Managing Debt

Key Takeaways

• Stop using the terms 'good debt' and 'bad debt'—view all debt as something to eliminate, because using positive language about debt lowers your guard and enables you to accumulate more of it
• If you're young with student loan debt and no employer 401(k), aggressively pay off the debt first rather than splitting income between minimum payments and Roth IRA contributions—you have decades to save for retirement but carrying debt compounds the problem
• Don't retire with a mortgage; treat debt-free homeownership as a non-negotiable financial goal, because not carrying mortgage payments significantly improves your ability to weather financial storms
• Eliminate credit card debt entirely by cutting up cards and using digital payment methods like Apple Pay instead—credit card debt is a primary driver of the average American's $90,460 personal debt load
• Build an emergency fund ('rainy day fund') before investing, because having a financial cushion means you won't need to borrow during downturns, allowing you to stay debt-free when storms inevitably hit