Talking About Debt:  Good, Bad or Ugly

Talking About Debt: Good, Bad or Ugly

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Audio: Talking About Debt

Dateline:  Miami, FL, 2001

“I have good credit.  I can just put it on my cards …” I said.

That’s how I justified the poor behavior of my six foreign business partners.  They refused to help make up for their government’s decision to hold back the funding it promised our venture.

Somehow I thought it was okay for me to shoulder my part … and theirs … although I was a minority partner.

And then an event occurred that was outside my control – and which I could never have foreseen.  By the way, things like that do occur, no matter how well you plan.  It’s called “Life.”

In my case it was 9/11.  The economy stagnated as the world (and American business in particular) sat waiting for the other shoe to drop.  Meanwhile, two of our major clients went bankrupt, ensuring that we wouldn’t ever get paid the second half of the huge year-end orders they had placed.

It was all over.  All my cards, business and personal, were maxed out.  The business credit line was tapped.  No reserves for a hole that large in the budget.  No savings.  No Plan B.

So I know all about the dark days of debt, seeing the steady stream of bills flowing in and knowing that there’s not that much in all the checking accounts combined.


I tell you this tale of woe because it’s representative of what often happens when you carry debt … regardless what the details are of your specific story.

However, with changing times, how we look at debt is no longer how we were raised to look at it.  And that change has caught many people off guard.

We were told all along that there was “good debt” and “bad debt.”  Good debt was seen as an investment:  say in a house that would increase in value over time; maybe in an expensive education that would increase one’s lifetime earning capacity.

And “bad debt” was seen as anything incurred for things that devalued with time, such as consumer products, meals, and so forth.  This form of debt was (and still is) best represented by what’s carried on our credit cards.

What’s changed today?  Well, in keeping with the phrase “the good, the bad and the ugly,” almost all debt today qualifies as ugly.  (At least for those of us too unconnected to have access to the inner sanctums of Wall Street firms, mega-billionaire and market manipulator George Soros and others with insider knowledge.)

So what happened to “good debt?”  Well, the housing market is giving ample witness to the fact that it is no longer a safe and ever-increasing store of value.  Just ask the millions whose mortgages are upside down just in the U.S. – that is, they owe more than the house is worth.

Or ask the unemployed 21-year-olds holding a sheepskin diploma – whether from mid-tier schools or diploma mills – what they think their costly educations are worth now.  Granted, unemployment for those holding college degrees is lower than for most others, but a degree is no longer the guarantee of employment it once was.

Pretty ugly.

And what about “bad debt?”  Americans are taking on more and more, with a national average interest rate of 14.99% while the cost of money is down under 1%.  The huge spread results from a combination of high default rates and getting away with whatever the market can bear.

Still ugly.

And what else has shifted?  Frankly, all the foundational economic rules.  When trying to forecast how the economy will react to a particular event, there used to be logical rules.  But now, it’s hard to advise someone how fast to pay down their outstanding debt, for example.  Do they pay down cards or hold on to cash?  Since the  economic tsunami in 2008, all the government intervention in the markets – bailing out banks and corporations, printing money madly and cutting behind-closed-doors deals – means that A plus B does not equal C any more.

How long will it take for the economy to turn around?  We don’t know.  Will all the money printing result in hyperinflation?  We don’t know.  Will government continue covering all the “safety net” entitlements?  We don’t know.

So what to do?

Find where your outflow of money equals your inflow of money.  If need be, pay down debt to that point.  Or increase your income.  That balance is where you’ll find your personal point of peace of mind.

If you haven’t started scrambling yet, and you’re carrying debt, it’s time to scramble.  (And, radical as it sounds, target having a No-New-Debt holiday season.)

With the level of uncertainty the economy is demonstrating, it’s time to be financially conservative.  Do what you can to build up resources that will carry you through unexpected events.  Do extra odd jobs to bring in more money if needed to drive down debt or to set money aside.

Am I a total pessimist?  No, I’m not.  I’m not predicting a dire future because I trust that someone somewhere somehow will put on the brakes before we reach pandemonium.

But I do think we should prepare so we’re functioning from a place of peace of mind, where our judgment is sound, not panicked.  That place of peace that will allow us to benefit from any and all opportunities that cross our paths, and give us choices.

A person strapped with debt … or with a home facing foreclosure … or with a declining or at-risk income has few choices.

Don’t let that be you!

Drop me a note down below, in the comment section, and let me know if you think you’re doing everything you can to reach “peace of mind.”


Bio: Sharon O’Day lost everything at age 53: her home, her business, everything. But how could that be? She’s an expert in global finance and marketing with an MBA from the Wharton School. She has worked with governments, corporations, and individuals … yes, she was the secret “weapon,” if you will, behind many individuals in high places. Yet she did! Since then, with her finances completely turned around, Sharon has gone on to interview countless women.  She’s done extensive research to understand how that could have happened, especially with her strong knowledge of numbers and finance.

The surprising answers will be shared in her upcoming book “Money After Menopause.” Today her mission is to show as many women as possible how to become financially free for the long term, through her “Over Fifty and Financially Free” coaching programs. She has developed a step-by-step plan to get past all the obstacles that keep women broke and scared … and from reaching the financial peace of mind they so deserve.

  • Lori

    Great tip to find where your outflow equals your inflow of money. I love how you said find your personal point of peace of mind. Being in debt is so stressful so it is important to find that peace of mind. Thanks for sharing this great article!

    • Anonymous

      Lori, we each have a place (defined by many factors, including financial) where we feel peace of mind.  What I consider normal risk, you might lose sleep over.  Or vice versa.  At least in my mind, the important thing is to identify where YOURS is and work hard to get there … wherever “there” is!

  • Thank you Sharon…great article! The normal or typical business cycle and the Presidential cycle are not following atypical patterns as a result of a number of factors including globalization and high government debt levels…saving for the rainy day is so important…Thank you, Hughie

    • Anonymous

      Globalization and high government debt levels have eaten away at the underpinnings of our economies for sure, Hughie.  But it’s the schizophrenic responses to events and situations that make projections so difficult.  Yet there ARE opportunities (financial and other) in the craziness, if we’re poised to benefit from them …

  • Very interesting about how old “good” debt isn’t so worthwhile anymore. My husband and I just had the peace of mind conversation last night about our retirement accounts. I think I finally “heard” why his goals for us are more aggressive than the average couple our age.  Felt really good to get clear on things, and I think part of that is because of your influence 🙂

    • Anonymous

      Amity, if I moved you one iota, you will have made my day.  But something tells me it’s more thanks to your clear and open thinking and your husband’s wise arguments.  😉  Congrats to both of you!

      • I receive that (and I’m sure he does too 🙂  But it helps to have a financial role model whose willing to share her successes and failures so others can learn.

  • Brilliant tip Sharon!  Being in debt can be very stressful and I agree it is so important to find that peace of mind. Thanks for posting this article.

    • But isn’t it nice to know, Anastasiya, that we can do something about that debt if we are determined enough?  Granted, sometimes we’re dealt a tough hand, but with time …

  • Great article Sharon.  I HATE debt and like many others, am continually pursuing “peace of mind.” We look for ways to cut back, including not eating out as much, buying food when it is on sale, etc. I just always love reading your articles because they are such an encouragement. Is there a specific link where we can find an article about your specific story and how you overcome when you lost everything?  Would love to read it! 

    • Jennifer, if I ever get around to publishing my long-overdue book, you’ll find the whole story there.  Otherwise, it’s sort of in bits and pieces, all around … so, hopefully soon.

  • Enjoyed reading your story and good advice.  Things have sure changed a lot from when we were younger and money flowed in easier and regular living did not cost so much.  Credit cards have the ability to ruin our lives.  Thankfully WE have the choice whether to let them or not.  Not using credit definitely equal peace of mind.

    • “When we were younger,” Pat?  Feels like a whole other world, doesn’t it?  But when you say “regular living did not cost so much,” think back to what we considered good living!  Much, much simpler.  Very different expectations, much less of a sense of entitlement …

  • Great article about debt… the only truly ‘good’ debt is to be indebted to your intention to create income streams for your future….start a business because there is no better investment than in yourself.

    • Anonymous

      You’re right, Crystal, if funding something solid, then creating primary or additional streams of income qualifies as good investment.  And that’s where so many need help: understanding what’s solid and what’s not.

  • We are definitely working towards having “peace of mind” in our finances. We are selling our house & renting now. I’ll have less stress once it closes on Jan. 18!  Thank you so much for sharing Sharon!!

    • Anonymous

      And I KNOW your children are learning lessons (as age-appropriate) as their parents go through the process …  Bravo, Scarlett!

  • Sharon, you are so right.  Debt is bad and ugly.  Unfortunately we are learning the hard way because of making bad so called investments in real estate.  Now we have 2 houses we cannot sell and other bad debt because of trying to hang on to other real estate investments.  It is difficult, especially when you are 68 and 69 years old.  We are working through it but it is very difficult.  This will be the 3rd Christmas we have not been able to give our grandchildren Christmas gifts.  Thank you for the article.  At present, that peace of mind seems a long way away!

    • Hang on, Pat.  You’ve made it through two Christmases and will make it through a third.  Give your grandchildren love.  Share memories.  Dig deep and get creative.  I know it might be hard for them to understand, since this is the world of the iPod and iPad.  If a little honesty is in order, and if it works for you, it can be an invaluable lesson to a young person.  For yourselves, focus on the small stuff.  Figure out what’s most important to you and hang on to that with all your heart.  Revel in it.  [I remember reveling in flowers (weeds?) that bloomed outside the front stoop of my down-scaled house.]  None of this is fatal.  But, I admit, it sure isn’t fun … 

  • Great Article Sharon!  I love reading these as they make me feel so good about the decisions we’ve made along the lines of what you’re writing about.  Thanks for the tips though as I always seem to learn something new too.  By the way, I really enjoy the choice of listening instead of reading.  It really seems to absorb deeply when I sit back, close my eyes, and just let is soak in verbally!  Thanks again!

    • Congratulations, Robert, on having made good financial decisions over time!  As for the audio of the article, here’s a little secret: as I record it, I find places where I might stumble over a word, so I change it.  Then I go back and change my text.  The side benefit of recording is that it makes ME a better writer!  (And I agree, especial for “aurals,” it’s a great way to internalize information.)

  • Sondra

    My daily affirmation: “I love and respect myself enough to live a financially prosperous and responsible life.”

    • Anonymous


  • We are on the same road Sharon. I just can’t go fast enough! Debt is ugly and I pray I never get to see it’s face.

  • As usual, Sharon, you are spot ON the target.  Am 70.  Have about $12K in debt plus my house.  Get SS$ and am working three part-time jobs.  I feel as if there is no end in sight.  Just since Sept. I’ve had to use my credit cards for hearing aids (0% for a year), new motor for car (cheaper in long run than a car payment every month for 4-5 years), plumbing problems, 27 year old dishwasher and 14 year old hot water heater gave up the ghost and needed to be replaced.  That’s almost $10K of unexpected necessary expenses that I had to put on credit cards.  And my home is worth less than what I paid for it 22 years ago.  That’s a lot of ‘life’.  But you know what?  Am very thankful that I am healthy enough to work three jobs.  I am thankful that I found a roommate who pays her rent on time.  I am grateful that I still have some savings and that I can continue to save a little bit each month.  I have an abundance of food in my refrigerator/cupboards.  My home is in fairly good repair.  I have a great bunch of friends and a family who love me.  And through it all, Jesus Christ is Lord and master of my heart, mind, body, and soul.

  • Not only are your blog posts a valuable contribution to those in need of financial advice during our days of economic uncertainty Sharon, they are always such a pleasure to read ~ or as in my case, listen to.

    Lesson Number One: don’t get into debt…
    Lesson Number Two: don’t despair should Lesson Number One not have been possible, but CHANGE your own destiny.

    It’s all there, Sharon; you present your tips and encouragement in simple yet eloquent terms, giving sound advice/solutions while at the same time keeping hope alive!

    Thank you…

    A smile – Emm 🙂  xx