One day, I was talking to someone about how I really felt burdened by my large amount of debt. They listened to me grip about student loans, trouble with my car and the plan I had (at the time) to get rid of it all. Their advice to me:
“Ignore it for now.” “Buy a house, it’ll increase your net worth.” “Increase your credit score so you won’t have to worry about being able to purchase things you need.” “Just get a piece of furniture or something to increase your score.” “Get on the minimum payment plan and deal with it later.”
Anybody who is a die hard Dave Ramsey fan would flinch at every word they said. I’m not even a “die hard” and I did. None of those pieces of advice helped me get out of debt sooner than 2039.
I responded “thanks – I’ll look into that,” and walked away. I knew they meant well but after listening to Dave Ramsey for a year I knew they couldn’t help me and had mountains of debt themselves.
As a millennial, I am constantly compelled to share with anyone who will listen to the importance of dealing with the debt you owe HEAD ON. Don’t pay the minimum and hope for the best. Don’t ignore it and hope it goes away in seven years.
1. It isn’t going away. It ain’t! (That’s the country in me)
I ignored the first few years of my student loan payments and thought they were gone because Nelnet stopped calling me. When I finally decided to check my credit report one year, they were the first thing on the docket. Even if I did want to purchase that house this person recommended, my unpaid balances would follow and take away that chance.
2. It’s gaining interest.
This reason should have been #1. While you’re ignoring your debts and racking up more with Old Navy cards, Victoria Secret cards and a car lease, the amount you owe is doubling in value. Credit card companies are a little “lenient”. They accrue interest monthly. Student loans, however, accrue DAILY. Imagine having to pay an extra $2,000 on a $1,000 loan because you “just couldn’t deal.”
3. It’s stressful.
The phone calls, the unopened mail, the tanked credit score. If you have any concern for your financial future, ignoring your debt only leads to anxiety and stress. It’s okay to answer the phone and say:
- I don’t have the money right now. Can I call you back in 60 days with a starter payment? Or
- I don’t have the money today. What payment plans do you guys have available.
Even if you can’t afford the payment plan, offer what you think you can afford.
You get it. You need to look into paying off this debt. But what are the next steps?
- Pull your credit report from all three reporting companies (Experian, TransUnion, Equifax).
- Make a list of all the debts you owe in order from smallest to largest.
- If you have any extra cash somewhere, throw it at that smallest amount.
- Then, setup payments for the next one, and the next one, until all those debts are gone.
While you’re at it, visit http://www.DaveRamsey.com to get even more clear tools on how you can become debt free. There’s no reason to let it sit around like an angry stepchild if you don’t have to.