Paying off debt fast doesn’t always equal financial freedom. In fact, it might be the reason you’re stuck in the debt-shame-burnout cycle.
In this episode, I break down the real cost of debt binging and why throwing every dollar at your balance might leave you worse off emotionally and financially. I share how to build a debt balance—not just pay off a balance. I talk about sustainability, budgeting systems, and why the real transformation isn’t in the numbers, but in how you feel and act around money.
If you’ve ever paid off a credit card only to find yourself swiping again weeks later, this episode is for you. If you’ve ever used a bonus or lump sum to get ahead, but still felt behind, this episode is especially for you.
The real win isn’t getting out of debt. It’s staying out of debt for good.
Listen to learn how to break free from debt shame and burnout…
- [00:10] Why you shouldn’t rush to pay off debt
- [02:26] Getting stuck in the debt binge cycle
- [06:27] You debt isn’t the problem; the problem is your system
- [11:07] Debt balance vs. debt burnout: debt is information, not shame
Tune into this episode of Money Files to hear how rushing to pay off debt might do more harm than good – and what you should do instead.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
If you loved hearing about the debt binge cycle, check out my episode with my client Amanda, Then & Now – How Is My First Coaching Client Managing Her Finances?
Transcript for “Debt Binge vs. Debt Balance: What No One Tells You About Paying Off Debt”
Intro: Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work everyday with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Keina: Hello and welcome back to another episode of Money Files. So today I want to talk to you about something that might actually go against what you’ve heard about paying off debt. And I want to talk to you about why rushing to pay off your debt might actually be doing more harm than good. So I’m going to say that again, rushing to pay off your debt might do more harm than good. If you gave me the choice between paying off a chunk of debt, let’s say in 6 months versus 12 months, I would take the 12 month option. And not because I want to pay more interest or not because I want to ignore debt or I think you should ignore debt, but because most people are so focused on paying off debt fast that they forget to ask themselves why are you in debt to begin with?
And that’s one of the most important questions you can ask yourself, why am I actually in debt? What are the things that have gotten me here? And I understand why someone would want to pay off their debt in six months versus 12 months because we’ve been told over and over again like, you need to get out of debt fast. You shouldn’t be in debt. And so your inclination is that you want to throw every single dollar that you have towards your debt. You want to be like really restrictive. You want to make sure that every single dollar that you have is going towards your debt and you shouldn’t spend anything else. You guys all know that there are a lot of financial gurus on the internet that talk about this, but I’ve seen this story like play out time and time again. And here’s how it ends. It ends with debt burnout.
And yes, you might hit your goal, you might pay off that $8,000 or you pay off that $20,000 and you might even do it in just a few months. But what happens is you’re so exhausted, you’re so deprived, you’re so worn down that like a few weeks later you are right back into like swiping your credit card because nothing in your life actually changed except for the balance on your credit card. And so what I want to introduce you to today is what I call debt binge. What I see in clients and people in general is that they pay off their debt, like I told you with this strict mentality and they think about, let me take a big chunk from my savings. Like sometimes it’s not even restriction, it’s just from money that’s available or they are cutting out everything. They’re like not eating out, they’re not having fun, they’re not traveling and they treat paying off their debt like a punishment. And if I got into this, I need to make sure I get out of this. It’s the responsible thing to do.
But then what happens is once that debt is gone, they start binging. They binge on the things that they didn’t let themselves have. They go on trips, they start shopping, they spend without thinking, and they’ve created a system for themselves that’s only about rewarding themselves after they did the hard thing. So they’ve rewarded themselves because they paid off the debt and now what happens is they’re right back in the same spot. And this is what I call a debt binge. It’s similar to, I always talk about like financial things being related to like food because it’s similar with a diet. Like you hear about somebody who’s like, oh my goodness, I’m going to like lose 10 pounds before I go on my vacation.
And they restrict themselves, they cut out all the fun, they don’t allow themselves to eat anything that they shouldn’t be eating. And so then what happens is like they might lose that weight temporarily. They might de bloat temporarily, but then because they haven’t allowed themselves to have any of the things that they enjoy, they go and they like crash out. I’m like, you’re going to see that person feeding in the corner over like multiple chocolate bars and I don’t want you to have that life because it isn’t something that’s sustainable. Throwing money at your debt and not allowing yourself to have other things isn’t sustainable. I don’t want you to continue to be in this debt cycle of I pay off my debt, I restrict myself, and then I binge again. I pay off my debt, I restrict myself and then I binge again. It’s a cycle that you’re in.
So I just want to pause here and say this really clearly for you. You are not in debt because you’re irresponsible. You are not in debt because you don’t care. Most of the time debt is a symptom, it’s a reaction to your life happening really fast. It’s a stand in for financial safety. And so when I work with clients, we don’t just look at the numbers, we look at the why, like why are these numbers the way that they are? What is it saying about you? What has happened in your life that we need to account for? All of your numbers are data, your numbers are information that we can use to help you paint a path forward. So we look at your habits, we look at like how you’re feeling when you spend money. We want to actually understand what’s your identity around money and how has that shaped your decisions? What have your parents modeled for you? How has that informed how you think and how you feel?
Because if you don’t actually fix the root cause of what got you into debt, you are going to find yourself right back there again. And I should also say like debt isn’t bad. You might have to leverage debt. I leverage debt. I just don’t have a lot of feelings around leveraging debt. I don’t make myself a bad person because of the debt. So I just want to offer to you that what if debt itself, the emergency, what if the real emergency that you need to fix in your life is the system, that you need to build a system that allows you to feel safe to spend money, that you can have a system that allows you to feel the next raise that you have, that allows you to feel like you can trust yourself with a windfall of money or that you can just finally be able to focus in whatever space you’re in, in life because money isn’t the thing that you’re thinking about.
And so that’s what I’m hoping my clients do. We slow down to create structure, to be able to create that space and to create sustainability because I don’t just want you to work with me and only feel like you can have success by working with me. I want you to have success because of the fact that you know that you can trust yourself with money, that you can feel in control of your finances, that you know how to manage something that’s unexpected, that you can actually pay down your debt consistently, like those are the things that I want you to be able to do. So I told you earlier that I would take that 12 month debt payoff plan over the six month one every single time. And this is why, because in those 12 months, we’re not just going to fix your credit card balance, we’re going to build the muscle of saving while you pay off debt, spending intentionally while you pay off debt and planning for life while still working towards financial goals.
So that means that you get to still take the trip and pay off the debt. It means you can still eat out and pay off debt. It means you can still shop and save and show up for the future without shame. I want you to be able to show up in a store and not have shame about what you’re spending on because you have this debt monster that’s telling you you shouldn’t be there. And so it’s not about giving yourself permission to do whatever, but it’s about making room for like real life and the things that actually caused you to get into debt in the first place. It’s about making sure that we put money away for your car because that’s the thing that’s caused you to get into debt. It’s about making sure that we have some money so you can go on some weekend trips with your friends because those are the things that you put on your credit card in the past.
And so we do that by building a system that honors the fact that you have bills, honors, the fact that you want to save money and honors the fact that you want to spend money at the same time. So if you’ve listened to my podcast and I can link it in the show notes, one of my very first clients, she did a podcast episode with me. She was like, Keina, I don’t want to do the podcast episode with you until I’ve paid off all my debt. And so she came back around, she did the podcast episode with me, her name’s Amanda. And she, like I told you, was one of my very first clients. She had over five figures of debt and she was very organized, driven, career oriented. I believe she was in her late twenties when we started working together. And she just felt stuck financially.
And so when we started working together, she could have paid off her debt like really, really fast. But instead we chose to build a sustainable plan for her. I think it took her maybe two years that we like mapped out for her to be able to pay off this five figures worth of debt. She also did some traveling. She showed up, in the time of her life, she had weddings she wanted to go to and she wanted to be present. So it took her two years. We used and leveraged some balance transfers. So she actually wasn’t incurring a whole bunch of interest on her debt. We were leveraging balance transfers because we had actually built a system where she knew how to manage her money. We were able to be really consistent with what she was putting towards her debt every single month and being able to see it go down from, five figure debt to four figure debt.
But here’s what’s important with the timeline that we built for her, she didn’t sacrifice her entire lifestyle to do it. She started saving, like I told you, while paying down her debt, she built new spending habits and years later, like she’s not back in debt. And that’s the power of what I’ll call debt balance. So there’s debt burnout and then there’s debt balance. And so debt burnout, which I named a little bit earlier in this podcast, is where you throw all of your energy and money at the debt and then you’re going to feel deprived, you’re going to feel burnt out and you’re going to bounce back into the same pattern. And then there’s debt balance where you pay off your debt with structure and intention. You include spending and saving in your plan.
You build habits that last after the debt is gone. And I know that some of you might be thinking like, oh my goodness, Keina, but what about all the interest? And I hear you, but let’s be honest, if you’re paying off $10,000 in 6 months versus 12 months, that extra interest might be a few hundred dollars. And I just want to ask you, what’s the real cost of getting right back into debt? What’s the cost of putting yourself into debt burnout, going back into this cycle of shame, what’s like the cost of another year of financial anxiety? And you can’t focus so much on the interest rate and not focus on your broken spending habits. And I don’t want you to just focus on the shame because I want you to focus on you actually developing a better relationship with money because at the end of the day, you want the debt paid off, but you also want to live a better life.
You want the debt paid off and you want to feel in control of your money. And so when I’m thinking about timelines here, I would rather it take you three extra months for you to feel good about how you’re paying off your debt. And so when I work with clients, we’re using this debt as a piece of information. This debt is teaching us what do we need to know about you? What patterns have led us to this place? What’s missing in your budget that caused this gap? What do we need in your new system so that you feel safe going forward? So we can build a plan for next year and a plan for the dollars that are going to be coming in after that, a plan for the dollars when the debt goes away because we don’t want you in and out of this debt cycle.
I actually had a consult with someone who, their parents were going to pay off their debt for them on the condition that they worked with a financial coach. And so one of the problems that can come up with that is like, okay, my debt is going to be cleared, but can I trust myself to actually do the work? Can I trust myself to accept money from my parents and not disappoint them again? And some of you maybe aren’t in that position, but it’s a bonus, where you’re going to use your whole lump sum of money and you’re hoping that you can trust yourself to stay out of debt. And it’s not even about the lump sum, but if you are doing this work where you are paying off the debt, I also want you to do the work of building a system that is going to support you ao that paying off debt is something that is sustainable. Because a lot of the reason that people are in debt is because we’re not planning ahead or we’re fighting this idea that, if we do budget, if we do manage our money well we’re going to be left restricted, we’re not going to be able to do things or you might even be in debt because like life has thrown you a curve ball.
And it’s like, I didn’t expect this curve ball and now I’m trying to get out of it. Like how do I go about doing that? So I don’t want you to just throw a lump sum of money towards it without making sure you have support. I have clients that put the cost of coaching on a credit card and that might sound crazy to you, but here’s the thing, I know that investment and they know that investment in themselves is about helping them experience a total internal shift so that even though we’re going to pay that off within the coaching container, that they know by the time they get done paying off coaching, they’re going to be a completely different person.
If you’ve heard my clients on the podcast like those aren’t lies guys. Those are people that have shifted their relationship with money and they’re comfortable enough to even talk to you and tell you like, here’s where I was when I started with Keina and yes, I made, a four figure investment and I put it on my credit card and here’s what it did for me. I have been able to always have money in my bank account. I’ve been able to make a plan to be able to pay down my debt. And that’s the result. So if you are on the fence about like, oh, I’m just not sure, I don’t know where the money would come from, you want to bet on yourself because this is going to completely change the way that you show up. And I don’t want you to be someone who is out there binging on things, but after you actually pay off your debt.
So debt is not your enemy and you’re not a failure because you have debt. The real win isn’t getting out of debt fast, it’s staying out of debt for good. Or if you even have to use debt that you feel comfortable in trusting yourself to use that debt. And you do that and get there by building a plan that honors your real life, that honors how you want to spend money. So that plan is going to allow you to save, it’s going to allow you to spend and still show up for your goals. So the next time you feel the pressure to rush when paying off your debt, I just want you to pause and ask yourself, what’s the life I want to build alongside this debt payoff? What would it look like for me to be free from this cycle and not just the balance on my credit card?
And if you want help building that kind of plan, one that’s rooted in sustainability, one that’s going to be rooted in your values and your financial goals, I would love to work with you. So you can go to my website, wealthovernow.com. You can apply to work with me there, or you can go to the show notes and we’ll build a plan that lets you save, spend and pay off debt without burning out. And you don’t have to wait for the debt to be gone to work with me. And you also don’t have to wait for the debt to be gone to feel in control. You can start that today. So thank you so much for tuning in and until next time, I can’t speak right now. I’ll talk to you later.
Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.
