5 reasons not to be embarrassed about your debt

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The Best and Worst Ways to Get Rid of Debt


Debt is a delicate subject. If you have $100,000 in debt, is that a good thing or a bad thing? If it's a mortgage, it might be good. If it's a mortgage on a house that's underwater, it might be bad. If it's a high interest credit card balance, it might be really bad.

Here's what it shouldn't be — embarrassing.

It's easy to be embarrassed about debt. The common belief is that people land in debt because they're bad with money or their spending is out of control. There's a sense of failure if you owe so much money.

But you shouldn't be embarrassed to the point it affects what you do. If anything, put that embarrassment in your desk drawer and use that emotion to fuel good behavior.

1. You're Not Alone

People happily share how much they spent on a car but rarely share how much they owe. It might not surprise you to learn that Pew Charitable Trusts found 80% of Americans were in debt in 2015, with the median debt load among Americans at $67,900. A lot of the debt was driven by mortgages, but Pew also found that 39% of the Americans it surveyed had unpaid credit card balances.

These statistics reveal that you have plenty of company being in debt, despite the fact that no one admits to it.

2. It's Not Entirely Your Fault

Your debt is the product of your decisions but also your environment and the things that happen to you. While I'm not advocating you give up all responsibility for your debt, don't beat yourself up about it. Our goal is to understand the source of the debt and help you pocket that emotion so you can deal with the debt constructively.

Before assuming all of the blame for your debt, carefully consider whether something like unemployment, medical expenses, or student loans were the source of your debt. Debt is debt but knowing the cause is helpful.

3. Embarrassment Won't Improve Your Debt Situation

Embarrassment is making your debt situation even worse. When we are embarrassed it's easy to hide from that feeling, to avoid thinking about it and dealing with it.

Hiding from your debt may seem impossible, but people do it all the time. You might avoid looking at statements and make the minimum payments. You could avoid talking about money with others because it reminds you about your situation. Or you continue spending as long as you still have room on your credit lines.

However it takes place, hiding debt from yourself is a surefire way to increase the amount that you owe.

Rather than hide from the debt, embrace it and know that to overcome it, you need to fight it.

4. Build a Strong Debt Payoff Plan

Once you've turned the emotional corner, learn how to use that emotion to fuel a plan that can help you pay off your debt. When Chris Peach paid off $52,055.15 in credit card debt, it was because he decided enough was enough. He saw how much he owed and realized he had to make a change in his life. His embarrassment fueled a resolve.

The cornerstone of any debt payoff plan is to have a budget. The easiest way to maintain a budget is to use a tool that can track your spending, like Personal Capital or Mint. Once you get your spending below your expenses, it's a matter of finding additional sources of income (like selling your stuff) and sticking with the plan, which is no small matter!

And as you pay off your debt, you can track how it is positively impacting your credit score. You can get two of your credit scores for free each month on Credit.com to see where you stand.

5. Your Debt is Temporary

One big takeaway from every debt payoff story is that much of it is psychological. We all know math. If you spend more than you earn, you'll go into debt.

The hard part about paying off that debt is that you need to change your habits, which is a combination of will power and adherence to a plan. Once you realize that, and put systems in place to help you remember, you're more likely to keep with it and realize that your debt situation is temporary. It doesn't define you.

By reversing the process — by beginning to pay down your debt — you create a whole new dynamic. In a real way, you are undoing the mistakes of the past, and replacing them with a solid plan for the future.

Related: 17 countries with the highest level of government debt
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17 countries with the highest level of gov debt (BI)
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5 reasons not to be embarrassed about your debt

17. Iceland – 90.2%

Prior to the credit crisis in 2007, government debt was a modest 27% of GDP. At the time of WEF's rankings, its debt was still super high.

(Photo via Getty Images)

16. Barbados – 92.0%

The tax-haven nation is the wealthiest and most developed country in the eastern Caribbean, but its growth prospects look weak due to austerity measures to combat the effects of the credit crisis eight years ago.

(Photo via Alamy)

15. France – 93.9%

The eurozone's second-biggest economy has been recovering "in fits and starts," says the country's statistical agency.

(Photo by Allan Baxter via Getty Images)

14. Spain – 93.9%

S&P is confident that Spain's buoyant growth prospects and labour-market reforms will boost its outlook.

(Photo via Getty)

13. Cape Verde – 95.0%

The island nation is a service-orientated economy and suffers from a poor natural-resource base. This means it has to import 82% of its food, leading to vulnerability to market fluctuations.

(Photo via Getty Images)

12. Belgium – 99.8%

The country is known as "the sick man of Europe," because while the government managed to reduce the budget deficit from a peak of 6% of GDP in 2009 to 3.2% — its debt is still incredibly high.

(Photo via Shutterstock)

11. Singapore – 103.8%

It's one of the wealthiest countries in the world but the island nation suffers from high debt. The government is now trying to find new ways to grow the economy and raise productivity.

(Photo via Getty Images)

10. United States – 104.5%

The US hiked interest rates for the first time in seven years in December last year. In March, Federal Reserve Chair Janet Yellen said the economy was on a path of slow and steady growth.

(Photo via Getty Images)

9. Bhutan – 110.7%

The small Asian economy is closely linked to India and depends heavily on it for financial assistance and foreign labourers for infrastructure.

(Photo via Getty Images)

8. Cyprus – 112.0%

The country's excessive exposure to Greece hit it hard when the European sovereign-debt crisis rippled across the world in 2010. Like Greece, it had to be bailed out by international creditors and enforce capital controls and austerity measures to get funding.

(Photo by Rosita So Image via Getty Images)

7. Ireland – 122.8%

The country exited its bailout programme two years ago but still faces a huge debt pile. But it's on the right track. Ireland has already had success in refinancing a large amount of banking-related debt.

(Photo via Getty Images)

6. Portugal – 128.8%

Portugal exited its own bailout programme in the middle of 2014. However, GDP was still 7.8% lower than it was at the end of 2007.

(Photo via Getty Images)

5. Italy – 132.5%

The country's proportion of debt to GDP is the second highest in the Eurozone.

(Photo via Getty Images)

4. Jamaica – 138.9%

The services industry accounts for 80% of GDP, but high crime, corruption, and large-scale unemployment drag the country's growth down. The International Monetary Fund said Jamaica has to reform its tax system, among other things.

(Photo via Getty Images)

3. Lebanon – 139.7%

The country used to be a tourist destination but war in Syria and domestic political turmoil have led to a lack of an official budget for months.

(Photo via Getty Images)

2. Greece – 173.8%

The country has taken over €320 billion worth of bailout cash and it's looking increasingly impossible to pay it all back — especially since it has had to implement painful austerity measures to get its loans. But it's surprisingly not the worse country in the world for government debt.

(Photo by Konstantin Kalishko via Getty Images)

1. Japan – 243.2%

The country is in a troubling spot. Its economy is growing very slowly and now the central bank has implemented negative interest rates.

(Photo via Getty Images)

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This article originally appeared on Credit.com.

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