Change Your Debt Mindset and Finally Pay off Your Debt (2024)

A bad debt mindset will keep you stuck in debt. Pay off debt faster by shifting to a positive mindset with these actionable steps.

This article is part of the Student Loan Debt Movement, which is encouraging and inspiring people to take action on their student loans.

I didn’t start out hating my student loan debt. I simply thought ‘oh, I’ve got debt. I’ll pay the payments. It’s a lot of money…but that’s okay.’

Yes, I started out a little naïve as a newly graduated 22 year old with $125,181 in student loan debt. A debt that was more than twice my annual salary.

The anger and the fear didn’t start until a couple of years after I had been paying off my student loan debt. Despite month after month of $1200 minimum payments, I was still six figures in debt. I hadn’t made a dent. There was no light at the end of the tunnel. Heck, I wasn’t even sure I was in a tunnel. Was I in a black hole of student loan debt with no chance of escaping?

A bad debt mindset will keep you in debt

My negative mindset towards debt lingered around for years. There was the anger. The slight tinge of jealousy (or was it amazement?) to those who never had debt payments. The fear. The frustration. The feeling of hopelessness.

This mindset didn’t help me pay off my debt. It had the opposite effect – it made me feel bad about my debt, bad about myself, bad about a lot of things.

My poor mindset kept me in the same financial situation for far too long. I was stuck in a hamster wheel. I was putting a lot of mental energy into thinking about my debt. Stressing about my debt. Spending time calculating and recalculating my debt payoff schedule hoping to trick my balance into disappearing. And of course I was still putting a lot of money toward my debt. But I was just churning the wheel, stuck in a cage, going nowhere, accomplishing nothing.

Shifting from a bad debt mindset to a good debt mindset

I can’t remember the exact reason, time, or place I shifted my debt mindset. I wish I could remember the catalyst that prompted me to shift my bad debt mindset to a good debt mindset. Was it the realization that my debt situation could be even worse? Was it the thought of getting married and not wanting to be a financial burden on my future spouse? Or maybe I just needed to prove to myself and everyone else that student loan debt is not a death sentence? Whatever it was, I’m thankful.

A good mindset will do wonders for your debt balance

The day I shifted to a positive debt mindset was the day my life changed.

It was the day I said “I can” instead of “poor me”.

Remember that anger that I mentioned earlier? Well that anger turned into eagerness to pay off my debt.

The fear turned into confidence.

The frustration turned into action.

The hopelessness turned into hopeFULness.

With this newfound positive mindset, I started to take control of my finances. I started to believe it was possible to get out of debt. I made a debt plan. I educated myself and decided to use the Debt Snowball Method to ditch my debt one loan at a time. I made little changes (saving money at the grocery store) and big changes (moving in with a friend to save money on rent). I finally started down the path to debt-freedom.

What does a good debt mindset look like?

So you are probably wondering what it means to have a good debt mindset. Well, it looks and sounds something like this:

• I can pay off my debt. I will pay off my debt.
• I’m grateful for this challenge of paying off my debt. It’s the perfect opportunity to show how strong, smart, and persistent I am.
• I will learn more about money management and develop new skills to help pay off my debt faster. I will put in effort every day.
• I will learn from others who were in similar financial situations.
• My past money mistakes will make me stronger because I have learned from them.

What does a bad debt mindset look like and why is it ‘bad’?

This is what a bad debt mindset looks and sounds like:

• I’m the victim. Debt happened to me.
• I’m not responsible for this debt. I was tricked.
• I messed up my finances to the point of no return. I’ll never be debt-free so there is no point in trying.
• He/she was able to get out of debt because [insert the multitude of excuses here]. That’s not my situation, so I’ll be stuck in debt forever.
• It’s too hard. I have too many things to juggle, and I just can’t deal with my money problems.

So what’s wrong with a bad debt mindset? It keeps you in debt. It keeps you down in the dumps about your financial situation, unwilling to make a change. How can you possibly get out of debt if you don’t make any changes? If you are choosing to have a bad mindset about your past and present finances, you are not giving your future finances (and life, and happiness, and freedom) a fighting chance.

Action steps for a good mindset

So how do you ditch the bad debt mindset? Here are some actionable steps you can take to have a good debt mindset and pay off your debt fast:

1. Acknowledge that you have had a bad mindset about your debt. Decide to ditch the victim mentality (that never helped anyone) and take responsibility for your debt situation.
2. Decide that you are going to get rid of your debt. Say it out loud, write it on a piece of paper, tell a friend, just do something other than think it. This one simple action will put you in the driver’s seat of your financial future. Having control is very important in achieving a positive debt mindset.
3. Make a debt plan. Yep, you heard right – you need to create a written plan to get out of debt. In the same way that a business plan is helpful in starting a successful business, a debt plan is helpful in starting a successful debt payoff journey. Find out how here: How to Pay off Debt Fast by Treating it Like a Business
4. Track your debt balances so that you can see that you are making progress. When someone is in a bad debt mindset, it is hard see that their efforts made any difference. Incorporating a tracking system into your financial ritual will help you see that small changes can make big differences. You won’t feel stuck and soon the momentum will take over. If you enter your email address in the box below, you will receive three debt snowball worksheets over three days; the 2nd day you will get a tracker that will kick-start this new journey. These worksheets are helping over 23,000 people get out of debt!
5. Start learning from books, podcasts, blogs, friends, families; take every opportunity to learn. Today, download one money podcast and subscribe to one financial blog. Learn from your past mistakes and write down ways you can avoid making them again.
6. Get excited about the challenge of paying off your debt. Think about how much stronger (and richer) you are going to be next month, next year, in 5 years. Think about how much happier you are going to be every day of the debt-free journey you are about to embark on. Think of how much happier you (and your bank account) are going to be when you are finally debt-free.

Thinking differently about debt

Debt doesn’t have to be the worst thing that ever happened to you. Debt doesn’t have to define you or permanently set you back in life. Debt is just a part of your story. And it doesn’t even have to be a bad part of your story. It can be a story of gaining confidence. A story of overcoming a challenge. A story of becoming a more understanding and empathetic person. It can be a part of your life story, but not your entire life story.

You may feel suffocated by your debt. Trapped, helpless, defeated. You may feel all of these things at the moment you are reading this article, but I want to implore that you change your mindset. It might not happen today. It might not happen tomorrow. But if you work over the next few days or weeks to change your mindset, your debt story will start changing in front of you. Don’t stay stuck. Don’t stay in debt.

What is your current debt mindset? Does it need to change? Let me know in the comments!