13 Ways to keep debt from holding you back

I have tons of debt after launching four companies. There has never been a launch that didn’t mess up my personal finances. Most entrepreneurs have no credit – I am like that as well – so I have learned to live with debt and without credit. This is what has enabled me to take risks, set lofty goals, and go after dreams that lots of people tell themselves their debt precludes.

How do I do it? It’s all mental. Here are thirteen ways to think about debt to keep it from ruining your life.

1. Compartmentalize.
When you’re saving for a house you still buy food.  When you go on vacation you still expect to buy a car in the next ten years. That’s compartmentalization. We compartmentalize our financial requirements to enable us to have a long-term goal and fulfill short-term needs too.  Get a money-allocation system in place that will keep creditors from calling all the time, and then stop thinking about it. Do that system and any money left over put toward your bigger goals.

(For a visual explanation of compartmentalization, see the photo up top. Last year I set aside the fact that our house is missing siding and I used that money to build a new section in my garden so I wouldn’t miss spring planting.)

2. Make deals and stick to them.
You can negotiate with anyone. Most creditors are used to negotiating payback plans – it’s part of the business of lending money. So propose one you can manage without too much duress. If they say no, then tell them to take you to court. They rarely will. Instead they’ll likely just accept what you’re offering. Even if it’s the IRS, if you show that you are offering what you can pay without ruining your life, they’ll take the offer. Then stick to the agreement. Consider it a tax for living. And then you can go on with your life.

3. Give up the idea of retirement.
Retirement is an idea from the 1950s when people hated their work. Today you can find fulfilling, engaging work with no need ever to stop doing it. Most baby boomers could not retire, but it ends up that not retiring is a better way to live the end of your life – you remain engaged and relevant and involved. We do not need to aspire to having a pile of money at the end of life, so then continuing to pay back debt at the end is not that bad a situation.

4. Realize you can take back the debt’s power.
At big milestones like graduation, marriage, kids, we can choose to feel optimistic or we can choose to focus on our fears. When it comes to our outlook, 70% is driven by our genes. But you control the other 30%. Practice being optimistic and happy-go-lucky with your debt. When you practice optimism in one area it ripples into other areas in your life.

5. Don’t stop taking risks – the price is too high.
One of the most common regrets people have at the end of their life is that they didn’t take risks. They played it too safe. Most of your life will include some form of debt. If you put off doing what you want because of your debt you are way more likely to have regrets than if you pay your debt off really slowly, or if you never even get it paid off.

6. Talk to your friends.
When people started talking about what sex they were having, they understood both sex and themselves better. Lots of people try gay sex who aren’t gay. Lots of women ejaculate during orgasm. Lots of men can’t keep an erection. We didn’t know all that until we talked freely about it. Talking about something enables everyone to cope with their problems. It’s true with debt, too. Lots of people have personal loans, lots of people owe their friends money. If you find out what other people are doing and how they are feeling you can get better ideas for coping with your debt.

7. Forget about the dream of zero debt if you want kids.
I don’t know anyone in their 40s who has kids and no debt. Well, I know one person: she hired me to coach her because she is pathological about saving money and she never feels secure. Otherwise, people who have kids have debt because it’s human nature to want to give your kids what you can give them. And it’s human nature to be willing to go into debt to do that. Once you know that, you can free yourself from the need of being debt-free before you have kids, (or don’t have them).

8. Achieve financial security as a mental state.
Financial security is all mental. Science says it has to do with the people around you: do you have the same amount of money as the people around you? If you do, you feel okay. Which means a lot of financial management in life comes down to doing a good job of deciding where to live. If you live in NYC with college debt, you feel poor since the millionaires around you could pay cash to get rid of that debt. If you live in Appalachia with college debt you feel rich since you could leave and get a job, and your neighbors cannot. Put yourself somewhere so you can get to a good mental state.

9. Don’t use debt as an excuse.
A risk-taking mentality is not a result of good finances. Entrepreneurs take financial risks all the time, even after they have ruined their personal finances. Don’t tell yourself you’ll take risks after your debt is paid off. It’s simply not true. If you are not taking risks when you have tons of debt you are probably not a risk taker. For better or worse. Debt is not actually bad in itself, but entertaining false beliefs about yourself and debt is.

10. Stop putting so much money toward your debt.
Negotiate the minimum amount you can put toward the debt. It might feel like you’ll never pay it off, but it doesn’t matter. Paying it off does not actually change your life, and  financial stability comes from something deeper than paying off debt. So put the least amount of money possible toward the debt and then use your money to do something that will change the trajectory of your life. Good money research: if you put your money toward experiences, money can make you happy.

11. Just tell people you don’t have money.
Look, we don’t have debtors prison anymore. If you don’t make enough to pay your college loans, you can put them in forbearance. Forever. It’s not against the law to not have money to pay your taxes. It’s against the law to lie about it. You have to tell the government how much you owe, and you have to tell the government why you can’t pay. If you do that, the IRS is actually pretty nice about it. I know: I’ve done it. And credit card debt goes away after seven years (three years in Kansas!). So you might be able to wait it out. (I’ve done that, too.)

12. Declare bankruptcy.
You’d be surprised how many people declare bankruptcy. In fact, a very big group of people declaring bankruptcy are medical students who don’t want to be doctors. See? You’d never guess, right? There is a false belief that bankruptcy is somehow dishonest. It’s not. It’s admitting that you made bad financial decisions. People who gave you money expecting to get it back took a risk. They are professional risk takers. And they took into account everything they knew about you. So, they bet wrong: you couldn’t pay back the money. They are gamblers, and it’s part of their business to get stung by bankruptcy sometimes.

13. Wait out the terrible feelings instead of panicking.
Debt is like depression. It feels big or small at different times in your life. And sometimes if you wait, it will go away. College debt seems insurmountable in your 20s, but the average college debt is $26,000, and the earning power of someone in their 40s makes that debt seem manageable. Paying for two teenage kids to get all the way to college while you’re paying a mortgage and buying a car and paying for summer camp sounds impossible. But the kids will grow up and then your cash needs will decrease.

There is no point in being the most financially responsible person you know. You will not be rewarded. It’s like being the kid who gets a better score than everyone else on the test. Being that much better than everyone else serves no purpose but to skew the curve.


108 replies
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  1. Jim Grey
    Jim Grey says:

    I come from working-class parents but have managed to work my way into an upper-middle-class job. I come from a place of scarcity — we never went without when I was a kid (because my parents were good with what little money we had) but we never had extra, either. Ever.

    I now live in a place of abundance — there is extra. But I still live frugally where it counts. I drive an older used car that’s fully paid for (have two of ’em, actually) and live in a house and neighborhood that my peers wrinkle their nose at because it’s so modest. Only thing I owe on is the house. I’d have serious savings were it not for a very expensive divorce.

    I’m hip to taking risks with my money where they really count, but houses and cars never count. Period. Those are the places where most of my peers have the most debt.

    • Marie
      Marie says:

      I’m exactly the same. My husband and I both saw our parents struggling to get by, and decided our lives would be different. We both have college degrees and zero debt, and an emergency fund of 3 months’ living expenses. There is something incredibly comforting about knowing that if the fridge breaks, or we scratch the car, it’s an annoyance and not a crisis.

      Of course, the maximum interest rate chargeable in my country is 30% for consumer debt, so there’s even more incentive to stay out of debt.

  2. Greg
    Greg says:

    Great post. I can vouch for #11 and #12. The IRS is actually very reasonable, once you talk to an actual person. They’re actually very careful not to accept payment plans that may tap you out each month. With #12, you forgot one thing: creditors write off bad debt. They really aren’t taking a risk lending money, because if you can’t pay it back, they get a tax write-off.

  3. Paris
    Paris says:

    “Retirement is an idea from the 1950s when people hated their work. Today you can find fulfilling, engaging work with no need ever to stop doing it.”

    Yeah when you’re 80 and your hands are shaking, you can barely hold your pee and about to get Alzheimers I’m sure working would be such a joy! “Omg I got a great design gig I’m so excited! So excited! Oh shit I just crapped my pants!”.

  4. L
    L says:

    Thank you. I needed to read this.

    I honestly believed I would never be able to move to NYC until I paid off all my credit card debt I stupidly acquired in my 20s. Then I fell in love with my boyfriend who already had plans to move there. Motivated by the fear of a long-distance relationship, I started interviewing (from DC), got 2 job offers, sold my car for the apartment fee and deposit, and we’ve been living happily in NYC since September. My debt didn’t end up stopping me after all–I can’t imagine having waited to move for no reason.

    Right now, I am coping with a similar fear that I will never be able to quit my full-time office job until I pay off everything.

    While I’m not looking to be reckless (I’ve long since STOPPED accumulating debt and I live below my means), it’s nice to realize that I’m not necessarily doomed to be scraping together late hours freelancing on the side while working a F/T office job for the next 5 years just because I “need” to pay off debt before moving into freelancing full-time.

      • Lucy Chen
        Lucy Chen says:

        For me and my family, the single reason for avoiding debt is freedom. We think debt limits our freedom. The only debt I have is my university loan from the government. Our car is fully paid for, and we rent.

        My husband and I have built a company about 4 years ago, but it’s what they called “bootstrap”. It required little start-up money and our savings was enough. It has about 10 full time employees now in China and 1 part time in Australia (not including my husband and I’ve stopped working for him to work on my art), and it’s debt-free.

        I think it is because we never see debt as an option, we always find ways to do things without it.

    • Penelope Trunk
      Penelope Trunk says:

      I am not sure about debt, per se, but I definitely think that needing money is what makes me work. And I have seen it in the people I coach. It’s really really hard to build a career you care about if you don’t need money because every career requires us to do stuff we don’t want to do.


  5. Kristen
    Kristen says:

    Taking risks should not be synonymous with recklessness. The ideas here marry the two so that you can barely tell the difference. While it’s important to encourage entrepreneurship, risk taking, and the pursuit of happiness – this post suggests some very foolish, irresponsible and short-sighted financial advice. Life-long debt is a fairly new concept in the course of history, and proving to be a poor financial plan for those taking that path. The concept of retirement is certainly changing, but to neglect to plan at all financially for your later years is a recipe for disaster, and ultimately…unhappiness. Additionally, money is a key factor in the deterioration of relationships, particularly marriages. None of the ideas suggested here will be helpful if you hope to have strong relationships or a strong marriage. If your plan includes things like bankruptcy as suggested above, I encourage you to re-evaluate, and dream about the possibilities and the freedom you would have in your life if you had NO payments. That scenario TRULY encourages risk-taking, entrepreneurship and peace of mind. And it is possible.

    I’m typically a big fan of this blog for its provocative ideas, but this was a disappointing read.

  6. BA
    BA says:

    2. Make deals and stick to them.

    In other words, make second deals after you default on the first ones. People can and do screw up, but the tone in this post reminds me of the line in Animal House: “You f’d up, you trusted us.”

    • Penelope Trunk
      Penelope Trunk says:

      I thought of that while I was writing that piece of advice. It’s not so much to keep the deal to earn someone’s trust. I mean, it’s a nice idea, but it wasn’t my point. I was saying that if you tell yourself not to think about the payment then you can compartmentalize better – put it out of your mind and focus on what you actually want to be doing.

      It’s like going to the gym, really. People who go to the gym regularly don’t perceive it as a negotiable point in their day. So going there regularly is not something that takes a lot of mental energy for them.


      • Lucy Chen
        Lucy Chen says:

        Exactly. I’m trying to do 30 minutes of yoga per day, make it a routine. And I’ve realised what I need is to stopping see it as a negotiable point in my day.

      • Gym Money
        Gym Money says:

        Maybe you should be using that gym membership money to pay back your debt. Then maybe you wouldn’t need such delusional compartmentalization.

  7. redrock
    redrock says:

    I would happily work in my profession (or another one) until I keep over hopefully at the age of 90. But, how do I know that my health will hold up? Or that I will be able to work with the same mental alertness required for an interesting job? And why go into debt for your personal life unless necessitated by dire circumstances? I understand risk taking for business and it is necessary, but why apply the same rules to personal finances? Why spend all the energy to figure out how to escape your debtors?

  8. V
    V says:

    I usually enjoy reading your blog Penelope.

    The only take away from this post was financial discipline may not be your area of expertise.

    I am better of taking advice from Ramit Sethi from iwillteachyoutoberich.com about financial matters and take advice from you about homeschooling, risk taking and entrepreneurship.

      • David Wendelken
        David Wendelken says:

        Horribly bad financial advice. Morally repugnant advice.

        I find it ironic that the author of this trash is offering a Seminar entitled “secrets of a successful FOOD BUSINESS”.

        What would those secrets be? Piss-poor planning leading to “tons of debt” leading to stiffing creditors?


        • CLM
          CLM says:


          Wow. Great way to toss mud at your fellow being that you simply disagree with. If your morals are so grounded, perhaps you might consider refining them.

          As for secrets of a successful food business, the best of plans DO fall through REGARDLESS of your ‘careful planning’- haven’t you ever read Steinbeck? Mice and Men? Best laid plans? What if you create a wildly popular product only one vendor/supplier can create and the supplier suddenly increases prices above a reasonable profit margin? Can you plan for that? What if the economy tanks and people suddenly lose the extra income they spent on your product? Would you call automotive manufacturers or airlines a success? They had to be bailed out by taxpayers yet many manage to create and provide products and services you likely enjoy.

          And have you seen the course? Are you a restaurateur? A qualified opinion is certainly better than the mere speculation you’re offering.

          People can say whatever they chose on the internet, but why not use the same respect with one another that you would in person? Do morals suddenly evaporate when fingers touch keypads or are they only tied to credit histories?

          • David Wendelken
            David Wendelken says:

            Well, it certainly is possible to properly plan out a business and still have it fail.

            3 times even.

            Done it myself. I’m starting business #4.

            It’s also possible to do so without ending up in debt or stiffing one’s creditors. Done that 3 times, too.

            It’s also possible to make mistakes and be unable to pay. Haven’t done that but I can empathize.

            But moral scum would plan to do so and advise others to plan to do so, too.

  9. GingerR
    GingerR says:

    It seems to me that a start-up, if it’s successful, should eventually generate cash to pay off debt. If you’ve done multiple start-ups and you’re getting deeper in debt with each one I think I’d have to wonder what’s going wrong.

    • LInda
      LInda says:

      Yes. It might be time to get a job instead?

      It is this mindset (that massive debt is ok) at the personal, state, and federal level that has this country at the brink of an economic collapse.

  10. techkim
    techkim says:

    Wow this is kind of sad.

    I am married with THREE children and the only debt I have (because I put it off) is school loans. I believe in this guy and his way of thinking about money.
    I swear by it and I run my own business.

  11. karelys
    karelys says:

    I think we have to accept debt as part of life from now on. We do get a say on what kind of debt we accumulate.

    I agree with most of the post. Still, I wouldn’t let my credit cards go unpaid because then that would make me ruined in credit. And no one would want to lend me money to do anything.

    It’s possible to live debt free. And it’s possible to save up for retirement. But honestly, no one can tell me how much my money will be worth after the retirement age. And no one can tell me how much money I’ll actually need.

    I think it’s best to have a different plan. Maybe a stream of income that will continue to create revenue even when I am old.

  12. Cassady Dixon
    Cassady Dixon says:

    But wasn’t a big part of the 2008 meltdown the notion that we all paid because too many people took too many risks? We need risk takers, but don’t we need a healthy amount of frugality/caution to counterbalance an excess of risk as well?

    I guess it’s all about deciding what is worth taking a risk on, but that kinda brings us back to square one.

  13. MC
    MC says:

    It’s hard to square this blase attitude with the fact that you’ve apparently been browsing Mr. Money Mustache recently.

    I would love to see him try to set you straight. It would have zero chance of working, but I would love to see it anyway for amusement purposes.

  14. Dangerman
    Dangerman says:

    Projecting much?

    I love arguments that begin “I don’t know anyone who…” because they invariable reveal more about the author than they inform about reality.

  15. Danielle
    Danielle says:

    My life is by no means perfect but…I am 45, have two school age kids who go to a free bilingual immersion charter school (3 cheers for public school) in Northern California in a small city with low expenses compared
    to SF which is an hour away. My husband works from home. I work in healthcare outside of the home 45 hours per week and am the main breadwinner. We have no debt, though we are still renters and will likely take on a mortgage
    this year. I love my job, but I work to live. I enjoy your blog but it seems like most of your posts make people like me seem nonexistent, which I don’t think is true.

    • Penelope Trunk
      Penelope Trunk says:

      I think what people need help with most is what they have a difficult time doing. So some people need to take more risks — go outside their comfort zone. And some people need to find more ways to create stability.

      We each need to try to do stuff that is hard for us so that we grow. And each of us has a growth curve that is different.

      So I don’t think you and your family are invisible on this blog. I think each person sees themselves on this blog in the area where they are taking risks and doing things that are really difficult for them.

      This particular post is good for people who are dying to do something different with their life but they are scared to because of financial problems. Debt should not be a life sentence to slow personal growth. And you know what? The fear of instability should not be a life sentence to slow personal growth either.


      • karelys
        karelys says:

        What a kind response. I am so impressed.

        Many times I feel invisible (and my family) in this blog and the homeschool blog. We don’t have the same values that you do. But I take what applies. And it helps.

  16. Yousuck
    Yousuck says:

    Your in debt because you want to give your kids everything? How about stability, ethics and responsibility?

  17. Le
    Le says:

    I’m in my forties, with two kids, debt free … I never thought I was an anomaly …. We are frugal, drive old cars, eat in lots and enjoy life. I had two businesses and I was better financially coming out of them then going in. They were not high risk nor entrepreneurial … Maybe that is the difference – I bet on a sure thing :)

  18. Bob
    Bob says:

    “Look, we don’t have debtors prison anymore.”

    Whenever I hear someone say that, it translates in my mind as “People who repay loans are suckers.”

  19. CLM
    CLM says:

    People were (obviously) frightened by your ‘my life is messy as I try to balance my child and my own dreams’ post but this one actually frightened me the most. Not in a ‘Gosh, will Penelope be OK?” kind of way (I know you will, so not worried there), so much as it was like seeing a mirror into my own life.

    I’ve taken risks and paid dearly for them. There wasn’t one I didn’t believe in or else I wouldn’t take it. Some people wait their entire lives to take those kind of risks (call it, chasing dreams, if you will), saving, waiting, hoping… dreaming. I’m not sure if they or I have the most practical method because when those people feel they can take that leap of faith they are either too old (not enough energy to carry it through) OR they don’t realize they’re making a hail mary pass- one shot, make or break before the buzzer sounds.

    So which is better- waiting until you feel completely secure and taking a shot at one dream or living your life taking a shot at every dream you fancy? Is there balance?

    My fears subsided when I thought about my own approach. I was more willing to chase dreams when I was younger but have become more careful as I’m older because I’ve seen plenty of failure. That failure makes one strategically plan and consider every variable they can control in any given dream. It helps them weight whether a dream is complete fancy or something that could actually take off. It’s what we can’t plan for and can’t control that’s the scariest- that’s true risk.

    Go to any bank on Earth and they’ll reassure you they don’t believe in dreams- they want to know you’re dream has been raking money in hand over fist for upteen years before they’ll give you a penny. They like innovation, upteen years after it has been making money hand over fist.

    As a side, I’m not really sure how the phrase ‘hand over fist’ ever got associated with money. Seems it’d be hand over palm, as I don’t place my money atop my fist, but it’s a fun phrase to use.

    Anyway, innovation, creativity, dreams require belief and trade offs. You’ve demonstrated that a thousand times on this site. You’ve also shown that sometimes you’ve traded something and didn’t get quite what you expected in return. Everyone who deals in dreams has been there. I think what you may not have mentioned is that some of us chase dreams the way people seem fall in love- we don’t really have much choice in the matter. It’s in our DNA. We’d rather fail a thousand times chasing a dream than sit back and not dream at all.

    That said, I think of this particular blog entry as advice to younger dreamers, who will eventually find they too may have no choice but to chase what others fear or may ridicule them for. “A financial survival guide for dreamers”, you may call this, because debt rarely stops someone who MUST pursue.

    I guess the only advice I can add it that Ramen noodles taste great, are very filling and are dirt cheap. Without the salt packet, they’re even healthier, with Cholula hot sauce they’re wonderful.

    • JackReno
      JackReno says:

      Agree with the notion that this is really a post on risk vs. responsibility. And agree with Penelope (and all the research) that those with the moral high ground here may be left with some regret later in life for those things not done, not risked.

      Aren’t most of the entrepeneurs we hold up as being the best of America those that took substantial risk when starting? Dropping out of colleges, financing ventures on loans, maxed credit cards, etc. The only difference being that their ventures were ultimately successful and wiping out the debt they had accumulated. But, was there a guarantee? No. That’s what risk is and why it gives the biggest reward and frankly part of what makes America great. If everyone sat on what they had, they’d never move out of their hometown, work outside the family business, or go to college (takes debt there, doesn’t it?).

      From my own experience, I do not like the debt I have accumulated precisely because it prevents me from doing more. However, those debts involved moving cross-country twice for a better quality of life for my family. Frankly, getting the family out of unhealthy environments. Was that worth the debt? Yes, definitely worth the debt. But, doesn’t mean I sing its praises to the rafters either.

      I am a responsible person and believe there is something to keeping your word and promise, but I’m not a stupid person that would stay in misery because I owed someone money. I think a lot of people allow themselves to be stuck (and miserable) because they are afraid to risk and mask it with a lack of funds, opportunity, etc. And while I think there is merit to the argument of a whole society on credit is not good for that society, there is equal merit in the argument that a society full of miserable people is not good for that society either.

  20. Jack @ Enwealthen
    Jack @ Enwealthen says:

    Great advice on negotiating payment plans. Most people have no idea how to negotiate, let alone that negotiating debts and payment plans is possible. It’s the only way I survived the financial impact of my big accident. Everything is negotiable, all the time. Live it, be it, do it.

    Heartily disagree on the kids == debt idea. I grew up not having everything, and it made me better appreciate money, and the work my parents did to provide for us kids. In no way will we go into debt to provide “the best” for our kids. We provide the best we can afford and still achieve our financial goals. Going into debt to give things to children is bad for you, and teaches your children bad money management habits.

    Instead, when the want something, make them work for it. Teach them how to plan, save, invest, and even go into debt (but smartly). Don’t worry, they already know how to spend…

  21. Lauren
    Lauren says:

    You can debate a lot of these both ways, but I think it’s really important to take away that you can still work toward your dreams when you have debt. I’ve read a lot of personal finance books, and they all tell you to pay off debt before you do anything fun with your money. I’ve read exactly one that says you need to pay towards retiring your debt, but you also need to save for your dreams. That’s the one I follow. I have about $10K in credit card debt that may be with me for the rest of my life, going up and down as I have the occasional multi-thousand-dollar crisis (HVAC death, septic system replacement, etc.). My credit’s still good enough for me to get 0% balance transfers. It moves from card to card every year or so, and I pay a couple hundred dollars a month on it. This payment is manageable in our budget and the interest rate comes out about 3%, with balance transfer fees. And we’re still able to save for fun experiences. We saved for 4 years and took a trip across the country last year, paid for without incurring additional debt. I wouldn’t say we’re poster children for sound financial management, but if I were to die tomorrow, I’d much rather have had a few more great experiences in my life than be debt-free. It might not be better in terms of dollars & cents, but I can’t take those with me.

  22. Nick
    Nick says:

    It’s ok to borrow money, sure.

    It’s ok to accumulate debt, maybe some.

    It’s ok to never manage to pay it back in your life time… Say what?

    This is horrible advice and a huge part of what’s wrong with American Culture. Seriously? You think it’s ok to stiff the person who loaned you the money to live your life the way you did? It’s ok to just mooch off “the man”? What gives?

    This is a load of crap and horribly irresponsible, especially if you have/want kids. You want to give your kids everything, but instead of leaving your kids a nice chunk of cash when you keel over, you’re leaving them debt to deal with for you, how nice.

  23. Jen
    Jen says:

    There’s something missing from this post. I am married to someone who has taken a lot of risks with our shared money. When the risk doesn’t work out, I am left to figure out the clean up and deal with the stress of that. He loves the risk part but can’t then follow up with the fixing it part when things don’t work out. Some people have a borderline addiction to risk taking and I think my husband is one of those people. It can put a tremendous strain on a family and a marriage. It definitely has with ours. Both spouses have to be comfortable with this type of accepting your debt / taking more risks despite debt lifestyle.

    • Penelope Trunk
      Penelope Trunk says:

      So true! The divorce rate among entrepreneurs is very high. And also there is a selfishness aspect to the whole idea of taking financial risk to do something interesting – it’s often just one person’s idea of interesting.

      I see a lot of marriages where there are opposites – a person who plays it safe marrying someone who makes their life interesting, and vice versa.

      In the farming community I see so many family farms that are really just the husband working the farm, because he loves the farm. But it doesn’t really make money, so the wife has to work an “off-farm” job, which is usually in an office. This strikes me as very similar to the financial risks we are talking about because one half of the marriage is financially enabling the expensive excitement of the other half.


  24. Letting Go
    Letting Go says:

    Teach your children how to make their own way through life. Show them how to open doors and slam them behind in conformists faces.Leaving behind a few dollars when you die is not a good plan in life. They will spend that very quickly and it will not change their lives. The majority of successful people accumulated large amounts of debt and kept going forward. With debt also comes opportunity, and it is these people that you can thank for creating jobs and when the economy is thriving. It is the usually the quiet, conforming conservative that you need to be careful of. They are worse than the risk takers that you loath. They are sneaky, liars, and thieves.
    Do you really feel sorry for lenders and large corporations that take advantage of you and treat you like puppets? By conforming to society and becoming very average is good for some, but not for all. For people like myself and apparently Penelope, if you aren’t taking risks then you just aren’t living.
    Call me irresponsible, but I do not want to live in a box.

    • Nick
      Nick says:

      By all means teach your children, and provide for them while they grow, but racking up debt to do so, then leaving them to handle your debtors and field collections calls for you as your estate is divided up upon your death is just a cop out.

      By taking out loans and using lenders you’re empowering them. They’re not lending money because they’re losing it, they’re lending money because it’s making them very wealthy. So while you think you’re burning the man when you don’t repay your debt and you declare bankruptcy, and your marriage falls apart and you slip into depression then lie to yourself to get out of it, they’re still banking wicked cash and not giving a damn about your misery.

      The only way to really burn those untrustworthy conservatives that are loaning you their wealth (and collecting oodles of interest from the poor/middle class) is to not make use of their services and instead buy within your own means. Interest and debt is what keeps poor people poor. You talk about being non-conformist, but taking out loans, racking up debt, and declaring bankruptcy at least once in your life is the (older generation) American way.

      For business ventures, using your own wealth and going into personal debt is foolhardy at best. This is what VCs are for, and if you can’t attract VCs, you’re investing in something a VC wouldn’t, so you’re making a lousy bet. If you can secure funding, that’s not personal debt, then by all means proceed, and know that you’re probably making a good bet. The success stories from personal investment ventures are slim pickings and sensationalized. The real success stories are with real investors taking interest in a real opportunity.

      But really, all of this boils down to personal life goals, and what you value. Some of us value honesty, ethical behavior, and not abusing others investment in us, then there are those would would rather take what they can when they can and watch the world burn in their wake.

      • Letting Go
        Letting Go says:

        I would never leave debt to my children the way my parents will when they die. They are still buying houses in their 60’s and the first one isn’t even paid off yet. I think I might not even pick up the phone when they die, change my name and go hide in the woods.
        I actually don’t owe any money to any lenders. My debts are small and stupid. I lost my corporation over fifteen years ago. Liquidated my assets and walked away.
        I think people need to freely risk what they have if they want something better. I risk only what is in my pocket, but these large corporations did rack up large debt in previous attempts and are the reason why many are employed. They learned from their mistakes and moved on. On the other side of it, they are more than willing to lay you off, permanently most times when they are no longer growing. I still believe in being a non-conformist, working for yourself, and breaking down barriers.

        • Leslie
          Leslie says:

          Legally family members are not responsible for a relative’s debts after they pass away. The exceptions would be if you are the executor of their estate or have cosigned a loan for them. Their debts would be paid by selling any property that they have.

          • Anna
            Anna says:

            Correct. Regardless of what their lenders may tell you, no one is obliged to pay anyone else’s debt unless they have cosigned. Period. If there isn’t enough money in the estate it doesn’t matter.

  25. Chantell
    Chantell says:

    I wonder if all the commenters who enjoy financial stability (as defined by the financial preachers who enrich themselves on the aspirations of the indebted) also endeavor maintain tidy inboxes. What’s the point?

    • Nick
      Nick says:

      Ya, sheesh, they’re probably the same people who try to show up on time to meetings so they don’t impose on their colleagues too.

    • LInda
      LInda says:

      The point is to avoid becoming a slave to a corporation. The point is to have something to pass on to the children and grandchildren.

  26. Isabelle
    Isabelle says:

    I think the conversations about debt are entirely different for my generation (Millenials- I’m 29) than they are/have been for everyone older, because we are the first generation graduating with massive amounts of student debt and a truly terrible job market (particularly for some of the most educated among us.) I can’t tell you how many friends I have with PhDs or professional degrees that have MASSIVE debt and pretty bleak job options. (Academia, anyone? Law?) We have to live with debt in a way that our parents and grandparents never did, and it can be terrifying and paralyzing if you aren’t able to compartmentalize the way Penelope is talking about. The “responsible” friends I have who have spent their twenties paying off their student loans have taken no other risks, are already working in jobs they hate and will probably be stuck in them forever, and at 30 can barely think about being able to afford kids in the next 5-10 years. I’m waiting as long as possible to pay my student loans back, taking entrepreneurial risks in the meantime, and making sure my own kid knows it is a terrible idea to go into debt to do something just because it is “the thing you should do” (ie what my generation was told about going to college.)

  27. Chuck J. Rylant, MBA, CFP
    Chuck J. Rylant, MBA, CFP says:


    I have mixed feelings after reading your post.
    I write personal finance books, so it’s probably obvious my recommendations differ.

    However, I can’t deny there is a lot of entrepreneurial reality baked into your personal finance advice. That said, as a financial advisor, I think you may be setting up a lot of the wrong people for unnecessarily sleepless nights.

    Entrepreneurs tend to be reckless – which maybe you’ll agree your perspective on debt is. And as you correctly state, you have to take risks as an entrepreneur to make it.

    I get it. I am one.

    But personally, I don’t think it is prudent to encourage such risky choices. Entrepreneurs are going to take those chances regardless what the “experts” say, so they probably benefit more by being reeled in a bit.

    And the non-entrepreneurs, who I suspect are the bulk of your audience, likely do not have the stomach to take the ride you’re suggesting. And it is a scary ride.

    If they did, they would probably not be employees. That does not make either group superior to the other, just different.

    In other words, your recommendations may be a great way for the entrepreneur to emotionally deal a very bad situation they created, but I don’t think it’s wise to suggest intentionally getting into such a difficult position.

    Now, as a marketer, I think your post is pure genius. Preaching to pay off your debt doesn’t generate a lot of eyes on the page. So although we don’t completely agree, I applaud your marketing here.



  28. Lisa
    Lisa says:

    Just declared bankruptcy today! Never felt better! Other than some of the forms we had to fill out were pretty fucked… My partner and I were filing jointly, and I was listed on ‘spouse’ on all of the forms. Ummm what? I’m the primary income earner damnit! You’d think that would get a little recognition! But nope, still just a woman I guess. Although he never actually asked about that so… whatever!

    • Kate
      Kate says:

      I’m glad you feel better now that you’ve declared bankruptcy. I hope it gives you the chance to start over fresh and build a strong financial future.

      Unfortunately, the rest of us are now paying off those debts for you in the form of higher interest payments and other impacts. And that’s the problem with this post. SOMEONE ends up paying. Shouldn’t it be the person who lived outside their means in the first place? I don’t condone financial irresponsibility by design. Which is what this post seems to suggest.

      • Lisa
        Lisa says:

        As a practical communist/communitarian, I’m not interested in maintaining the state or private markets. Sorry that your interest rates are going up… I suggest you look into bankruptcy and community living as a possible alternative :)

        • Nick
          Nick says:

          As a practical communist/communitarian who isn’t interested in maintaining the state or private markets you must realize that if everyone declared bankruptcy, there’d be no more loaning of money at all. If everyone takes the low road, we all lose, and the state of the union would look something like the current state of Russia. The only way Communism can work is if corruption is low, and people aren’t abusing the system (either by a police state, or a culture that bakes in doing the right thing, or both).

          The ultimate problem with your mentality, that putting the burdens on the backs of others is ok, is that the wealthy will never take on your burdens for you (unless forced via taxation). The wealthy will just pass the burden along to the middle and lower classes. When you go bankrupt, the bank doesn’t take the loss, they raise interest rates. When you dine and dash, the restaurant doesn’t take that loss, they raise their prices. If they didn’t, then they’d go out of business. The burden will always be put back on the average Joe.

          The only way to beat the system (as so many people in the comments seem to want to do, but misguidedly aren’t doing) is to not use it. Want to get a slice of wealthy pie? Don’t take out loans, don’t give some wealthy person/company your money in the form of interest. Unless you can find a return that is greater than the interest, you’re flushing money down the drain.

          For entrepreneurs, the single best bet will always be to find someone else willing to risk their money on you. Then the risk is so much less on your back, and it also means your emotions are somewhat taken out of the equation, since your investors are (hopefully) investing logically and taking educated risk. This means you’re not just some sucker betting on a lame horse.

          • Lisa
            Lisa says:

            Sorry dude, my job required me to own a car, and pays $17 an hour at 30 hours a week. How the fuck am I supposed to afford that? I managed to make it so that I don’t need a car at work… But at a certain point I couldn’t afford my rent.

  29. Amy
    Amy says:

    My husband and I have been “poor” / “rich” / “poor” / “rich” (relatively speaking, not ever bazillionaires) several times already in our lifetimes. We have taken business risks, enjoyed success, and then watched it slip away (always our fault, not blaming anyone or the economy). We have also gone through times of working for others and the general financial stability that brings. Both situations have good and bad points to them, and I anticipate that we will try them each again sometime (we are in our 40s).

    We have had huge debt – truly huge debt – several times in our lives. With this last one (recession era), we were told many times that we should have done the bankruptcy thing, but it wasn’t for us. We feel that part of taking the risk is taking the fall that comes with it sometimes. We always pay the debt back, though sometimes slower than we wish we could. So, though I don’t agree with your take on bankruptcy, I do agree with a lot of what you’re trying to convey about debt not being a good excuse to live life in a way you don’t want to.

    And, regarding marriage and debt, I am like Jen who posted above (the “responsible” one). Over the years, I have found I can handle anything as long as I know exactly what is what. The problem for us was never the debt, it’s been when someone hides it or tries to minimize it. We’ve learned that it only works if we’re honest with each other. (Took a LOT to learn that lesson, but glad to finally be there.)

    Thanks for writing this, Penelope.

  30. Anna
    Anna says:

    I’m not comfortable with this post. My husband’s ex-wife claimed bankruptcy, defaulted on credit cards, took risks with family money, etc., after the divorce (which she wanted) and guess who suffered? We did. My husband is incredibly careful with money and very frugal yet is mired in financial troubles due to her. His 800+ credit rating dropped to 540 within a year of th3 divorce due to her actions and it took us three years before we could qualify for a mortgage and buy a modest home despite our middle class incomes and lack of debt. Once we were on a mortgage together, his ex-wife’s financial woes jumped from him to me. I was just turned down for a business loan (I’ve operated a small company for ten years) due to a poor credit rating caused by her unpaid medical bills (for cosmetic dentistry no less). In other words, I can’t take a risk and grow my own career thanks to the casual “whatever” attidtude of my husband’s exwife who has a life is short, take what you want attitude. Taking financial risks with your career is fine; carefree defaulting on credit cards, bankruptcy, etc. is not. This type of irresponsiblity affects everyone around the offender.We are constantly harassed by collection agencies and we have spent time and money dealing with lawyers to try to financially “divorce” her. It’s impossible. And don’t get me started on how her attitude towards financial matters is affecting her own kids. I’m seriously considering a divorce to protect myself and my own child. Sorry, Penelope, this post sends the wrong message.

    • Anna
      Anna says:

      “his ex-wife’s financial woes jumped from him to me”

      Just to clarify, her financial history affected my husband’s credit rating, and then affected my own credit history once we bought our first home together and merged family finances.

    • Penelope Trunk
      Penelope Trunk says:

      Anna, this is great financial advice to people marrying someone who is divorced: you marry their ex as well. So if you don’t want to be married to their ex, don’t get married. You could easily have set up house together and acted as a married couple but not mingled finances. I know it’s too late for that, but it’s a good cautionary tale for anyone else considering this situation for themselves.


  31. Coach Oz
    Coach Oz says:

    Great financial advice. I recently read that owning a home is actually one of the worst ways you can put yourself in Debt and that renting is better. Read Rich Dad Poor Dad.

    Coach Oz

    • Nick
      Nick says:

      This is not universal advice and completely depends on the area that you live in, how much debt is acquired purchasing the house, what your debt interest rate is, and what your expected return on investments would be.

      If what you’re paying in rent would be higher than mortgage + taxes + insurance, it’s probably better to buy since you’d be building equity with a portion of the mortgage payment + have extra money to invest each month. Then renting is endless, where a mortgage has an end point (other than taxes + insurance).

      NYT has a nice calculator to figure out how long it takes before buying is better than renting based on 2 of the factors: http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0

  32. Dana Petersen
    Dana Petersen says:

    I think this is a reasonable article for those who have or face debt. As a current college student, a lot of these tips are very applicable and beneficial. I see classmates who all their money goes to is the debt and they don’t live, stress out and burn out. If money is divided wisely debt can be handled properly. Though, my goal is to eventually be debt-free. Great piece.

  33. g. martinez cabrera
    g. martinez cabrera says:

    I have to say: when I first read this piece, I thought you were kidding. Then, I thought you were being irresponsible. But the more this piece stayed with me–and that’s a credit to your blog, because how many blog posts can you say stick with you–the more I’m glad I found your blog, and this post, in particular.

    Like some of the other comments above, I didn’t grow up with much money. I’ve noticed that some people who come up that way become obsessed with money, and others seem to come out indifferent. But I was somewhere in the middle: in my mid-20s’, I got a credit card, and then, for the first time in my life, I could have things. No more no’s after a childhood of them.

    Still paying for some of those decisions all these years later. But this post spoke to me because it told me to move on. Fix the previous mistakes as well as I could, and still, live my life.

    Not bad for one blog post, Ms. Penelope. Not bad at all. Thanks

    • w roq c
      w roq c says:

      Gabe, visited your site…read your latest post…great point and on point in regards to the one of the main subjects of this blog.

      Big cities are a reflection of what is going on in America and the world, in general; that being the accumulation of wealth at the top…those Google Buses being a great example of this, in particular. (The excesses of wealth come In many forms.)

      But when the big cities are exclusively enclaves of the rich, who will serve them their lattes? I want to see how the brightest guys in the room solve that conundrum…robots, probably…

  34. w roq c
    w roq c says:

    Like a previous commenter, I also write books on the subject of personal financial management.

    My books, the information in them, I mean, are based on my own experiences…at the age of thirty-two I was broke (which I define as having no savings), unemployed, in debt to the tune of $50,000, and, except for the kindness of family, would have been living in my car.

    In retrospect, I would have been better off had I managed my money better…but I didn’t know how…simple as that. Dad was a field worker who only made it as far as the eighth grade and liked to brag that he was the best educated person in his family.

    There was no one around me to teach me how to manage money so as to avoid the financial meltdown I experienced. I did not know what I did not know and paid dearly for my sin of hubris.

    That is where I am coming from and it is based on my perspective that I have come to conclude that it is better to avoid debt in the first place. (Obvious, I know, but then why are so many smart people so deeply in debt if it’s so obvious?)

    But, if you have already accumulated a bunch of debt, then you have got to make peace with it because if you are in debt, that is probably not the biggest financial issue you face.

    If you have debt, then it is almost certain that you have no savings…and THAT is a much more serious financial issue than your debt. And getting past broke should take precedence over fixing your debt.

    I tell my coaching clients to focus on building their savings and to, basically, chill out (with a plan) in regards to their debt…one took to calling me the debt whisperer…I liked that.

  35. Jay
    Jay says:

    You should trade coaching for the labor to finish your siding. Might even get the materials thrown in. If I lived closer than Louisiana I would pop over and take care of it.

  36. Lindsey
    Lindsey says:

    Having no debt and a few months of savings has allowed me to take risks in my 20’s that my friends didn’t. I quit jobs I hated, moved a lot to try new things. I’ve always lived below my means, which just meant no fancy car or big house or expensive vacations, but day to day, I live like my friends–same clothes, weekend trips, social life, etc. But, many of them are stuck in jobs they hate and can’t leave because they built a lifestyle around the salary.

    We fundamentally don’t understand each other’s perspective. Being stuck in a job you hate because you’re paying a huge mortgage is terrifying to me. And, to them, moving and changing jobs is terrifying.

    Maybe that’s your point — I need more stability and they need more risk.

  37. Jim B
    Jim B says:

    This is a tremendously insightful and helpful post. It’s a guide for navigating the reality of the financial challenges that so many of us face today.

    I am disappointed by the judgemental tone of so many commenters on this post.I don’t think Penelope is advocating that anyone should charge off and run up debt without thinking, or “screw the man” through loan default. She’s calling out the reality of how risk taking and entrepreneurship work in a market economy and how people are afforded an element of protection from complete financial ruin if their risk taking doesn’t lead to a successful financial outcome.

    I’m 48 and borrowed heavily to do an MBA 15 years ago. It took me almost 10 years to pay off the loan since I am from overseas and like many I had to make a lot of financial sacrifices after graduating. I consider myself financially responsible (live in cheap part of New York, drive a 10 year old car etc) but I have very little in major savings, still rent an apartment and know that retirement unlike that of my parents’ generation

  38. Jim B
    Jim B says:

    will need me to keep on working.

    This post, like so many of Penelope’s made me realize I am not alone in the struggles I deal with, and I need to be bold and face the realities of where our generation is financially with some optimism.

    This is an awesome post and you have given all your readers some great stuff to think about.

    Cheers Penelope.


  39. Alice Price
    Alice Price says:

    The points made here are true, but also somewhat deceptive.

    Debt as a concept may not be a bad thing, but the unfortunate fact is that when you make bad financial decisions, it can (and does) hurt other people. Credit card companies, banks, etc. may seem like huge, nameless institutions and yes, it’s difficult to drum up sympathy for their financial well-being, but if you maxed your credit cards and had no plan to be able to realistically pay it back, that’s pretty dishonest in the end. Yeah, those companies take risks professionally and it may have been a mistake for them to lend you money to begin with, but they did so in good faith because they trusted the person you were on paper (then you stole from them). Saying that they “deserve” it or that they take things like bankruptcy into account is like saying that it’s ok not to pay your bill at a restaurant because they made the mistake of serving you food before they gave you the bill. That’s no logic at all.

    Also, there are so many kinds of debt that it’s a bit of a generalization to say that paying it off doesn’t change your life. Paying off a mortgage can significantly increase your financial freedom–to the point that it can be the difference between being able to invest in the experiences that really make you happy or being tied to your house payments forever. Also, if you are on the receiving end of a personal loan, paying it back can be the difference between maintaining a healthy relationship and completely losing someone’s trust. Even not paying your IRS debts means that other people who “played it safe” are contributing to public services you use while you are not.

    The point is, in the end, I agree that debt should not rule your life, and these this article outlines some really important ways to keep it from ruining everything else you do. But there should never be excuses that make it ok to not repay what you truly owe.

  40. Dave
    Dave says:

    Most people who are inept at managing money don’t really need help rationalizing their practices or enablement. I guess, when you are deep in debt, there is a point where you need to stop obsessing non productively about it, but the advice should be to do something about it, not ignore it and go after your dreams. People need to come up with credible plans to get out…not just say, oh, I’ll pay off the credit card debt when my blog hits it big.
    I understand…you can see debt as a tool. With your eyes open, you can make practical choices that involve debt. But don’t tell people who ran up big consumption debt and just bought whatever their kids needed, they should compartmentalize it away.
    Their are plenty of parents in their 40s with kids and only a mortgage for debt. We don’t throw $3-400 birthday parties and we don’t play every sport. We drive beat up minivans. Clothes pass from child to child. We have a deeply-ingrained “cheap” mindset from parents who took the kids to Disneyland once and went out to the car to eat PBJs rather than buy food at the park. Parents who had to be begged and argued with for years to purchase a pair of Nike sneakers or upgrade to Levi’s jeans. That mindset, while it did not produce a startup company success story, did allow kids to flourish and parents to retire and travel the world on all the money that was saved and invested from every cheap choice over 40 years…

  41. Mark W.
    Mark W. says:

    I like this post. It provides to me an insight an entrepreneur may possess with regards to their relationship to money. I don’t have to condone or take certain pieces of advice to appreciate the honesty set forth. I can pick and choose based on my own experiences and personality. The first two paragraphs prior to any advice made it clear the advice was personal (“I” was used four times). Whenever I read advice, it’s important for me to understand the author’s perspective to get the most out of it. I could say I could have used this advice in my twenties. Then again I may have dismissed it out of hand because I didn’t agree with some of it. My relationship with money is conservative most likely because of my parents, family, and friends. I have some regrets like passing on a trip to Costa Rica and an Alaskan cruise when I had the money and opportunity. A good sized down payment on a house was more important to me at the time. It is what it is and each one of us has to live with our decisions. Blogs and social media in general were not available when I was making my decisions. The comments are just as valuable to me as the post itself and appreciated.

  42. New Friend
    New Friend says:

    P. You are an inspiration and the voice of real people. Thank you for being you. You say what so many feel – what so many are afraid to admit. You attack the fear and angst head on. Your talent is a gift. You, your spirit, your words are a gift. Thank you.

  43. Hannah
    Hannah says:

    I liked this article because it convinces me that you are completely committed to entrepreneurial hedonism (you might not like how I classify your world view, but I like to classify people too).

    I would like to point out one thing which nobody yet has pointed out. You seem to think the goal of personal finance is to be a high income earner so you can get rid of problems as the pop up. I (and many others) believe the goal of personal finance is to become rich so you don’t have the decision fatigue associated with who to pay, whether to work on finances or your career, etc.

    • Nick
      Nick says:

      Hannah, good point. Taking this into account makes a lot of the comments and the original post a bit more clear, at least where they’re coming from. This ties back to “The Millionaire Next Door” book where they classify people as UAWs and PAWs. Wikipedia has a nice summary of it and the concepts; just search for The Millionaire Next Door to find it.

      It’s basically a building wealth vs. having money available mentality.

  44. Katybeth Jensen
    Katybeth Jensen says:

    I came back to read the comments after thinking about this post for a few days. I’ve made financial mistakes and your post is certainly reassuring on that level. And it’s true it’s better to negotiate than hide. On the other hand this is not the life I would want my kid to live. I want him to pay cash, stay away from college loans by finding alternatives and use his creativity to fund his dreams without the drama and angst of depth. I want him to be trustworthy and for people to know he is a good investment. While re-building the Bug he is has funded his dream with a loan or two and will pay everything back by March 1st. I’m not worried about his credit rating, I want him have a strong trust rating. I want people to be able to count on him. I’ve have not always set a strong example and I certainly understand spending beyond your means for your kid but I think he has learned from my financial mistakes and angst as well as my willings to go for it….time will tell. I just want my kid to have options that usually come with savings, and trust not debt. Me? I’ll keep much of this post in mind and use it reassure myself when times are overwhelming.

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