4: Debt - The Quiet Emergency

Debt is not always a disaster. But it is always a cost. Every month you carry high-interest debt you are paying for something you already consumed, with money you could be building something real with. The reason most people don't feel this is that it is invisible. The meal is gone, the holiday is over, the thing you bought is just part of the background now. The payment remains.

**Not all debt is equal.**
Credit card debt at twenty percent interest is an emergency. A student loan at three percent is manageable. A mortgage on a reasonably priced property is a tool. The emergency kind needs to be attacked. The manageable kind can sit alongside savings without the world ending. Knowing which you are dealing with is the first step to dealing with it correctly.

**The avalanche is smarter. The snowball feels better.**
The mathematically correct approach is to pay the highest interest rate first - you pay less overall. Some people can't do that psychologically. They need the win of eliminating a balance entirely, so they start with the smallest debt regardless of rate. Both approaches work. The one you will actually stick to is the right one.

**Stop adding to it while you are paying it down.**
This sounds obvious. It is not obvious when you are tired and it is Thursday and you do not want to cook. The card either gets paid in full every month, or it gets put away until the balance is gone. There is no version of paying off debt while continuing to accumulate it that ends well.

**Your turn:**
What's one thing you bought on credit that you regret?

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