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What's Your Relationship With Debt?
Six questions about borrowing, avoiding, and what you actually know.
Debt is less about numbers than about the relationship you have with it. Two people owing the same amount can be in completely different situations — one has a plan and a date, the other hasn't opened the statement in three months.
These six questions are about that relationship: what you borrow for, what you know, and what you do when the balance goes up.
- Do you know your total debt right now, to the nearest hundred?
- Yes, exactly
- Roughly
- Not really
- I'd rather not add it up
- How do you feel about borrowing to buy something?
- Never. I save first, always
- Fine if the rate is low and it's an asset
- It's how normal life works
- It's how I got where I am, and I regret it
- Your credit card statement arrives.
- I already know what's on it
- I check the total and pay in full
- I look at the minimum payment
- I put off opening it
- An unexpected 1,000 expense lands. You…
- Take it from savings
- Put it on a card and clear it next month
- Put it on a card and see how it goes
- Have no idea where it comes from
- Do you know the interest rate on your most expensive debt?
- Yes, and it's why I'm paying it first
- Approximately
- No
- I have no debt
- Your plan for being debt free is…
- A date I could tell you right now
- Paying more than the minimum each month
- Vague — someday
- I can't see one from here
Good to know
Is all debt bad?
No. Debt secured against an asset and priced at a low rate behaves very differently from revolving consumer credit at a high one. The useful question is what it costs and what it buys, not whether borrowing is good or bad in principle.
Should I pay the smallest balance or the highest rate first?
Highest rate first costs the least money. Smallest balance first delivers visible wins sooner and keeps more people going. The method you actually stick with beats the one that's optimal on a spreadsheet you abandon.
Why does my balance barely move each month?
Because the payment is being absorbed by interest before it reaches the principal. When your payment is close to the monthly interest charge, almost nothing comes off the balance — which is what makes high-rate debt so difficult to escape by paying minimums.
When should I get help?
When payments are being missed, when you're borrowing to cover other borrowing, or when you've stopped opening statements. Free, non-commercial debt advice services exist in most countries and they are used to this — asking early expands your options.