Do you know what surprised me most when I started paying off my rather large amount of debt?

Most of what I read – websites, blogs and books – abounded in truisms like ‘don’t spend more than you earn’, minute technicalities of saving and/or righteous judgement. Some of that was useful, some of it was not worth more than a second’s look. What I read, offered information but not the wisdom and understanding that I needed to pay off my debt.

The wisdom necessary to pay off our debt, and stay debt free, I had to figure out. Here I’d share 7 important things about debt that personal finance experts won’t tell you.

Before we move on, let me tell you a bit about me.

I’m Maria; I blog on personal finance and I’m professor at two universities. I have written two PhD theses and have initiated in research many generations of students. Smart, uh?

I also had £100,000 of consumer debt at the beginning of 2010. You see, you can get yourself in debt irrespective of education, background, occupation, gender…Shall, I continue?

The key point is that anyone can get themselves in debt. As with many things in life, getting in debt is not what matters; what you do next is what counts.

What did I do, you may ask?

I got fed up and I got determined. I learned a lot of what there is to know about money: about how to make it, keep it, spend it and invest it. This all paid off. Three years later, at the beginning of 2013, we had paid off all our debt. Now we have serious savings and investments.

The 7 important things about debt I share here, didn’t come from bookish learning: they were suffered and tested through experience.

#1. Having debt is like stealing from your future self

Some people tell me that they have debt but they are not bothered about paying it off. Some people were also very negative when the news that I paid off £100,000 worth of consumer debt in three years; some muttered that I should have gone bankrupt.

You know what?

These people must realise that staying in debt is like stealing from your future self. Why would you want to do that?

#2. Paying off your debt is very empowering

After you’ve just realised how much debt you have, the way to debt freedom looks like a climb to the summit of Everest: long, cold, hard and very daunting.

Don’t feel disheartened. Just start paying your debt off. Very soon you’ll see results and this is so empowering.

When we paid off over £70,000 in two years, I started feeling like Rambo: nothing seemed impossible and sky was the limit.

And you know what? I hustled like a pro! You can feel my elation in my announcement that we are debt free.

#3. Not everyone can pay off their debt

Personal finance experts, particularly bloggers, will try to motivate you by telling you that everyone can pay off their debt.

This is not true. To decide whether you can pay off your debt, use The Money Principle ‘debt repayment coefficient’ or DRC. This is:

DRC = (Annual Pay After Tax – Annual Survival Budget)/total debt

If your DRC is larger than 0.18 you can’t pay off your debt and need to seek professional help. (I’m assuming you know or can work out your Annual Survival Budget but let me give you a hint: this is the spending that you need for your survival and not much less. Still, your survival budget can be surprisingly large.)

I’m not a spoil sport and I’m not here to burst your bubble. I’ll motivate you by saying that if you find your DRC is high, you can start learning how to make more money. It’s all splendid fun.

#4. Most people are in debt because they don’t earn enough

This is certainly something you won’t hear often from personal finance bloggers. They’d rather tell you how to save more and be frugal to the extreme.

The problem with frugality is that it can be very dangerous when extreme. Yes, you can cut your food budget but this often means inadequate nutrition and limited capacity to do much else than make designs on how to be more frugal. Yes, our minds are limited as well.

Yet, when you look at statistics the median gross household income in the UK (2 adults) is approximately £22,000 (this is before tax) and the basic cost of living per person is approximately £15,000 per person. Can you see the problem? It is not surprising that 60% of the people in the UK who live below the poverty line work, is it?

Make sure that you earn enough before you start making plans to pay off your debt.

#5. Habits are the key to debt

When talking about debt we usually talk about money. So, people tell you that you are in debt because you spend more than you earn.

This is technically correct but rather misguided. You are in debt because you:

  • Don’t balance your current account regularly;
  • Don’t control your spending;
  • Don’t spend mindfully;
  • Buy quantity rather than quality; etc.

To put it bluntly, you are in debt because of your habits. To get out of debt, and to stay debt free, you need to change your habits.

#6. To pay off your debt you need focus not money

“Ah, Maria, but of course I need money to pay off my debt.”

Money is secondary, friends. You can spend your money on any number of things. To spend it on paying off your debt you should develop the focus of a hunter. You must stalk your debt, chase it and hit it until it is all gone. All of it!

You wish to know what I mean?

When we were paying off our debt, the smallest payment we made was slightly over £4. This, my friends, is the focus of hunting tiger.

#7. Having debt makes you very vulnerable

Most people would rather judge when they talk about debt. I’ve always been practical (and I never allowed anyone to judge me).

I wasn’t ashamed of having debt – after all, this is the norm and our capitalist societies thrive on debt. No, what really made me mad, so mad that I didn’t stop until the last penny was paid off, was that having debt made me very vulnerable.

The bank could have taken our house.

My employer had a big trump card over me: I needed the job.

My choices were severely limited.

If I were to encourage one emotion when dealing with debt it would be the craving for independence and security. Because they feel great and you cannot have them when you have debt.


Becoming debt free is the best thing I ever did apart from giving birth to my son. It wasn’t easy. It took determination, ingenuity, extremely hard work, learning new skills and repeatedly leaving the safety of comfort zone.

I don’t regret a second of it. Paying off my debt is one of the most empowering periods of my life. It taught me that I can face anything in life and can not only survive but thrive. It taught me to adapt, learn and grow.

Best of all, it was so worth it. People are right when they say that the ones who earn interest sleep better than the ones who pay it.

How has your sleep been?


Author’s bioMaria Nedeva is the founder of The Money Principle where she teaches people in financial trouble how to build sustainable wealth. You can follow Maria’s work on Facebook and Twitter.