Can You Be In Debt and Still Achieve Your Financial Goals?

What Are Your Financial Goals?

Is it really possible to achieve financial goals while being in debt?

Having paid off $87,500 in debt with $70,000 more to go, my wife and I have many financial dreams we want to accomplish in 2018. The only problem is that we have a $1,200 monthly mortgage payment that makes it hard to invest, save for a new car, or even start putting aside money for our children’s college costs.

It’s not always easy, but I’m here to tell you that you can accomplish your financial goals while in debt.

It all boils down to one word: attitude.

If you think you can improve your finances while in debt, you will achieve financial goals one by one. It might not happen overnight, but it will happen in due time.

Besides attitude, there are three ways to achieve your financial goals:

  • Borrow Less
  • Save More
  • Earn More

Are You Borrowing Too Much Money?

Did you know the average American debt in 13 states is more than the average paycheck–this stat doesn’t even account for home mortgage debt.

Average American Debt

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If you’re like me, two thoughts came to your head the first time you read this statistic:

  • Your jaw dropped to the ground
  • You said, “I want to do better.”

Since I live in one of these 13 states, I can understand how my “neighbors” are spending more than they earn. At the same time, we earn near the regional median income and have zero consumer debt. So what are we doing differently?

For starters, we could have been put in this category if we decided to buy a brand new family car or truck last year (sticker price of $30,000+) when we needed to car shop, but we paid $7,500 cash for a used vehicle instead. While it was eight years old, we won’t be in debt by more than we earn in a year!

Yes, my wife and I aren’t debt-free (yet) but we make conscious decisions every day to ensure we spend less than we earn. Instead of giving into instant gratification and running up a credit card balance, we do the following:

  • Look for Craigslist deals
  • Save up enough cash for large purchases
  • Wait for items to go on sale or clearance

If you’re spending more than you earn, you already have your first financial goal to accomplish–living within your means.

Avoiding consumer debt is one of the easiest ways to improve your finances.

Until you earn more than you spend, you will always live paycheck to paycheck and bounce from one monthly payment to the next.

Save More Money

Right now, where does saving money for the future rank among your other financial priorities?

It needs to be near the top if it isn’t already there.

There are different budgeting strategies to help you set aside some income each month. One of the most popular is the 50-30-20 plan that allocates your paycheck into needs, wants, and saving/extra debt repayment:

  • 50% of your paycheck covers your basic monthly expenses–utilities, rent/mortgage, student loans, insurance
  • 30% goes to your wants–cable tv, after-school activities, charity
  • 20% goes to saving, investing, and extra debt payments

Track Your Monthly Spending

I recommend writing down your monthly expenses and even track how you spend your money on a daily basis for a single month from how much you spend on negotiable expenses like coffee and lunch to the non-negotiables like the electric bill.

My wife and I review our spending on a quarterly basis. The first time or two was an eye-opener.

Weigh Wants vs. Needs

In America, we are “blessed” with the problem of confusing our wants with our needs. Most of us, have never experienced famine, homelessness, lack of clean water that many in the developing world face in their lifetimes.

As we result, we begin thinking we must get the 300+ channel cable tv lineup, a new car every three years, or taking a lavish vacation. While there’s nothing wrong with having these things, most of us can quickly drop our normal monthly spending by downsizing our lifestyle.

My wife and I stream the shows we want to watch online for free or a few dollars, instead of paying close to $100 a month that we only watch two or three hours a month. By buying used cars, you not only avoid depreciation (saving more money), you also avoid borrowing more money in the form of a car loan.

Build an Emergency Fund and Make Extra Debt Payments

In addition to cutting spending to hit the 20% savings target, you have to make sure you set aside 20% in the first place. I recommend putting your savings into a separate account that you don’t pay bills from. We use a second bank just to make sure we don’t accidentally spend our savings if we get lazy with paying our bills and the overdraft protection kicks in.

Emergency Fund

For starters, build an emergency fund equivalent to three months of living expenses. For us, that’s $6,000. To ensure I hit that financial goal, I scheduled an automatic transfer that automatically moved $200 from my direct deposit account to the savings account. Determine how much you can set aside each month and schedule an automatic transfer until your emergency fund has three months of living expenses (six months if you have no consumer debt).

Extra Debt Payments

By keeping our monthly expenses as low as possible, we use a portion of our income to make extra debt payments. By paying off our loans early, we will save over $20,000 in interest payments in our life! That’s $20,000 more we can spend on what we want instead of writing a free check to the bank.

Start with your high-interest consumer debt with the highest interest rate:

  • Credit card balances
  • Personal loans
  • Student loans
  • Car loans
  • Home mortgage

If you follow the 50-30-20 rule and have extra money left over from your “wants” you can use this money to repay your loans or saving if you want.

Increase Your Income Without Working More

I try to live by the mantra “Work Smarter, Not Harder” as much as possible.

While my wife and I pursue side hustles in our free time to boost our income, we also try to earn passive income where the money we have already earned continues to appreciate in value.

Some of the best ways to invest money are through:

  • Stocks
  • Real Estate
  • Peer Lending

My personal financial goal for investing is to earn a return of at least 6% every year. That won’t happen in a CD or traditional savings account, so my wife and I invest in a couple of the above investment vehicles because we believe the reward exceeds the risk.

By having multiple passive income streams, we diversify our portfolio to hedge against any future market downturns. While there will be down years, long-term, earning passive income is the secret to retiring on-time.

Passive income is truly the gift that keeps on giving. It’s why I contributed to a 401k retirement plan with my first job out of college, even though most of my income went to repay my student loans, those initial contributions have grown.

What It Takes To Become a Millionaire

Did you know you can become a millionaire in 40 years, by investing $500 a month? By investing more, saving more, and avoiding debt, you can reach that milestone even sooner.

Even if you are starting with zero net worth today, you can financially thrive in a few years. Most millionaires don’t inherit their fortune or become rich overnight. They started exactly where you did.

By making SMART goals that are specific and achievable (yet slightly challenging), you will improve.


The primary financial goal for my wife and I is to get out of debt as soon as possible. We do this by maintaining a positive attitude, cutting expenses to the bone, and boosting our income whenever possible.












About the Author

I'm a personal freelance writer.

6 Comments on "Can You Be In Debt and Still Achieve Your Financial Goals?"

  1. I agree with this completely! Attitude is truly the difference between people who get out of debt and people who are always in debt. For me, I’m motivated to pay debt now so it’s less (if anything) that I owe later when I want to buy a house or have kids. It stinks in the short-term to put so much towards debt, but it will be so worth it.

    • I’m glad I’ve focused on getting out of debt. We were debt-free for two years until we took out a mortgage…having that feeling of knowing you don’t have to work for a monthly loan payment is very exciting!

      Congrats on being young and being proactive about your future. You’ll reap huge benefits later!

  2. Wow, Josh. When I saw that in 13 states the average person owes more in consumer debt than he or she makes in a year, my jaw did indeed drop. And then when I saw that most of these states were in the south, I immediately began to wonder why. What makes the south different? Then I read about your neighbor and it all makes sense. Southerners do love their F150s. But there’s no reason to buy new. If Americans could just get into the habit of being half normal–as in don’t spend more than half of what the typical American spends on a consumer item–there would be a lot less financial hardship in this country. Thank you for this very sober look at our debt-fueled lives. And thank you for showing us very sound ways of correcting this tragedy. Merry Christmas and Happy New Year.

    • I was shocked to see it was mostly southern states too. Although buying new instead of used happens everywhere in the country, I think being in “truck country” combined with a lower median income are the two largest contributing factors.

  3. Another fabulous post, Josh!! Those debt numbers are really scary. For a long time we were right up with them, and even higher at some points, and I can’t tell you how good it feels to be in the “better” group now. It’s taken years of seriously hard work and climbing up from numerous setbacks, but things are working well now. It’s worth every bit of effort, people. You deserve better!!!

    • I was right at the 100% mark when I graduated college in May 2008. The market crashed soon afterwards. Thankfully I was a supervisor and didn’t lose my job, but the regular workers who had the same seniority were laid off for almost a year, when they finally did get called back, a number of them had maxed out credit cards during that time and everything else.

      It was extra motivation for me to pinch pennies as much as possible to repay my loans as soon as possible. Of course, I did finance a new car for $27,500 the month after I paid off my student loans, so I didn’t practice what I preached. But, my wife & I are doing everything possible to make sure we are never forced to borrow money again for consumer debt (once our house is paid for).

      I don’t want anybody to experience that “trapped” feeling ove literally being in debt up to your eyeballs.

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