The D-word. Shudder.
No one wants to think about debt—much less talk about it. And when it comes to actually doing something to get out of it? You certainly wouldn't be alone if you found yourself pretending to live in a unicorn-filled land where your student loan balance doesn't exist. *Raises hand*
But as hard as it is to talk about, none of us are doing ourselves any favors if we can't be honest about our debt. If you think you might be guilty of spending too much time in a fantasy world, take our quiz to see if you're ready for a little reality.
1. Do you stress about money but never make any changes?
Every month you struggle to pay the minimum on your credit card bill, and the balance keeps getting higher and higher. But you’re still plopping that card down on the counter each morning at your local coffee shop.
Worse still, you know the card number by heart, so you don’t even have to pull out your wallet when you make another online purchase.
2. Are you racking up other damaging behaviors?
Every time you think about your bank account, you suddenly have a cigarette in your hand. Or a doughnut. Or another beer. Or you’re scrolling through Pinterest for the 40th time that day.
Making yourself numb with food, substances—even the internet—is classic avoidance behavior. Unfortunately, it's also a great way to pile problems on top of problems. Doughnuts aren't free, after all.
3. Have you transferred your credit card balance more than once?
You’re on a constant hunt for another zero-percent-interest credit card to add to your arsenal.
Transferring a balance to a card with no interest rate and engaging in a methodical plan to pay that balance off can be a smart financial choice. But it's not a long-term strategy. If you’re trading credit card balances like baseball cards, you may have a problem.
4. Do you fight with your partner or friends about money?
You need two hands to count the number of arguments you and your spouse have gotten in about money in the last week. Every bill that crosses your door is cause for a serious row.
If money is a constant source of discord with your loved ones, it may be time to take a closer look at your financial health.
5. Do you ignore your bills?
You throw your bills in a pile on your counter and hope they’ll resolve themselves. When you do glance at them, it's only because you're moving them from one pile to another.
Unfortunately for all of us, bills rarely pay themselves. Sure, we've all seen an online meme about a good samaritan who pays it forward, but they're probably not going to find the student loan bill you have shoved between a Pottery Barn catalog and a reminder for your next dental cleaning.
6. Do you think your debt is “good” debt?
You're carrying a five-digit student loan balance, but you don't worry about paying off your student loans because those are educational. They're good debt.
Sure, people with college degrees get higher-paying jobs on average. And yes, student loan debt can actually boost your credit score in some cases.
But graduates with high student loan balances may have less job flexibility, more stress over money, and more difficulty adjusting to a sudden financial change. None of that seems "good."
7. Are you totally focused on making more money to handle your debts?
You keep telling yourself that the debt will be resolved if you could just get this next raise. Unfortunately, you've been saying that for the last five years—and you've gotten three raises. It's never enough. Your debt is still skyrocketing.
Of course more money could be used to pay down more debt, but if that's not how you're spending the money you make, no raise or bonus will bring you financial freedom.
How to get out of denial
So, how many of these did you answer "Yes" to? One? Two?
If you identify yourself in even one of these, do these two things right now:
1. Pat yourself on the back for taking that first step toward ending your debt denial. Identifying the problem is the first step, according to just about every expert who has ever been on a TV talk show.
2. Make a commitment to be honest with yourself about your financial situation.
That means no more hiding bills in a pile on your desk, no more transferring credit card balances while still paying with plastic, and no more talking about "good" debt. The best way to pull yourself out of denial is to take positive action toward reducing your debt. Start by finding out how much you could save by refinancing your student loans.
Getting out of debt denial might be the smartest thing you do this year.