Debt: The Honest Conversation Nobody Wants to Have

Debt: The Honest Conversation That Nobody Wants to Have

There is a specific discomfort that comes with debt. It’s not just the financial weight of it, but the way it feels like something you’re supposed to have figured out by now. You look around and it seems like everyone else has it handled or like it’s something you should probably talk about less.

I have been in debt. I am working through some of it now. The thing that took me the longest to understand wasn’t how to pay it off. It was understanding that there is no single right way to handle debt.  The strategy that works for someone else might be exactly wrong for your situation, your psychology, and what you’re actually trying to build.

This post is the honest conversation about debt that most personal finance content doesn’t have. Not because the information isn’t out there, but because it usually gets flattened into one philosophy presented as the only philosophy. That’s not useful to you.

Why Debt Feels Different from Other Financial Problems

Money problems can usually be solved with more information or more income. Debt is different because it compounds against you. The longer you carry it at a high interest rate, the more expensive it becomes. And unlike a savings gap or an income problem, debt has a way of affecting your decision-making even when you’re not thinking about it directly.

Research in behavioral economics has shown that financial stress from debt reduces what’s sometimes called cognitive bandwidth — the mental space available for clear decision-making. When part of your mind is always running a background calculation about what you owe, you make worse decisions across the board. Not because you’re bad at managing money, but because the stress itself impairs your thinking.

That’s worth naming upfront because it reframes what getting out of debt actually does for you. It’s not just about the interest rate math. It’s about recovering mental clarity that debt quietly takes from you over time.

Morgan Housel’s The Psychology of Money is worth reading for this reason alone.  It explains why behavior matters more than knowledge when it comes to financial decisions.

The Case for Eliminating Debt First

The most widely known debt payoff philosophy is the one Dave Ramsey built his entire brand around. Get out of debt as fast as possible. Cut expenses aggressively. Work extra hours if you have to. Pay minimum payments on everything except your smallest balance, throw everything extra at that one until it’s gone, regardless of interest rate, and then roll that payment into the next one, and then the next, and the next and so on. He calls it the debt snowball. 

Other gurus suggest the debt avalanche instead. Same principle as the debt snowball, but instead of starting with the lowest balance, you start with with the highest interest rate.  With all else being equal, the math consistently favors this method over the snowball method and you’d typically save on interest over time since you’ll get rid of the highest interest debt sooner and only the lower interest debt for a longer period.

The reason Ramsey teaches the snowball instead is behavioral. Paying off a small balance completely and eliminating that minimum payment from your budget creates a psychological win that keeps people motivated. Research into debt payoff behavior has found that many people abandon the avalanche method because the progress feels too slow, while the snowball keeps them moving. For a lot of people, the strategy they’ll actually finish matters more than the strategy that’s theoretically optimal.

I have a lot of respect for what Ramsey’s framework does for people who are deeply in consumer debt with no clear plan. The structure and accountability helps people with no clear plan. The urgency also helps. This isn’t the framework that I personally follow, but again, what works for me might not work for someone starting from a place of significant consumer debt with no financial cushion, for example. It has proven to work for many people and I would certainly recommend taking a look at it if you’re looking for that kind of structured setup.

If you want the full framework, The Total Money Makeover by Dave Ramsey lays it out in detail.

The Case for Strategic Debt

The counterargument to eliminating all debt as fast as possible is the one that investors and real estate operators tend to make. Not all debt is created equal. A mortgage on a property that appreciates in value and generates rental income is a fundamentally different thing from carrying a credit card balance with those sky-high interest rates.  Mortgages typically have some of the lowest interest rates while credit cards have some of the highest, so of course it makes quite a big difference.

The strategic leverage philosophy, which is closer to how Robert Kiyosaki frames it, is that debt used to acquire income-generating assets can actually accelerate wealth building rather than slow it down. You borrow to buy something that pays you back more than the cost of the debt. The spread between what the asset earns and what the debt costs is your profit.

This is a legitimate framework that works well for people who have stabilized their finances, understand the risks involved, and are disciplined enough to manage leveraged positions without getting overextended. It is not a beginner framework, and treating it as one is how people end up in serious financial trouble.

My own investing background is primarily in stock and options trading, specifically the option wheel strategy and vertical spreads. I approach debt the way I approach options positions. Some leverage makes sense when the risk is understood and the potential return justifies it. But I’m not carrying consumer debt at 20% interest while making strategic investments. That math doesn’t work for anyone.

How to Figure Out Which Approach Is Right for You

The honest answer is that your debt strategy should depend on the answers to a handful of questions. What exactly are your goals?  What are you trying to build?   What kind of debt do you have? What does your psychology tell you about your motivation and follow-through? Are you going to be disciplined enough to make sure that the debt will be paid on time? Will going into debt help you bring in enough cash flow to cover the payments? These answers to these questions will really help to narrow down which strategies you’ll be able to use.

High interest consumer debt — credit cards, personal loans above 10% — should almost always be treated as an emergency regardless of your broader philosophy. The guaranteed return from eliminating a 20% debt beats almost any investment available to you. If this is where you are, the Ramsey framework or the avalanche method both work. Pick the one you’ll actually finish.

Low interest debt — a mortgage, a student loan below 5%, a car payment at 3% — is worth thinking about more strategically. If you can earn a better return elsewhere with the money you’d use to pay it off early, keeping the debt and investing the difference can make financial sense. This requires discipline and a clear-eyed look at what you’re actually earning on your investments versus what the debt is costing you.

Student loans live somewhere in the middle depending on your rate. Federal loans with rates around 4-7% fall into the strategic zone for most people. Private loans at higher rates should be treated more urgently.

The Thing Debt Advice Usually Misses

Most debt content focuses on the mechanics — which balance to pay first, how to negotiate interest rates, how to find extra money in your budget. Those are all useful things to know. What gets less attention is the emotional component.

Debt carries shame for a lot of people in a way that other financial problems don’t. There’s a narrative that being in debt means you made bad choices, that you should have known better, that responsible people don’t end up here. That narrative is worth examining critically. Some debt comes from poor decisions. A lot of it comes from medical emergencies, job losses, periods of low income during formative years, and an economic environment that makes it very easy to take on debt and very hard to pay it off quickly.

Understanding how you got into debt honestly, without either excusing avoidable decisions or catastrophizing normal ones, matters because it affects what you do next. Someone who went into debt because of a layoff needs a different response than someone who went into debt because of spending patterns they haven’t examined. Both deserve a path forward without the weight of shame making every financial decision harder than it needs to be.

Where I Am With This

I am not debt free. Coming out of two periods of unemployment, I have balances I’m working through, but the debt that I do have is not just debt for the sake of debt.  Of course, I have my mortgages, but at relatively low rates, and although I do have a sizeable credit card balance, it was from special deal that was offering 0% interest and that money is being invested so the major debt is actually helping me to grow my wealth.  I have smaller balances on my every day use cards, but those are also getting paid off regularly.  I still have my emergency fund.  That’s pretty solid. The retirement accounts are intact. I have a couple of part-time jobs to pay my bills.  I’m managing, even without a full-time income.

I’m using a modified version of the avalanche method. I’m targeting the highest interest rate balances first while maintaining my investing activity. This is a personal choice based on my specific situation, my psychology, and my belief that building income streams now is worth the opportunity cost of a slightly longer debt payoff timeline. If you’re able to use debt wisely, it can be a tool rather than a burden. It might not be the right choice for everyone. I think it’s the right choice for me and where I am. 

I’ll share more specifics as this develops. That’s the deal on The Richer Road. I show you the real process, not the polished version.

Next week we’re talking about something that’s been a practical part of building The Richer Road from day one: how to actually use AI tools to generate income, not as a concept but as a specific workflow that real people are running right now.

See you on The Richer Road.