debt payoff Archives - Monthly Money

Good Debt vs. Bad Debt: Not All Borrowing Is Equal

Monthly Money Man on August 28, 2026

A few weeks ago we talked about the 10% line, and last week about picking your payoff method and actually sticking to it. If you’ve been doing that work, good — you’re climbing. But I want to slow down for a second, because there’s a piece of debt talk that gets oversimplified almost everywhere else you’ll read about it.

You’ll hear a lot of finance voices tell you all debt is bad. Pay it all off, avoid it forever, never touch it again. I understand the appeal of that message — it’s simple, and simple sells. But it’s not true, and treating it as true can actually cost you money and opportunity. In fact, a lot of the wealth-building you see around you — the rental property down the street, the small business that grew into something real — was built using debt as a tool, not avoided because of it.

The real question isn’t “debt: yes or no.” It’s good debt vs. bad debt — understanding what each dollar you owe is actually doing for you.

What Makes Debt “Bad”

Bad debt has three things in common: it’s used to buy something that loses value, it usually carries a high interest rate, and it doesn’t build anything that pays you back over time.

Credit card debt on things you’ve already consumed — vacations, restaurants, clothes you’ve since donated — is the clearest example. So are most personal loans taken out to cover a shortfall rather than an investment. The car itself isn’t inherently bad debt, but a car loan on a vehicle that’s depreciating fast, at a rate that eats into your monthly cash flow, edges toward bad territory the more it strains your budget.

The test I’d give any client: is this debt working for you, or are you just working to pay for it?

What Makes Debt “Good”

Good debt has the opposite profile: it’s usually lower interest, and it’s attached to something that either grows in value or grows your income over time.

A mortgage on a home you can comfortably afford is the classic example — you’re borrowing at a fixed rate to hold an asset that’s historically appreciated, and every payment builds equity that’s yours. Certain education debt fits here too, when it leads to a real increase in earning power, though this one deserves a careful eye since not all degrees pay off equally. Business debt used to grow a company that’s already generating revenue is another example — you’re borrowing against future income you’re confident will materialize.

The common thread: good debt is a tool you picked up on purpose, not a hole you fell into.

The Line Isn’t Always Where You Think

Here’s where I’ll push back on the “good debt” label a little, because it’s not a free pass. A 3% mortgage payment that’s still eating 45% of your take-home pay is straining your climb even if the interest rate looks great on paper. Good debt can still be too much debt. The category tells you how the debt is structured — it doesn’t tell you whether you can afford it.

So the real framework is two questions, not one:

Is this debt attached to something that grows in value or income? (Good debt vs. bad debt)
Is the payment sized so it doesn’t choke my monthly cash flow? (Affordable vs. not, regardless of category)

A debt needs a yes on both to actually be helping you climb.

What This Means for Your Next Move

If you’re carrying a mix — which most people are — here’s the order I’d want you thinking in:

First, attack anything that fails both questions: high rate, depreciating purchase, straining your budget. That’s your credit card balance, most likely. This is exactly what the avalanche and snowball methods from a couple weeks back are built forif you haven’t run your numbers yet, the debt payoff calculator will lay out your fastest path.

Second, leave good debt alone if it’s affordable. Don’t rush to pay off a 4% mortgage early at the expense of your emergency fund or retirement contributions. That instinct feels responsible, but it’s often not the highest-value move you can make with that money.

Third, if a “good” debt is straining your cash flow anyway, treat it like a budget problem, not a debt problem. That might mean a smaller car next time, not panic-paying down the loan you already have.

This Week’s Climb

You don’t need to restructure anything today. You just need clarity on what you’re actually carrying.

List your debts again — you may already have this from the payoff plan work.
Label each one: good, bad, or “good but straining my budget.”
Circle the bad debt. That’s still your priority for extra payments.
For anything labeled “good but straining,” ask honestly if the real fix is the debt or the monthly budget around it.
Leave the truly good, truly affordable debt alone. Let it keep doing its job quietly in the background.

Not all debt is a mountain you need to tear down. Some of it is part of the trail. Knowing the difference is what lets you climb with a clear head instead of blanket fear.

See you at the top.

This article is for educational purposes only and does not constitute personalized financial advice. Please consult a licensed financial professional regarding your specific situation.

The Debt Plan: How to Actually Stick to It

Monthly Money Man on August 21, 2026

You don’t have a debt problem. You have a finishing problem.

If you’re like most Ascenders, you’ve started a debt payoff plan before. Maybe more than once. You made the spreadsheet, you felt the rush of motivation, and then somewhere around week six — a car repair, a kid’s birthday party, a “we deserve this” dinner out — the plan quietly died. Not because you’re bad with money. Because the plan wasn’t built for real life.

This month, we’re building one that is. A real debt payoff plan you can actually stick to — not the one that looks best on paper, the one that survives contact with your actual, chaotic, wonderful life.

The Method That Actually Sticks

Here’s where most debt advice goes sideways: it leads with math. Pay off your highest-interest debt first, they say. Mathematically, that’s called the avalanche method, and it will save you the most money in interest over time.

The math nerds will tell you to pay off your highest-interest debt first — and they’re not wrong. But if you’ve started and stopped a debt plan before, the method that gets you to the finish line beats the method that’s 2% more efficient on paper.

That’s why, for most people just getting their footing, I point them toward the snowball method instead: list your debts smallest balance to largest, ignore the interest rates for a minute, and throw every extra dollar at the smallest one until it’s gone. Then roll that whole payment into the next smallest. And the next.

Researchers at Northwestern’s Kellogg School actually studied this, and it’s not just a feel-good idea — people who knock out small balances first are significantly more likely to finish paying off all their debt than people who chase the “optimal” interest-rate order. A quick, real win in month one does something a spreadsheet can’t: it proves to you that this time is different.

Is it the most mathematically efficient path? No. Is it the path most likely to still be running in month eight, when life throws its next curveball at you? Yes. And a plan you finish beats a plan you abandon, every time.

(If you’re the type who genuinely loves a spreadsheet and wants to see exactly what the interest-optimized order looks like for your specific debts, our free debt payoff calculator will run both methods side by side so you can see the trade-off in real numbers — link at the bottom.)

The One-Page Debt Plan

You don’t need software. You need one page. Here’s what goes on it:

1. List every debt, smallest to largest. Balance, minimum payment, interest rate. Yes, even the store card you’re embarrassed about. Especially that one.

2. Find your “extra” dollars. Look at last month’s spending and find $50, $100, whatever you can find without white-knuckling it. This isn’t about deprivation — it’s about direction. Every dollar just needs a job.

3. Attack the smallest balance. Minimum payments on everything else, extra dollars all go to debt #1.

4. Snowball it forward. When debt #1 hits zero, its entire payment — minimum plus extra — rolls into debt #2. Your payments don’t shrink as debts disappear. They grow. That’s the whole trick.

5. Put a date on the page. Not a guess — do the math on your current pace. A real date turns “someday” into a destination you’re actually walking toward.

That’s it. One page, five steps, and you can build it this weekend at your kitchen table.

When Life Blows Up Your Plan Anyway

Here’s the part most debt advice skips entirely, and it’s the part that actually matters.

If you’ve been reading along, you know this has been a hard stretch around here — a big family trip, the loss of my father, getting my oldest ready for college, all stacked in the same few weeks. In our last article, “When It Rains, It Pours “, I wrote about what happens when several financial pressures hit at once. The truth is, life doesn’t pause your debt plan to let you catch up. It just keeps happening.

So build this into the plan from day one: some months, you won’t hit your extra-payment number. That’s not failure — that’s the plan meeting real life, which is exactly what it’s supposed to do.

When a rough month hits, don’t scrap the plan. Just pay the minimums, protect your emergency fund, and pick the extra payments back up the next month you’re able to. A debt plan that bends without breaking is a plan you’ll actually still be using a year from now. That’s the whole goal.

What Sticking to It Looks Like This Month

You don’t need to overhaul your finances this week. You need one page and one decision.

This month:

Write out your one-page debt plan using the five steps above.
Pick your smallest balance and decide exactly how much extra you can send it.
Set a recurring reminder for the same day each month to check your progress — not to judge yourself, just to look.

That’s the climb. Not a sprint, not a 30-day transformation. One page, one payment, one month at a time.

Ready to see the numbers for yourself? Head over to our free debt payoff calculator to plug in your own balances and watch both the snowball and avalanche paths play out side by side — so whichever way you go, you’re going in with your eyes open.

The 10% Line: When Debt Becomes a Problem

Monthly Money Man on March 27, 2026

I’ve sat across from more people with high-interest credit card debt than I can count. Medical professionals, teachers, engineers—high earners who felt broke every month and couldn’t figure out why.

The pattern was always the same: decent income, reasonable expenses, and thousands of dollars vanishing every month in credit card interest.

One pattern I saw over and over: someone carrying $15,000 to $20,000 in credit card debt at 20%+ interest rates. That’s $3,000 to $4,000 a year—gone. Not reducing the balance. Just interest.

That’s the 10% problem.

Why 10% Is the Line

Interest rates above 10% aren’t just expensive. They’re actively draining your monthly money before you even get a chance to use it.

A mortgage at 6%? That’s financing an appreciating asset. A car loan at 5%? You’re paying for transportation you need. Those rates are manageable.

But credit cards at 18%? Department store cards at 24%? Personal loans at 15%? That’s not financing. That’s bleeding.

Here’s the math that matters: if you’re carrying $10,000 at 20% interest, you’re paying $2,000 a year just to keep that debt. That’s $167 every month that doesn’t reduce your balance, doesn’t build equity, doesn’t do anything except disappear.

You can’t save your way out of that. You can’t invest your way past it. You have to stop the bleeding first.

The Hidden Cost

The real problem isn’t just the money you’re paying in interest. It’s what that money could be doing instead.

Someone paying $300 a month in credit card interest? If they redirected that money to a Roth IRA instead—at 8% average annual returns—they’d build $180,000 over 25 years.

But they can’t. Because the interest payments come first. Every single month.

This is why I tell people: high-interest debt gets fixed before almost anything else. You get your employer match in your 401k (that’s free money you can’t recapture). Then you attack this debt. Aggressively.

How to Know If You Have the 10% Problem

Pull out your credit card statements right now. Look at the interest rate. It’s printed right there on every statement.

If it says anything above 10%, you have the problem.

Don’t look at the minimum payment and think you’re okay. That minimum payment is designed to keep you in debt for decades. Look at the interest rate.

Common culprits:

Credit cards: 15% to 29%
Department store cards: 20% to 27%
Personal loans: 10% to 18%
Payday loans: don’t even get me started (often 300%+)

What This Looks Like in Real Life

Let’s say you have $5,000 on a credit card at 18% interest. Minimum payment is $125 a month.

If you only pay the minimum, it’ll take you 23 years to pay it off. You’ll pay $4,300 in interest. Almost as much as you originally borrowed.

But if you threw an extra $100 a month at it—$225 total—you’d pay it off in 2 years and pay only $900 in interest.

That’s the difference between bleeding slowly for two decades and fixing the problem fast.

The Fix

I’m not going to tell you to cut up your credit cards and live on cash. That’s not my style.

What I am going to tell you: this debt gets priority.

In August, we’re going to dive deep into avalanche vs snowball methods, balance transfer strategies, and exactly how to attack this systematically. We’ll use the debt payoff calculator I built for you. We’ll map out your complete plan.

But right now, today, you need to know where you stand.

Add up every debt you have with an interest rate above 10%. Write down the total. That’s your number.

That number represents money leaving your life every month that could be building your future instead. It’s like carrying a water bottle with a slow leak—you’re losing resources drop by drop on every climb, and by the time you notice, half of what you needed is already gone.

We’re going to deal with it. But first, you have to see it clearly.

What You Can Do Right Now

I’m not going to give you the full debt payoff strategy here—that’s coming in August with detailed methods and the calculator. But if you have high-interest debt, you can’t afford to wait five months doing nothing.

Three things to do this week:

First: Stop adding to it. If you’re still using the cards that are charging you 20%+, you’re pouring water into a leaking bucket. Put them away.

Second: Pay more than the minimum. Even an extra $50 or $100 a month makes a massive difference. On that $5,000 example I showed you? An extra $100 cuts your payoff time from 23 years to 2 years.

Third: Call your credit card company and ask for a lower rate. Seriously. Just call and say “I’ve been a customer for X years, I’d like a lower interest rate.” It doesn’t always work, but when it does, you just saved yourself real money with a 5-minute phone call.

We’ll get into balance transfers, refinancing strategies, and the complete battle plan in August. But don’t wait to stop the bleeding.

Your Action Step This Week

Pull your credit card statements. All of them. Look at the interest rates. Add up the balances on anything above 10%.

That’s your 10% problem.

Write it down. We’ll come back to it in August with a complete battle plan.

See you at the top.

Your Tax Refund: Freedom or Consumption?

Monthly Money Man on March 13, 2026

The Bottom Line Up Front: That refund hitting your bank account isn’t a windfall. It’s your own money coming back to you. And what you do with it in the next 72 hours will tell you everything about whether you’re still the old financial you, or the new one climbing toward the summit.

Let me guess what’s happening right now.

You filed your taxes. You’re getting a refund. And you’re already thinking about what to buy with it.

Maybe it’s that thing you’ve been eyeing for months. Maybe it’s a weekend trip. Maybe it’s just “treating yourself” because you feel like you earned it.

I’m not here to judge. But I am here to ask you one question:

Are you buying freedom, or are you consuming?

Because here’s the truth most people don’t want to hear: your tax refund isn’t bonus money. It’s not a gift from the government. It’s money you overpaid all year that’s finally coming back to where it belonged all along—in your hands.

And what you do with it in the next few days will show you exactly who you are financially.

The Consumption Trap

I’ve watched this pattern play out hundreds of times.

Someone gets a $2,000 refund. They’re excited. They feel like they just won something.

And within two weeks, it’s gone.

New TV. Night out. Online shopping spree. Upgrade the phone. Book a flight.

All consumption. Nothing invested in the climb ahead.

And here’s what happens next: three months later, that same person is stressed about money again. The emergency fund is still empty. The debt is still there. The financial anxiety is still crushing them.

Because they consumed the refund instead of using it to buy freedom.

What It Means to Buy Freedom

Freedom isn’t a vacation. Freedom isn’t a new purchase.

Freedom is waking up and knowing you have options.

It’s having one month of cash reserves so you’re not living paycheck to paycheck anymore.

It’s paying off that credit card so you stop hemorrhaging interest every month.

It’s maxing out your Roth IRA contribution so your future self doesn’t have to scramble.

Freedom is what you buy when you use money to reduce stress instead of create temporary pleasure.

And your tax refund—if you’re getting one—is the single best opportunity you’ll have all year to buy a significant amount of freedom all at once.

The Test of Who You’re Becoming

Last week we talked about emptying your financial backpack to see what you’ve been carrying.

This week, you’re making a choice about what to put back in.

The old financial you puts consumption back in. Stuff. Experiences that don’t build anything. Short-term pleasure that disappears.

The new financial you—the one who’s ascending this mountain—puts tools back in. Things that make the climb easier. Things that reduce the weight you’re carrying.

Your refund is the test.

Are you still the person who consumes windfalls? Or are you becoming the person who deploys them strategically?

Where Your Refund Should Actually Go

Here’s the honest answer: I don’t know where your refund should go.

Because I don’t know what your greatest financial weakness is right now.

But you do.

If you have no emergency fund: Your refund just became the foundation of your safety net. Put every dollar toward building that first month of cash reserves. That’s buying freedom from paycheck-to-paycheck panic.

If you’re carrying high-interest debt: Your refund just became a debt destroyer. Attack the highest-interest debt first. Every dollar you put there is buying freedom from interest payments draining your account every month.

If your foundation is solid but you’re not investing: Your refund just became your future. Max out your Roth IRA contribution for the year. That’s buying freedom for future you.

If you’re already doing all of those things: Then yes, enjoy some of it. But even then, consider using most of it to accelerate your climb. Freedom compounds. Consumption doesn’t.

The answer isn’t the same for everyone. But the question is: where do you need freedom most?

What to Do Right Now

If you’re expecting a refund, here’s your action step before it even hits your account:

Decide where it’s going before you have it.

Not “I’ll figure it out when I get it.”

Not “I’ll see how I feel.”

Right now. Today. Decide.

Is it going to your emergency fund?
Is it going to debt?
Is it going to your Roth IRA?
Is it going to finally fix that financial weakness you’ve been avoiding?

Write it down. Make the decision now, while you’re thinking clearly, before the money is sitting there tempting you.

Because once it hits your account, the consumption voice gets louder. The rationalizations start. The “just this once” thoughts creep in.

Make the decision now. Lock it in.

The New Financial You

You’re not the same person you were in January.

You’ve been tracking your spending. You’ve been building your safety net. You’ve been emptying your financial backpack and examining what you’re carrying.

You’re becoming someone different. Someone who’s climbing.

Your tax refund is the moment you prove it.

The old you would have already spent it in your mind.

The new you is buying freedom.

Which one are you?

See you at the top.