Four Myths that Keep You In Debt

The world of personal finance is fraught with myths that are designed to keep consumers in debt, and the numbers show that they’re working. According to, the average American household carries around $135,000 in debt (note: this figure includes mortgage debt), and some age groups carry much more than that.  Interestingly, statistics show that the more education you acquire, the more debt you carry, though the ratio of debt to income is greater with less education.

Four Myths that Keep You In Debt

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If you’re an entrepreneur, you know that it often takes money to make money, but even this must be curbed. Setting out to make money only to be shackled by crippling debt is a terrible fate.

In the age of the internet, there is a wealth of information for getting your finances under control. Dave Ramsey has seemingly endless advice through his Financial Peace University, radio show, and website. Credit card and mortgage lenders are constantly encouraging their customers to refinance and make smarter financial decisions. Online budgeting software is seemingly a dime a dozen. All of these modalities can certainly help you grab the financial reins, but you won’t be able to make any lasting changes until you take a good, hard look in the mirror and confront some of the debt myths that are so pervasive in our culture—and perhaps in your own thought processes, too.

For the rest of this article, we’ll identify and wipe out a few of those myths and point you down the path to financial freedom.

Myth: You’re Too Far Gone

It can be pretty overwhelming to see your credit card statement and honestly believe that you can only make the minimum payment. This is a reality for many Americans, including average American college students who graduate with almost $30,000 in student debt.  These students and others may get discouraged, think they’re beyond redemption, and believe that lifelong debt is their lot.

That is a big, fat lie that you need to stop telling yourself. If you want to get yourself out of debt, it is going to be challenging, but it is doable.

Myth: The Joneses Have It All, and You Can, Too

The Joneses may actually have it all and be debt-free, or they may be mortgaged to the hilt and not technically own anything. The point here is that you just don’t know, so stop worrying about them and start worrying about you!

The problem with keeping up with the Joneses is, to quote Edward Norton’s character in Fight Club, “We buy things we don’t need with money we don’t have to impress people we don’t like.” Break that cycle!

If you are in debt but unsure what to do to get out of it, first, stop worrying about how you might look to your neighbors.

  • Downsize your house (and your house payment), and buy a used car.
  • Start a side hustle.
  • Sell what you don’t absolutely need to generate a little bit of extra cash.
  • Sit down with your expenses and question everything. Do you really need all of those subscription services? Can you live without your expensive coffee – at least for the time being? Be willing to make sacrifices, but allow yourself a small amount of fun money.

Budgeting isn’t punishment, but it can certainly feel like it if you don’t allow yourself to live a little while you pay down your debt.

Myth: You Don’t Make Enough Money

This myth can be particularly problematic because it places the blame of your financial difficulties outside of your control when, in reality, your choices are usually what keep you living paycheck to paycheck. If, after you’ve downsized, taken on side gigs, and stuck to a strict budget for a few months, you’re still struggling to make ends meet, you may actually need a better-paying job. Chances are pretty good, however, that by doing the things I just mentioned, you’ll find that you have more money than you thought.

If income is legitimately the issue, start by getting additional training and education so that you can get a better job. This may require courses at a community college, but there are also a lot of free, online classes that specialize in business, IT, bookkeeping, foreign languages, and more. Do whatever it takes to network and grow within your field.

Myth: Budgeting Is Too Hard

Budgeting can be discouraging at first, but it all has to do with your mindset. You can either think of a budget as something restrictive, or you can see your budget as a way for you to prioritize your spending so that you can buy the things you really want without worry or guilt.

If a budget seems too overwhelming at first, start by just keeping track of everything you spend either on paper, using an app on your phone, or signing up for a program like Once you have a better idea of what you’re buying, download a budgeting spreadsheet or program, and create a budget based on how you currently spend. Analyze your past and current purchases and cut out or cut back on anything unnecessary. Making a budget isn’t a one-and-done activity; you need to revisit it every month and make modifications as necessary so that you don’t lose track of where your money is actually going.

Living within a budget gives financial freedom that staying in debt cannot offer. It isn’t as glamorous as putting your every whim on a charge card, but it will make you much richer in the end. There are few feelings better than making that final payment and living debt-free.