Are you tired of paying off debt only to find yourself right back where you started months later? You are not alone.
In this episode, I’m answering the question so many high achievers quietly carry: Why do I keep getting back into debt, even though I know how to pay it off?
Debt numbers are simple—money in, money out—but the patterns driving your decisions are not. Most people try to fix their debt with strategies like balance transfers, avalanche vs. snowball, or throwing lump sums at their credit cards. But without understanding why debt keeps resurfacing, those strategies never stick.
This episode walks you through the four debt identities, the Safety Net User, the Status Keeper, the Points Chaser, and the Survival Debtor, and breaks down the fake math, emotional hurdles, and hidden habits that keep smart, capable people stuck in the debt cycle.
If you want your next debt payoff to be the last time you ever do it, this episode is your starting point.
In this episode you’ll learn…
[00:30] Why knowing how to pay off debt is not the real problem
[01:40] Why debt keeps resurfacing, even after you pay it off
[02:16] Why your debt payoff strategy must match your debt identity
[04:10] Debt Identity #1: The Safety Net User
[06:20] Debt Identity #2: The Status Keeper
[09:30] Debt Identity #3: The Points Chaser
[11:35] Debt Identity #4: The Survival Debtor
[13:45] Why shame keeps survival debt lingering
[15:00] What to reflect on before paying off debt again
Tune into this episode of Money Files to discover how understanding your debt identity can finally help you change your money patterns for good.
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 Identity Series, check out Episode 40: How Examining Your Mindset Around Debt Can Help You Pay It Off.
Transcript for “[Debt Identity Series] Why Debt Keeps Coming Back And What To Do About It”
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 thank you for joining me and what I am getting ready to start is a debt identity series. And we’re going to answer a question that I know so many of you have asked yourself, why do I keep getting back into debt? Because here’s what I know, you actually know how to pay off debt, like logically we all know how to pay off debt. You take money and you put it to use your credit card. It’s not that complicated. But if that’s all it took, you wouldn’t be listening to this episode. You wouldn’t keep ending up back in debt six months after you pay it off. You wouldn’t be stuck in this cycle of paying it down, watching it creep back up, paying it down again and feeling like you can never get out of this.
And what I see people doing is they throw extra money or lump sums at their debt, they get a bonus, they get a tax refund, they pay off their credit card, they feel amazing. Maybe they do a balance transfer even, and then something happens, the hot water heater breaks or their friend invites them on a trip or the holidays come around and they’re right back in debt and then they tell themselves, I am bad with money. I can never get out of this cycle. There is something wrong with me, but that’s not true. What’s true is that you haven’t actually identified your debt identity and you haven’t done the work that needs to happen before you pay off your debt. And until you understand why you’re in debt and what patterns are keeping you there, you’re going to keep repeating this cycle. So that’s what this series is about.
We’re going to talk about the four debt identities, the fake math each one uses, and the work you need to do before you can actually pay off your debt and stay out of debt. Because the reason my clients are able to pay down debt and stay out of debt isn’t because they have some special willpower or because they’re better with money than you are. It’s because they do the adaptive work alongside the technical work. They do the inner work that helps them understand why they’re in debt and then when they pay it off, it actually sticks. So over the next few weeks, we’re going to go and deep dive into each debt identity, but today I want to give you an overview of all four so you can start to identify which one you are and you might be more than one and that’s okay, most people I would say are or have been more than one at different parts in times of their life.
So before we get into the four identities, I want to talk to you a little bit about why this matters, why you can’t just skip the part where I tell you whether to use the avalanche method or the snowball method. Why we can’t just talk about balance transfers and debt consolidation and whether you should take money out of your 401k to pay off your credit card because here’s what I’ve learned as a financial coach, you can have the best debt payoff strategy in the world, but if you haven’t actually addressed the root issue of why you’re in debt, that strategy isn’t going to work for you. Or it’ll work for a minute and then you’ll be right back where you started.
Think about it, if you’re using your credit cards as an emergency fund because you don’t have actual savings and then you pay off your credit card with a bonus, what’s going to happen the next time your car breaks down, you’re going to use the credit card again because you still don’t have an emergency fund. Or if you’re saying yes to every trip and every concert and every brunch because you tell yourself like, I deserve it, then you’re going to pay off your credit card with a tax refund. What’s going to happen the next time your friend invites you on a trip? You’re going to say yes and swipe that card because you haven’t addressed the underlying pattern of how you make spending decisions. Or if you’re putting everything on your credit card for points and you’ve lost track of what you’re actually spending and then you pay off your credit card, well it’s going to happen. You’re going to start using it again for points. And because you don’t have a system, you’re going to lose track again.
This is why people stay stuck in the debt cycle, not because they don’t know how to make a payment, but because they haven’t done the actual work to understand why they’re in debt in the first place. So before we can talk about debt payoff strategies, we will talk about those, but I promise, but we need to talk about your debt identity. We need to understand the patterns, the thoughts, the fake math that keep you stuck because your debt payoff strategy has to match your debt identity, otherwise you’re just playing financial whack-a-mole.
So let me just dive into an overview of the four identities, and as I go through these, I want you to pay attention to which ones resonate with you, which ones make you feel a little called out. So the first debt identity is the safety net user. This person gets a windfall of money, maybe it’s a bonus, maybe it’s a stock payout, maybe it’s a tax refund, maybe it’s an inheritance. And you’re like finally, oh thank you Jesus. You could pay off this credit card. So you take that money, let’s say it’s $25,000, you put it towards your debt and you’re debt free, you feel amazing, you have so much relief, and then your hot water heater breaks or your car needs new tires, or you have a medical bill and you don’t have the cash to cover it because you just use all your money to pay off your debt. So what do you do? You go to your credit card and just like that, you’re back in debt.
If this is you, you are who I call my safety net user. The credit card is functioning as your emergency fund. It’s a thing that saves you when something comes up that you can’t cover with cash. And here’s the thing, you probably didn’t even realize this about yourself. You want the relief of being debt free more than you actually want to be prepared. And I’m not saying that to shame you. I’m saying it because it’s important to understand. Being debt-free without being prepared is just a countdown to being in debt again. The fake math safety net users tell themselves is, these are emergencies. I can’t plan for emergencies. But the truth is that most of what you’re calling emergencies are actually predictable expenses you haven’t planned for.
Car registration happens every single year. Holiday spending happens every single December. Insurance premiums, they’re due annually. Your car and your house are going to need maintenance. You are treating predictable expenses as emergencies because you haven’t made a plan for them. So your credit card is your emergency fund, and what happens is you don’t ever actually create this fund for yourself. So before you pay off your debt, you need to build a $500, even a thousand dollars savings. And I know that that might sound counterintuitive, like mathematically you should put every dollar toward that high interest debt, but psychologically you need a buffer because if you don’t have one, that first $800 car repair is going to send you right back to the card. You also need to look at what expenses are coming up in the next 30, 60, 90 days and what are the things that like always put you right back into debt and have you actually made a plan to prepare for them? That’s the work for the safety net users and we’re going to dive deeper into that in next week’s episode.
So the second identity is the person I call the status keeper. And the status keeper isn’t driving a BMW. You don’t have a closet full of designer bags. So when someone talks about keeping up with the Joneses, you don’t recognize yourself with that because you are not materialistic and you don’t spend money on expensive things. But you do say yes to the girls trips and you do say yes to concert tickets and you do get your monthly massage because you deserve it. And so you’re going to brunch every weekend, you’re traveling multiple times a year, and you talk to yourself a lot about expenses not being very big because it’s not a Chanel bag, you’re not dropping a lot of money at one time and you work really hard.
So what happens is your credit card balance, it climbs over time. And as a status keeper, this is really tricky because you don’t see yourself as keeping up with anyone because you are not tasting traditional status symbols, but you are keeping up with experiential statuses instead of material statuses. So that’s important to note about yourself. Status keepers tell themselves, I’m not keeping up with the Joneses, but the new Joneses truly, truly, truly, truly, I wish you understood this. They live in your phone, they’re your Instagram feed, they are your TikTok shop, they’re in your inbox with targeted ads. They’re your friends that are telling you about the thing that you need to buy. And it’s so easy to fall into this trap because everything is in the palm of our hand and our buying decisions can be so quick. But that’s how you can spend $30,000 a year and not even realize it because you weren’t buying expensive things.
So for my status keepers, we need to do the actual math and add up what we’re spending money on. Are we spending money on travel, dining out? We need to get our real numbers. And then you can look at your actual take home pay and ask yourself like, what can I actually afford? What do I want to actually afford? And you can start to name your trade-offs. So every time you say yes to something, what are you saying not right now to? And that simple question is going to allow you to build your emergency fund and it’s going to allow you to have a positive relationship with saving money. So we’re going to dive into that identity in later this month, December 23rd. And the third identity is the points chaser. The points chaser is putting everything on a credit card and they’re doing this so they can get free travel, but what they’re not paying attention to is how much it’s costing them to get free travel.
They think they’re gaming the system, but their credit card balance has now gotten to a place where they’re having to dip into their savings. They can no longer pay off their credit card each month. And so issue with my point chaser is that they put everything on their card for points, but they don’t have a system for tracking or paying off their card. And points chasers, you guys don’t actually know the cost, the real true cost of your hundred thousand points. You paid for them, you just don’t know that you paid for them. And you don’t have clear boundaries for how much money you can actually afford to put on your credit card each month. So the work that the points chasers need to do is they need a system so that they know they can pay their credit card off each week and that their credit card doesn’t just become another bank account that they have to reconcile at the end of the month.
And then lastly, the third identity is the survival debt identity. And this person, their debt is from a life circumstance. It didn’t come from overspending or a lack of planning. It might be that it came from divorce attorney fees, from a medical expense, maybe it came from a job loss, maybe it was caring for a sick family member. And if this is you, you are a survival debt person and you probably carry a lot of shame about this debt, you probably tell yourself, I should have been more prepared. I should have had savings. I’m so behind. But here’s what I want you to hear. You’re talking to yourself about this debt the same way you talk about credit card debt from shopping. And it’s not the same. So if you’re telling yourself, I should have just been better with money and this wouldn’t have happened, or if I had saved more or planned better or been more responsible, you’re going to keep yourself in a shame spiral.
You’re using fake math to blame yourself for circumstances that were beyond your control. And fake math is believing that you should have been able to avoid this debt entirely. And that’s not math, it’s actually just shame disguising itself as accountability. And for my debt, my survival debt people, I like to do with one of my clients, what she actually did, is let’s rename this debt. Maybe it’s your freedom debt. It doesn’t need to be about survival. Maybe it was your new life debt. What has this debt actually afforded you? Because the thing that we have to do to help you pay off this debt is that we need you to be able to release the shame. So those are the four debt identities. And like I said at the beginning, you might be more than one of them. Maybe you’re a little bit of the safety net user and the status keeper and that’s okay.
The important thing is to start paying attention to your patterns. And when you look at the last time you went into debt, what actually happened? When you look at the last time you paid off your debt and then it crept back up, what happened after you paid it off? Are you using your credit card for emergencies because you don’t have savings? Are you using your credit card to say yes to experiences and lifestyle spending? Did your debt come from a major life event? And so over the next few weeks we’re going to dive into each identity. You’ll hear the specific fake math that each one uses, and I’m going to walk you through a money cleanse, where you can ask yourself questions to think about what’s the work that I need to do before I actually pay off the debt? If you hear nothing else, I want you to know that your debt payoff strategy has to match your debt identity.
If you’re a safety net user and you pay off your debt without building savings first, you’ll be back in debt 90 days without having built an emergency fund. If you’re a status keeper and you pay off your debt without doing the math on your lifestyle spending, you’ll be back in debt within six months when you say yes to the next trip. If you’re a points chaser and you pay off your debt without creating a system for tracking your spending, you’ll be back in debt as soon as you start using the card again. If you’re a survival debt user and you don’t actually release the shame, you carry around the debt, then you’ll be back in debt even after it’s paid off. So before we talk about avalanche or snowball, or before we talk about, should I take out a 401k loan? Is this in a perfect strategy? Should I do a debt consolidation? We need to know which debt identity is yours because that’s going to determine what work you need to do first.
So thank you so much for tuning in and I’m excited to walk through this debt series with you, especially as we, I know that we are in the season of New Year, new me, what do I need to do? But this work of really thinking about what is my debt identity, how do I make peace, if you will, with my debt identity, is the work that you need to do before you actually pay off debt. I have clients that are probably mad at me because they want me to help them pay off their debt on our first call and I’m like, Hmm, no, we’re not doing that because We need to know why you’re in debt. I don’t need you to have more shame about trying to pay off your debt again and then ending up right back in debt. It feels so much better to know that you’ve fixed the reasons that you’re in debt, that you have created a pathway for yourself to move forward. And then paying off the debt from that place, like that is the best win. And so that is really what the series is about, is thinking about what is the internal work that I need to do in order to prepare to pay off my debt? Alright, thank you so much for tuning in and until next time, have a great week.
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.
