad followed by a number of any sort, I know it’s going to end up in my Best of the Week folder.

    This one in particular hit really close to home as I’m always trying to explain to people why I’m so passionate about debt reduction. I’m so passionate, because of all these reasons it sucks so hard.

  3. Great points! Debt really is a heavy weight that you carry around, and once you’ve gotten rid of it, it’s like you’re free and light as air! 🙂 If you’ve got debt, do your best to pay it off ASAP, you’ll be glad you did!

  4. This is why I help people get out of debt for a living!

  5. I had an argument with my husband yesterday about cilantro at the nursery. If we were still in (huge amounts of) debt … we would have never been there to have that argument and then make up and buy some awesome fruit trees. We would have been at home wishing we could afford trees and secretly blaming each other for our lack of money.

    It’s NICE to argue about something different!

  6. It is the missed opportunities that is the biggest reason that I hate debt.

    When I have to pass on vacation now because of those jeans you had to have in college. And when I have to pass up on a great real estate deal because you are trying to get out of debt that I feel the most hamstrung by debt.

  7. I was just searching around about this when I came upon your blog post. I’m only stopping by to say that I really liked seeing this post, it’s really clear and well written. Are you going to write more on this? It appears like there is more material here for later posts.

  8. What a great blog – thanx Frugal Dad.
    I know it’s all true as I am finally getting out of a decade of debt. By August 2009 I will be debt free for the first time in what seems like forever. I can’t wait!!
    What I have learnt over the last couple of years.
    If you don’t have a credit card DON’T GET ONE – YOU DON’T NEED IT!
    And if you have an overdraft – get rid of it!
    Debt is a prison.

  9. I totally agree with you, DEBT SUCKS! I know how I felt when I was drowning in credit card debt and car loan debt. It got to where it was hard for me to sleep at night because I was always wondering how I was going to get my debt paid off.

    When I paid off my car loan and credit card debt, it became easier to sleep at night and the weight was lifted off of my shoulders.

  10. You are right, debt is awful. Money is always on your mind when you are in debt and it is hard to focus on the positives. This is why I LOVE YOUR BLOG. You always have wonderful ideas and suggestions to make life easier and happier while spending less and reducing debt. Thanks for all the advice!

  11. It really is crazy how many of us got in debt and now helping each other by sharing our great stories and suggestions on how to get out. My husband and I were going through a rough marriage, all because of financial issues. I couldn’t believe how far apart we had started to become and how many hours we were working. We had a talk and decided that as hard as it would be financially, we would have to cut our job hours to spend more time together in order to save our marriage, and just pay our debt off slowly. We then decided that if we just took a risk with cutting job hours to spend more time together, then maybe we should take a risk in getting help with our debt. We’ve been using a debt settlement program called “Easy Debt Relief” that my cousin referred us to and at first I was skeptic but I’m glad we took this risk. They’ve already settled two accounts for us and saved us money. I figured the quicker we get our debt settled and save money, the more hours we will eventually have together. Thing have gotten so much better again with us and with our debt using the program, Anyways, I know other peoples debt stories have helped me gain knowledge in many different ways so I hoped mine has helped someone too. Oh yeah and if anyone wanted the info for the debt program we’re using, I would definitely recommend you to visit their website: http://easydebtrelief.org/

    Take care,

  12. 1. Pay more than the minimum
    First, break the habit of paying only the minimum required each month. Paying the minimum — usually 2% to 3% of the outstanding balance — only prolongs the agony. Besides, it’s precisely what the banks want you to do. The longer you take to repay the charges, the more interest they make, and the less cash you have in your pocket. Don’t play their selfish game.

    Instead, bite the bullet and pay as much as you can each month. If your minimum payment is $100, double that to $200 or more. Examine your normal expenses — you can find the money. (For a gazillion ideas, check out our Living Below Your Means discussion board.) Skip eating out at lunch, and bring it from home instead. Eliminate desserts. Give up happy hour. We all have “luxuries,” and you know what yours are.

    Make a few sacrifices, and you will find the extra dollars needed to increase your debt repayments dramatically. Those increased payments will save you hundreds, if not thousands, in interest payments. Plus, you will get out of the hole you’ve dug for yourself much more quickly. Is it fun? No. But it sure beats living a hand-to-mouth existence, fearing bills each month.

    2. Snowball your debt payments
    Take a long, hard look at all your credit cards. Pay particular attention to the one with the lowest interest rate. Have you reached the maximum limit on that card? If not, consider transferring a higher-interest bill to that one. Many credit cards permit this, and it’s positively Foolish to trade an 18% debt for one at 12%.

    If your entire balance is too large to fit on one low-interest card, pay at least the minimum amounts due on all of your cards except one. Funnel the majority of your debt repayments into that one credit card, and pay it off as quickly as possible. When the balance on that card reaches zero, move on to the next with the same aggressive repayment plan.

    Lather, rinse, and repeat. This method of repayment is aptly called “snowballing.” As your debts decrease, the amount of money you have to attack them increases. Your payments snowball until all of your debt is pummeled. Pretty neat, eh?

    Another way to transfer higher-interest debt to a lower-interest card is to take advantage of the promotional offers many banks use to entice you to their line of credit. You’ve seen the come-ons. “Transfer all your credit card balances to us, and pay just 5.9% until next January.” It could be worth it. Moving to 5.9% from 18% interest could mean substantial dollars to you. And the money saved in interest could then be applied toward the principal each month, thus reducing your outstanding debt balance even further.

    Take care, though, before you act. Examine the offer closely. Look for the hooks. Will the interest rate after the introductory period be higher than you’re paying now? If so, you may have to switch again at that time. That, in turn, could give rise to another surprise. Banks have caught onto the charge card hoppers who switch from card to card to take advantage of the low introductory rates. Many of these offers now stipulate that if you transfer balances from the new card within a 12-month period, the normal interest rate will be applied to all outstanding balances retroactively. That proviso could be a bitter pill to swallow for someone short on cash, and it certainly doesn’t help the debt repayment schedule. Read the fine print, Fool.

    3. Cash out your savings account
    You could cash out your savings and investments and use the proceeds toward debt repayment. Yeah, no one wants to do that. But sometimes it’s just Foolish to do so. Even when debt interest is at 12%, your investments would have to pay more than 18% before federal and state taxes to equal that outflow of dollars. We doubt the dollars in your savings account are earning anywhere near that rate of interest. Pay off the debt, and it’s the same as getting that 18% return without any risk on your part. The higher the interest rate on your debt, the more attractive repayment versus investment becomes.

    4. Borrow against your life insurance
    Do you have life insurance with a cash value? If so, borrow against the policy. Yes, you’re borrowing your own money. But the interest rate is typically well below commercial rates, and you can take your time repaying the loan. Do repay it, though. If you die before it’s repaid, the outstanding balance plus interest will be deducted from the face value of the policy payable to the beneficiary. While that seems a small price to pay to get out of debt now, it could be burdensome to your loved ones should you sleep the eternal sleep before paying it back.

    5. Finagle family and friends
    Perhaps your family or friends could float you a loan. Who else knows, trusts, and loves you like they do? Unless you’re really the black sheep of the flock, chances are you’ll get a very favorable interest rate. They may even tolerate a late payment or two. But if you want to maintain the relationship, it’s best to keep things on the straight and narrow by using a written agreement. You should clearly establish the interest and repayment schedule in writing to avoid misunderstandings and hard feelings. And it goes without saying that you must be scrupulous about adhering to that schedule. Otherwise, you can forget the family reunions and birthday presents.

    6. Get a home equity loan
    Do you own your own home and have equity that’s accumulated through the years as you’ve paid off the mortgage? If so, now’s the time to consider a home equity loan (HEL) line of credit for the maximum amount possible.

    A HEL gives you two ways to save. First, by using the loan proceeds to pay down your debt, you trade something like an 18% loan for a 6%-7% loan. Second, if you itemize deductions on your income tax returns, HEL interest is a deductible item under most circumstances. In a 25% marginal tax bracket, the 6% loan really has an effective rate of 4.5%, and that’s probably the cheapest interest rate you’ll see on personal indebtedness.

    The danger here is falling into a common trap. Many get an HEL, pay off existing debt, and then ring up the charges on the credit cards all over again. Now they have the HEL to repay on top of the credit cards. The hole just got much deeper. Fools use the HEL to pay off the credit cards, and then keep them paid off until the HEL is repaid.

    7. Borrow from your 401(k)
    Do you participate in a 401(k) qualified retirement plan at work? Most 401(k) plans have a feature that lets you borrow up to 50% of the account’s value, or $50,000, whichever is smaller. Interest rates are usually a point or two above prime, which makes them cheaper than that found on credit cards. Thus, 401(k) plan loans may be a Foolish option to debt repayment. Not only is the interest typically much lower than that on credit cards, the best part is you pay it to yourself. That’s right, every dime in interest paid on a 401(k) loan goes directly into the borrower’s 401(k) account, not the lender’s.

    But there are drawbacks. First, the loan and interest will be repaid with after-tax dollars, but the interest will be taxed again when you withdraw money from the 401(k) years later. Additionally, you must repay this loan within five years. If you leave your employment prior to full repayment, the outstanding balance becomes due and payable immediately. If it’s not repaid, that amount will be treated as a distribution to you. You’ll be taxed on that amount at ordinary rates. And if you’re under the age of 59 and one-half years, you will also be assessed an additional 10% excise tax as a penalty for an early withdrawal of retirement funds. Accordingly, ensure any 401(k) loan can be repaid before you leave your job.

    8. Renegotiate terms with your creditors
    OK, you’ve done all you can. Savings are gone; relatives have been tapped out; you don’t have a home or 401(k) to borrow against. You feel like you’re against that proverbial wall. The money just isn’t there. Is bankruptcy the only way out? No way. Try pulling an ace out of your sleeve prior to taking that step. What ace? The threat of bankruptcy, of course.

    Let your creditors know your situation. Tell them that if you are unable to renegotiate terms, you’ll have no other recourse but to declare bankruptcy. Ask for a new and lower repayment schedule; request a lower interest rate; and appeal to their desire to receive payment. Faced with the prospect that you may resort to such a drastic step, creditors will do what they can to protect themselves against a total loss.

    Indeed, many will negotiate away the farm before they’ll write off your debt. As lawyers love to say, everything is negotiable. Therefore, what do you have to lose, except time? It’s worth a try. And if you don’t wish to do this yourself, organizations exist that can do it for you.

    9. As a last resort, file bankruptcy
    What if you decide you can’t pay down your debt using any of the methods listed above? What should you do? The absolute last resort is bankruptcy. Within Fooldom, we firmly believe everyone has a moral obligation to repay their debts to the utmost of their ability. There are times, though, when repayment may be impossible. In those cases, bankruptcy may be the only available course of action. Nevertheless, be aware of the significant drawbacks.

    Your credit record will contain this information for 10 years, thus ensuring you will have a tough time obtaining credit you can afford during that period. Additionally, as odd as it seems, it costs money to file for bankruptcy. Attorney and court filing fees cost in the hundreds of dollars, and they must be paid to obtain the relief sought. Finally, bankruptcy laws have gotten a lot tougher in recent years, so you may not qualify for complete relief.

    There are two types of personal bankruptcy relief: Chapter 7 and Chapter 13. Chapter 7 is straight bankruptcy that allows the discharge of almost all debts. Those that aren’t discharged are alimony, child support, taxes, loans obtained through filing false financial statements, loans not listed in the bankruptcy petition, legal judgments against the petitioner, and student loans.

    While Chapter 7 relieves you of the responsibility of repaying most creditors, you may have to surrender much of your property to help satisfy the debt. However, different states have different laws that grant you exemptions on certain types of property, such as a certain amount of equity in your home, a low-value vehicle, small amounts of jewelry and other personal property, and tools you use in your trade or business. These exemptions usually aren’t huge, but they do mean you won’t have to start over with absolutely nothing.

    Chapter 13, sometimes called the “wage-earner plan,” is different. You keep your property but surrender control of your finances to the bankruptcy court. The court approves a repayment plan based on your financial resources that provides for repayment of all or part of your debt over a three-to-five-year period. During that time, your creditors are not allowed to harass you for repayment. You also incur no interest charges on the indebtedness during the repayment period. When all conditions of the court-approved plan have been fulfilled, you emerge debt-free from the bankruptcy.


  13. Great list. I was in debt up until a few years ago. I dated someone in debt and it was not a paradise. She lived each of your top ten. Because of that, our relationship never had a chance. I could see who she really is inside, but that side would only show itself now and then. That side kept me with her until she was just too messed up over it. If you have small debt…say around 30K (seems like a lot but not like 100K like others owe or 200K like my ex) then do everything to pay it off. This is my main point! Pay it off and don’t make excuses! Be tight with your money! You don’t need to go to India or Guatamala, or buy a big screen TV or NEW computer…you need to pay off your debt so that you can be free! If you feel that you need to spend money or travel for “enriching” experiences and see other cultures to feel good, or have the latest computer or GPS navigation system because you never learned how to read a map, then maybe the money would be better spent on a life coach or good therapist!