Since the pandemic, plans have changed, but one I’ve stuck with is minimizing our “bad” debt. After an arduous refinance process, we finally closed on what will be a 30-year fixed rate mortgage to replace our floating 5/1 ARM that was set to kick-in next year. We would not be able to afford the home if interest rates increased, but at the time of our purchase an ARM was the only option we had.

Bad Debt – debt that is not paid for by the underlying asset acquired with it (i.e. personal credit card debt, car loan, loan from friend)

Now that we’ve been solely focused on reducing our bad debt load by balance transfers, refinances, government programs, and careful accounting, I’m wondering if I didn’t develop an insensitivity to bad debt over time by being exposed to the high interest high balance debt and not suffering financial death from it (albeit a near miss). It’s been like a terminal illness in remission that you “maintain” until it becomes a part of who you are and you forget about the tragedy of the situation because it’s the new normal for you.

The cost we have carried from owning the right decisions in the face of overwhelming odds and pressures to make the wrong decisions have been a heavy weight on us as a family. The corners I chose not to cut despite the low-hanging short-term gain in front of me, as well as the consequence of trusting a partner lacking integrity, translated to an overextended position that drained our accounts and spirits dry. Our integrity was intact, but bitterly lonely.

Having survived under “fight or flight” response for so many months to repair the sinking ship (from refinancing from 12% to 5% to 4% and screening tenants simultaneously to live with us), I now embrace our bad-debt-free future with a bit of anxiety, “What will I fight now that the bad debt is dead?”, “Am I capable of building stable assets in a less tumultuously painful way?”. Given the lessons we were fortunate to survive, we have hardened ourselves but hope our minds have not narrowed. Hard work alone has not been enough to succeed in this world, and neither has smart work. The tough thing to accept is that although having both is necessary for success, there is no guarantee that the journey will ever yield success at all.

What is known for certain, is that by not trying one precludes the chance to succeed.