I can borrow my way out of debt.
1 min read


The statement “I can borrow my way out of debt” is a financial fallacy because borrowing more money when you are already in debt simply increases your overall debt load. It is like digging a hole to get out of a hole; instead of solving the problem, it deepens it, hence leading to a greater financial crisis. Money borrowed comes with interest, which, if not managed correctly, means you will owe more money than you borrowed in the first place. Additionally, continuously borrowing money without offering commensurate repayments can adversely affect your credit score, making future borrowing more expensive or even impossible.

It’s easy to fall for this fallacy because it can seem like a quick and easy solution. You might think, “If I just take this one loan, I can pay off all my other loans and then only have one payment to worry about”. This line of thinking can be particularly attractive during times of financial stress or uncertainty. That’s why it’s so important to understand the true implications of borrowing money and the dangers of a ‘quick fix’ that ultimately leads to worse financial health.

An effective financial strategy, in this case, involves building a budget, cutting non-essential costs, focusing on repaying your current debts, and finding alternative income sources. Avoid taking out additional loans unless very necessary, and even in these situations, there should be a concrete and realistic plan on how to repay them quickly. It’s equally important to incorporate saving and investment into your financial planning to strengthen your overall financial health.

Further readings specific to this fallacy include:

  1. “The Total Money Makeover: A Proven Plan for Financial Fitness,” by Dave Ramsey. Book Link. This book contains principles on how to dig your way out of debt.

  2. “Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence,” by Vicki Robin and Joe Dominguez. Book Link. This book provides insights into managing finances and avoiding the lure of debt.

  3. “The High Price of Debt: Household financial debt and its impact on mental and physical health” by Elizabeth Sweet et al. Paper

  4. “Debt Snowball Method” - Wikipedia. Which focuses on the practice of building a debt-repayment plan instead of increasing debt by borrowing.