Linzy Bonham [00:00:00]:
There was a time back in, you know, maybe the 1940s where people could buy a house without taking on debt. That is not possible anymore. In this day and age, debt is just part of the world that we live in. Welcome to Money Skills for Therapists, the podcast that helps therapists and health practitioners in private practice go from money confusion and shame to calm, clarity and confidence with their finances. If you’ve ever felt overwhelmed by numbers or avoided looking at your business money, you’re in the right place. I’m Linzy Bonham, therapist turned money coach and creator of Money Skills for Therapists. Before we jump in, I want to remind you of something really important. Most of us highly skilled and competent therapists and health practitioners were never taught about money.
Linzy Bonham [00:00:43]:
Not in grad school, not in supervision, not anywhere. And yet here we are, running businesses that need to take care of us while we’re busy taking care of others. It is a lot of pressure. So. So if part of you feels anxious about money avoidant or like a bit of a hot mess financially, I want you to know that you are not alone. And I am here to help. Through my free live workshops each month, I teach practical financial skills to help you feel more grounded, calm and confident with your private practice money. You can see what’s coming up and save your spot to join live or register for the replay@moneyskillsfortherapist.com workshops.
Linzy Bonham [00:01:17]:
Let’s get started. Hello and welcome back to the podcast. Today, on this solo episode, I’m going to be talking about the idea of debt as a tool. Now, debt is something that a lot of therapists coming into Money Skills for Therapists or Money Skills for Group Practice Owners are dealing with. And I say dealing with because there’s some challenges associated with debt. One of the challenges that we see about debt is that it can feel very emotionally heavy. Often when we have debt, there can be stories that go along with it, negative stories. We’ll get into those in a minute.
Linzy Bonham [00:01:52]:
And the other thing that impacts us about debt is that it’s expensive. It costs money. So debt is generally in the equation when therapists are figuring out how to make money work for them. You know, we’re thinking about the money that’s coming in the door. We’re thinking about what we want to be spending on monthly expenses. But often debt is also part of the picture as we’re thinking about how to pay down a certain debt or just interest rates associated with things like our mortgage. So the idea that I want to talk about today is that debt is A tool, and tools are neutral things. I want to start by saying that there is nothing morally wrong about debt.
Linzy Bonham [00:02:29]:
I’m going to say that again because I think that sometimes as perfectionists, therapists can struggle with this piece. There’s nothing morally wrong about debt. Debt does not mean that you have failed. Debt doesn’t mean that you’re bad. Having debt, maybe even debt that’s kind of grown out of control, doesn’t mean that you’re dumb. You know, I’ve heard so many mean stories that therapists carry around about ourselves because we have debt, and I want to dispel all of those right now. All that debt means is that you’re living in today’s economy. We all rely on debt now in the 2000s in order to live, right? If you don’t have debt for school, then you will take on debt when you buy a home.
Linzy Bonham [00:03:13]:
And many of us are relying on debt to pay for the everyday things in life. Especially for those of us who have come through long educations to become therapists. You know, if you were first doing your master’s, then doing a PhD, or if you had to do an internship as part of getting your licensure and work for free, there’s probably no way that you have gotten through school without having some sort of consumer debt too, right? You’re enough student debt, but you’re also going to have some credit card debt, because that is how the system is set up. The system is set up in therapist schooling that it is almost impossible to become a therapist without having accumulated some sort of debt to get there. Unless you come from significant family wealth, which for some folks is the case, but for most of us is not. So there’s nothing wrong with debt. Debt just means that you’re living in the 2000s. There was a time back in maybe the 1940s where people could buy a house without taking on debt.
Linzy Bonham [00:04:06]:
That is not possible anymore in this day and age. Debt is just part of the world that we live in. So there’s nothing wrong with having debt. The second idea that I really want to make clear is that debt is not an emergency. Having a debt, even credit card debt, doesn’t mean you need to direct every extra dollar that you have towards making that debt go away. It doesn’t mean that you have to stop enjoying life until that debt is paid down. Debt is not an emergency. Debt is just an expense, right? There’s interest associated with debt, and that’s where we can start to think about it strategically.
Linzy Bonham [00:04:39]:
Something else that I want to Remark on is that often we have different meanings ascribed to different debts. And I’ll encourage you to think about this as we’re talking about debt. Thinking about the different debts that you might have. You might have a mortgage, maybe some student debt, maybe some credit card debt, maybe a line of credit or a heloc, you know, a home equity line of credit. Thinking about the different debts that you might be carrying right now, Pause for a moment and be curious about the different meaning that you ascribe to those different debts. Often, mortgages are a debt that we actually take on with glee. If you think about that image of a couple standing outside of their new house, standing next to the sold sign with a big smile, generally that means that they have just taken on a ton of debt to get that house right. So mortgage debt is often something that we see positively.
Linzy Bonham [00:05:30]:
It’s kind of like an accomplishment. When we’ve gotten to the point of achieving mortgage debt, is that how it feels to you? Does that feel like a light, happy debt? Or does your mortgage hang over your head? You know, what are the meanings that you’ve ascribed to having a mortgage? If that’s the case for you, School debt can have a different tone to it. Working with Americans, I often see American therapists who have a lot of debt from going to school, tens of thousands or even hundreds of thousands of dollars of debt. Be curious about your own student debt. If you carry it, what does it mean to you? What are the stories that you ascribe to that debt? Do you feel like a sense of accomplishment or gratitude because that debt allowed you to move into the profession that you’re in now, allowed you to practice as a therapist? Is that debt helpful? Positive? Does that debt bring up feelings of resentment about the system of schooling that you’re in, where it costs so much to become a therapist, especially in the United States? Sometimes with student debt, I see people feeling angry at a system that allows you to accumulate debt. And I have to say, the American debt system around schooling is quite wild to me as a Canadian, where your debt can grow over the years rather than shrink. Do you have any feelings about that when you think about your student debt? And then finally, credit card debt, if you have credit card debt, how do you feel about that debt, and how does that feeling compare to your mortgage debt? What we’re starting to do here, surprise, surprise, is bring some curiosity into our relationship with these debts. If you have all three of those types of debt, do they feel very different to you? Do they feel the same? Do you have different stories associated with each of them.
Linzy Bonham [00:07:07]:
Is there one debt that feels lighter than the other? This is where we’re starting to feel curious about what the emotional tone of these debtors. What’s the story that’s attached to them, and how does that allow us to relate to these debts? Because really, all of these debts are a tool. Debt is a tool that allows you to get the things that you want or need now, even if you don’t have the money on hand. But the risk of debt is that that just comes at a cost. It costs us money to have taken on a debt. When you were 22 years old and you wanted to become a therapist, maybe to get a PhD, you probably didn’t have $150,000 on hand to pay for your education. Student debt is what allowed you to get that schooling and become a licensed therapist and be able to charge well for the work that you do, be able to be a professional and operate like you are. Without the student debt, that wouldn’t have been possible in today’s economy.
Linzy Bonham [00:08:02]:
But all debts come at a cost. And that is really how we need to be thinking about debt when we’re starting to move into a more neutral, positive, strategic relationship is how much does a certain debt cost you each month? What’s the number associated with having that debt? And if we think about that number, whether it’s that there’s $200 a month of interest that you pay to hold money on a credit card, or Whether it’s a $1,500 payment you have to put down on your student loan or a $3,000 mortgage payment, how do you feel about your money going towards those debts rather than something else in your life? With money, there’s always what we call opportunity cost, right? Every dollar that we make, every dollar that we have in hand, could do many, many, many things for us, right? A dollar could turn into some food for your kid’s lunch. It could turn into a part of a vacation. It could turn into something for your home. It could turn into health treatments, right? Every dollar has what we call opportunity cost. And when we’re putting our dollars towards debt, it just means that it’s going towards paying for that debt for something that’s already happened, rather than being able to go towards something else. So starting to be curious for the actual numbers associated with those debts, how much is it actually costing you to carry this certain debt? Right now we’re starting to get into just numbers again. Is it $200 of interest to have a credit card? If you think about what is on that credit card and what it allowed you to do, what was possible because of you taking that debt, does that feel worth it? Is that a good use for that $200? Are you happy to pay that for a long, long time, or would you rather get that down? So instead the $200, once that debt is gone, could do something else for you? The risk of having debt really is just having so much interest that it eats our ability to enjoy life now, right? This is where debt actually is risky or can become a negative presence in our life.
Linzy Bonham [00:09:54]:
And if you’re in this place, you know it’s right, because it’s like you look at your budget each month, and before you can even start to plan for the things that are important or that you enjoy, there’s hundreds or thousands of dollars that are going towards a debt, right? When we take on more and more debt, more and more of our money each month is going towards paying this interest. And it starts to stop us from being able to make free choices about what we want to do, because our money’s already tied up in paying these debts. This is the risk of debt, right, Is that we’re committing to pay a certain amount each month for something that has already happened in the past. And we have to make that payment each month regardless of what else we might want to do with that money. And if you’re just making the minimum payment on something like a credit card, that kind of debt, that amount will continue. You’ll have to pay it forever, right? And then over time, as we start to add it up, it’s like that $150 that you put on the credit card to buy a nice sweater ends up being $800 over time, right? Because you’re just continuing to pay interest on it over and over again. Understanding the dollar amounts associated with your debt is where we can start to move out of just kind of general negative feelings or feelings of stuckness and overwhelm and start to think strategically about managing debt as just one part of our financial picture. The answer in how we deal with debt, how we make it something that actually feels neutral, is in math.
Linzy Bonham [00:11:19]:
There is actual math to be done when it comes to debt. And then there’s emotional math. There’s an equation, right, that you get to run to decide how much you want to put towards debt each month. How important is it for you to be paying down these debts either at a faster rate than has been forecasted for you? So, for instance, mortgages tend to be 25 or 30 years when you start, is it important to you to make your mortgage go away faster? Is that a priority or not? Are you happy to have a mortgage over 25 years because it allows you to have money to do other stuff now? This is where moving to a strategic space with money, there is an equation. You are in charge of the money in your life, and you get to decide how to direct it so it reflects your real values. At this time, being curious with your numbers and exploring what it would look like to pay off a certain debt faster, what would that cost you each month? To make a certain debt go away faster allows you to explore the financial impact, but also the emotional impact of taking that action with your money. Right. When we zoom out and we look at numbers as numbers and we use curiosity, we can find a way forward to have debt as part of our picture in a way that feels neutral or even positive and empowering.
Linzy Bonham [00:12:33]:
It’s like, I’m choosing to pay this debt so that I can live in the home I want with my family now while my kids are younger. I’m going through this myself right now, making these decisions around debt as I am doing a massive renovation on my house. And the decision that I had to make is, do I want to wait to improve my house and give us more floor space in probably 15 or 20 years when I would be able to pay it in cash, or do I want to do that now while my son is small, so this is actually the house that he grows up in? I chose the latter. Right. I’m choosing to take on a debt to allow us to have the family home that we want now for my son to grow up in. So that. That is his experience of growing up. That’s our experience.
Linzy Bonham [00:13:16]:
We get to live in this house longer, and there’s a cost associated with that. But when you look at the math, When I’ve looked at the math, I’ve decided that cost is worth it. And I’ve looked at what it will cost each month for us to service that debt and have decided that that’s worth it. Right. Debt can just be a neutral part of your financial picture. So when you start to look at your debt just in terms of numbers, you can start to be curious. How important is it for you to pay down a debt faster compared to having that money to do other things in your life? I have a debt calculator that I created to play with this idea, and I made this debt calculator. I should give full credit.
Linzy Bonham [00:13:51]:
My husband Rodrigo, who’s our spreadsheet technician, made this calculator, with my input back several years ago when we ran a MasterMind program called MoneyBoss. And the calculator helps you to see your different debts. What’s the interest rate associated with that debt? What’s a minimum payment? And then has you think about how much money a month do you want to put towards servicing your debts? When we look at that number, and I want that number to be a number that still means you can live your life again. Debt is not wrong. Debt is not an emergency. We don’t need to suffer because we have debt. But once you identify, okay, I will put $1,500 a month towards servicing my debts, then this calculator, this tool lets you play with, okay, what would happen if you put that money all towards your smallest debt first? What would that look like over time in terms of the interest that you’re gonna pay over time? And when that debt will go away? Then you can look at it and be curious about how does it feel to see a certain debt go away first? Does that feel emotionally exciting? Does that feel like a relief? Because of the negative stories that are associated with that debt, it would be great to just make that debt go away and feel like that chapter of your life is closed. So this lets you see the timeline of paying down debts in a different way, and it also lets you see how much over time you’re paying for these debts.
Linzy Bonham [00:15:03]:
Again, interest, it’s expensive, it’s a cost. We have to think about that cost as we’re thinking about our strategy. I’m going to link this calculator in the show notes. I’ll make a little video too, explaining how to use it. So if you are managing different debts and you’re curious about what it could look like to pay them down in different ways and to put a certain amount of your budget each month towards servicing debt, you can play with this tool and be curious. Again, like with all things in money, curiosity goes a long, long way. Right? Once we can zoom out and just be curious and observe the impact of making different financial decisions, then we can move forward in a way that is purposeful and grounded and know that the actions that we’re taking are going to have results that we want to see happen in our life. We’re going to see our money doing what we want it to do for us.
Linzy Bonham [00:15:56]:
Money is a tool, debt is a tool, and it’s the way that we use those things that actually creates a certain outcome in our life and makes us feel that we’re actually living our values, because that’s what money is about at the end of the day, is actualizing your values in your life and using the tool, the power of money, to create what you want to make, to create what you want to create in this life. Whether that is a beautiful home for your family and that’s worth the cost. Whether that is getting a certain education so that you can have a certain impact in this world. Whether that is taking a trip and having a certain experience now with your parents before they’re no longer able to travel, and knowing that you might have to put that on debt, but you’re going to pay it down in a certain way that it feels completely worth it. Debt is neutral. It’s not wrong, it’s not an emergency. It just costs money. And when we can make strategic decisions about it, like we make strategic decisions about all money in our lives, it can be a neutral or even a positive part of our financial picture.
Linzy Bonham [00:16:57]:
So I’m going to link that debt calculator in the show notes so that you can grab a copy of it and play with it. Bring some curiosity into your own relationship with your debt and let me know what you discover when you play with that tool. Thank you so much for joining me today. I’m Linzy Bottom, a therapist turned money coach and the creator of Money Skills for Therapists. If you are ready to feel more calm, confident, curious about your private practice finances, then attending one of my free upcoming workshops is the best place for you to start. Whether it’s saving enough for taxes, creating stability in your private practice, overcoming money shame, building a practice that actually takes care of you, we bring you a variety of workshops to help you begin to shift your relationship with money and get your private practice finances working for you. Register today at the link in the show notes or@moneyskillsfortherapist.com workshops. I look forward to supporting you.
