Jeena Cho

Sex & Money: Getting to Zero - Fighting Student Loan Debt

As a bankruptcy lawyer, I’ve worked with hundreds of people in helping them get out of debt. Recently, I’ve seen more recent grads coming into my office with six-figure student loan debt.

Oftentimes, when I meet with recent grads, they’re in full freak out mode. The $120,000 loan may as well be $1,200,000 because it’s all scary and overwhelming. The fear leads to increased stress and anxiety. When we’re in stressful situations, our body responds by releasing stress hormones, which prepares our body for flight or fight response. The response is great if you’re being attacked by a saber-tooth tiger but not when you need the rational part of your brain for problem solving.

I’ve been there. I used to have fairly regular panic attacks (and insomnia) because I couldn’t even begin to wrap my mind around this very scary thing called student loans. The thing that helped me the most in figuring out a strategy for getting out of debt? Mindfulness and resiliency.

What is Mindfulness?

Mindfulness refers to our ability to simply observe a situation and our emotional state without judgement or reaction. When my brain starts hyperventilating and going into full freak out mode, screaming things like “It’s SO much money. How am I ever going to pay it off? I’m going to end up homeless!” Instead of feeding into that hysteria, mindfulness allows me to simply notice the emotions, then fade away.

Mindfulness gives you a momentary reprieve. It gives you better control over your emotions. It’s the difference between shouting back at your opposing counsel when he raises his voice versus calmly suggesting to him that you continue the conversation once you’ve both cooled down. Mindfulness allows us to respond to a situation with clarity instead of reacting.

What is Resiliency?

Resiliency is the ability to find wholeness and to bounce back -- from difficulties, setbacks, stress and adversities -- to a place of thriving. It’s the knowing and trust in ourselves and our ability to figure out a solution to life’s challenges that shows resiliency.

Most of us are not taught personal finance skills in school so the first time we ever have to deal with money (or debt) issues is when we finally graduate from law school. The added stress of thinking that we should be able to skillfully manage our money and the lack of conversation/education around debt management doesn’t help the situation either.

However, all of us have inner strengths which we can use to help us get out of tough situations. We just have to remember that we’re resilient and that we can and will get through this.

Tips for Cultivating a “I CAN Get Out of Debt” Mindset

  1. Breathe. First, we want to calm our mind and body so that we can rationally think through this problem. Start practicing relaxation and breathing techniques everyday to reduce the stress so that your frontal cortex, the executive part of your brain can sit in the driver’s seat. (There are many apps for this. Check out: Mindfulness.)
  2. Be Kind to Yourself. It’s easy to get into a cycle of beating yourself up - for not earning enough, for not being more fiscally prudent, or for not being “good enough.” Most of us are experts at motivating ourselves with the stick so start building your resiliency muscle by motivating yourself with a carrot. Whenever you notice your inner critic, take a deep breath, acknowledge the the negative chatter by saying “Thank you. I know you’re trying to help” then say “I know I can figure this out.”

  3. Have Confidence. Tacking 6-figure debt can feel completely overwhelming and it’s sometimes easier to go into denial and hide from it. However, this will only make the situation worse. With student loans, the only practical solution is to get through and pay it off as quickly as possible. Make a list of all the obstacles you’ve overcome in your life and all the challenges you’ve tackled. Now, look at all of your skills and strengths - ability to find solutions, ability to work well with others, ability to think of creative solutions, ability to work hard, ability to learn new skills, etc. You have many more tools and abilities than you realize. Start using those tools to help you find a solution to getting out of debt.  

  4. Personal Finance 101. Just like Con Law, personal finance isn’t something we’re born knowing. Start educating yourself on personal finance. Go to the library and browse the books on personal finance. Start reading personal finance websites like Kiplinger, Get Rich Slowly, Money Magazine. Remember, financial professionals spend years learning these skills so recognize that you aren’t going to master money overnight. It’s a practice and a skill that you’ll cultivate throughout your life.

  5. Crunch the numbers. I’m often surprised by the number of people I meet where they have no idea what the bottom line number looks like. For example, if you have $120,000 of debt at 5% over 25 years, what’s the monthly payment? (Answer: $700). While $120,000 can feel like a completely unmanageable number, thinking about it in smaller chunks may help ease the anxiety. To calculate the numbers, use this handy calculator.

Do you have tips for kicking student loan debt? As always, I love to hear from you! jcho@jclawgroup.com or Twitter @jeena_cho

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