Money Rehab with Nicole Lapin - How I Tackled My Debt Monkey

Episode Date: October 18, 2021

Like any good sponsor, Nicole can talk the talk because she’s been in Money Rehab herself. At one point, Nicole was in $5,000 of credit card debt. In this episode, she tells the story of how she faced that debt and got rid of it for good.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Let's just say it.

Money can be a fickle little bitch. Money can make you feel happy, sad, excited, stressed, hopeful, hopeless. All the things. If money was a person you were dating, I'd say your boo is toxic, has extreme highs and lows, and needs to be kicked to the curb ASAP. But unfortunately, we can't kick our wallets to the curb. We just have to make it work. One of the biggest occasions when money will make you feel stressed out is when you owe more than you have. Today, we have a listener question about handling that stress.

Hey, Nicole, my name is Tia and I'm a nurse in Austin. Right now, I have about $20,000 in debt from credit cards and student loans. I listened to your episode on debt consolidation and I think it may be an option for me, but I'm just having a really hard time making a plan to deal with my debt. I can't even think about my debt without feeling a pit in my stomach. Have you ever dealt with debt? How did you do it? There are a lot of four-letter words that pack a punch, but none quite like D-E-B-T. none quite like D-E-B-T. Tia, I have been in debt, and even though I can't assume that I know how you're feeling, I can certainly tell you how I felt. Being in debt is one of the most stressful experiences I've ever gone through, and I've jumped out of a plane on a first date. That is not a joke. I remember so vividly looking at my bank statement and seeing in big, bold letters a minus sign. I owed $5,000 in credit card debt.

I know that's a very manageable amount of debt in the scheme of things, especially when compared to the average amount of student debt in this country. And so it was, frankly, easier for me to handle. You won't hear me say, it doesn't matter whether you have $5,000 of debt or $20,000 of debt. It all sucks. Now, that's naive and not helpful. But at the same time, I wished someone else would be open about their debt and how it was affecting them.

So I hope I can be that voice for you, Tia, the voice I really needed to hear when I was in debt. When I thought about my debt, I felt ashamed, embarrassed, guilty, and honestly, insecure. I felt like I knew better, and getting into debt was a personal failure. I can tell you all day long, Tia, that you're not alone and being in debt does not mean you failed. However, I can also tell you, Tia, that these words may feel thin until you actually get that debt monkey off your back. At least that's how I felt. I knew that the only way to get rid of that icky feeling of having 5,000 big ones hanging over my head was to rid myself of it once and for all. There's no time like the present, I thought. It was a random Wednesday

in the middle of the month, and rather than wait until the first day of next month, as some people might have done, I jumped right in. No excuses. So how did I do it? Well, here's what I did in four steps. Number one, I acknowledged my debt. I wrote it down on a sticky note and stuck it to the top of my computer screen. $5,000. I was already obsessing over it anyway. Having a physical reminder of the hole I had dug for myself gave me some clear headspace and kept me motivated to pay it down. I would cross out the number every time it got smaller, which was extremely gratifying. It feels similarly to the way it does when you cross something off your to-do list, but better. Number two, I set a deadline. Being in the news business,

I was all about deadlines. I knew that if I was going to stick to a repayment plan, any repayment plan, I had to set parameters around it. Otherwise, it would be too easy to dip back into the pool for needs like new work clothes or non-work related airfare. I gave myself two years, which worked out to be $2,500 a year, about $208 per month, or about seven dollars a day. I will never forget the seven dollars a day. Looking at my debt in those terms started to feel much less intimidating. I mean, seven bucks a day. That's one glass of wine with dinner. Less than one glass of wine if you live in Manhattan. But I thought, hey, no problem.

I could do that. It seemed way more manageable if I broke it down into little chunks. Number three, I put myself on autopilot. Through my online banking portal, I set up an automatic payment of exactly $208 a month. This meant that every single month, the money came out of my checking account and went right toward paying down that credit card debt. Because I didn't even see that money, I found that I really didn't miss it. And I didn't even have the option to spend it on something else. Number four. I reminded myself of why I was doing this. Every time I was tempted to skip a month's payment so I could buy myself something or have a night out, I reminded myself what I wanted to be doing with that money in the

long term, my end game, like starting my own production company and getting a two-bedroom apartment for myself. That kept me focused, and at the end of two years, I was debt monkey free. In fact, by the end of about a year and a half, I was so pumped to just be done with it that I upped my monthly installments to $308 per month. I kept the eight bucks, by the way, because it felt easier to stomach than some big old round number in the same way that it feels easier to spend 99 cents than a dollar, anyone. And I ended up debt-free a few months ahead of schedule. For today's tip, you can take straight to the bank. You may be

surprised by the most common mistake people make when paying off their debt. It's not that people consolidate their debt in the wrong way or make mistakes when submitting payment. The biggest mistake people make is that they don't get started. So put some time on your calendar this afternoon to tackle that debt monkey. Let a friend or let us know that you put this time on your calendar so that you have a bigger chance of staying accountable. Don't forget, you've got this. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz

for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.