You Don’t Have That Much Debt. Really?

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Hey, this is Jeff Rose from SoldierOfFinance.com, where I am teaching people to enlist, take charge, and succeed in their lives financially. Today I am going to be talking about a topic that we will be talking a lot about here at the blog and here on the YouTube channel. Today we are talking about Debt, and today that comes with a Capital D. Today’s title is

“‘I Don’t Have That Much Debt.’ ‘Really?’”

Notice the “Really.” That is the key part here.

This is a meeting I had a little while ago. I was meeting with a couple who was planning for retirement. They had about 5 or 10 years out to retirement, so it was good that they were coming in earlier rather than later. A lot of people don’t come in until sometimes it is too late. They still had a good 10 years left, so I was very impressed that they took the time out of their busy days to actually sit down with a financial planner, to help them map out their retirement goals.

The Meeting Begins

I started meeting with them and started asking the usual questions. Along the way the topic of debt came up, “What are your liabilities?” And, they both responded with,

“Oh, we don’t have that much debt. Our house is paid off. We don’t have that many consumer loans.”

I thought, “Wow! This is really impressive.”

Here we have a couple who is 10 years out from retirement, and their house is already paid off. That is pretty incredible folks to hear that. Especially with me being a financial planner, it is really exciting to hear that these people already had their house paid off and to also hear that there is very minimal debt. We looked at their savings, and they could probably have done a little better job on the savings side, but I am hearing “house paid off” and “not much consumer debt or credit card debt“. I was thinking, “Nice! This is great!”

The Truth Begins to Comes Out

I asked them how much debt to you have?” They responded with. “Oh, we have 2 car loans, a total of about $15,000.” I was like. “Well, ok, that is debt. Is there any other credit card debt?” “Oh yeah, we have some credit card debt.” I go into, “How much is that?” They both didn’t know. I was like, “Ok.” So that really surprised me.

We left the meeting, and I wanted them to report back with the amount of debt they had, the amount of interest that they were paying on their debt, just so they could both actually see it in person so we all knew what we were working with. It was about a week or so later that I got an email.

The email I opened just floored me. As you recall, they told me that they didn’t have that much debt. What we ended up finding out was not only did they have the $15,000 loans on the vehicles, they also had a camper that was just under $10,000, and over and above that they had over $25,000 of credit card debt – $25,000!!!

We have this couple who comes to me and makes this bold claim that they don’t have that much debt. Really?!?!

You only have $50,000 of consumer debt!

The worst part was that they had some department store cards that they were paying closer to 18% to 19%; I want to say one card was even in the 20% range. It was like they were just kidding themselves, telling themselves that they didn’t have much debt. When they actually had to do some digging and start looking, really kind of looking at themselves, they saw, “Wow maybe we have kind of let this go.”

I think it was a really good eye opener. It was for me because it once again makes me think how many people out there are disillusioned with the thought that, “Oh, we don’t have that much debt.”

Having Debt is Not the Standard

I go back to my younger days when I was in college and talking about student loans with a lot of soon to be graduates. I would always hear students saying, “Oh, I only have $15,000 in debt.” “I only have $10,000 in debt.” “I only have $30,000 in debt in student loans.” Only $10,000! Only $20,000! It is not just only. That is a lot of debt! If you can avoid it at all costs, do it. If it takes working an extra job, if it takes applying for scholarships, if it takes applying for assistantships, do whatever you can because debt will just consume you. I started down that path, and luckily I saw the light of day and was able to rectify that situation. Do not be one of those who just assumes that debt is ok and more importantly that you just assume that oh you don’t have that much debt and you don’t take the time to truly realize how much debt you really have.

So ask yourself, “You don’t have that much debt. Really?” This is Jeff Rose, SoldierOfFinance.com.

These opinions are for general information only and are not intended to provide specific advice for any individual. To determine what may be appropriate for you, consult your financial professional prior to investing.