Can You Be In Debt and Still Achieve 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.












Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.