Few principles in financial planning are black and white. Individual circumstances drive most decisions.

But there’s one black-and-white elephant we need to address before anything else: high-interest-rate debt.

I know, I know. The inaugural post for a firm called Two Palms Financial was supposed to be about living your best life sipping cocktails on the beach.

Before we get there, we need to make sure a tsunami of high-interest debt doesn’t submerge your paradise.

When used well, debt can fuel growth. Student loans can support professional growth. Loans can support an undercapitalized business with high customer demand for a product or service.

When used poorly, debt can take over.

Let’s look at an example of Dane with $20,000 in 7% credit card debt and Dan with the same balance but with 25% debt. Both are making $500/month payments.

It takes Dan almost double the amount of time to payback his 25% debt and over $20,000 more in interest payments than Dane and his 7% rate.

Financially, high-interest debt consumes an outsized share of your household or business income. If your paydown schedule is not aggressive enough, the interest payments continue to pile up further impacting your credit score and ability to borrow in the future.

You may be forced to sell personal assets you hold dear or underperforming investments at an inopportune time.

An indebted business owner may need to sell assets critical to the business’s growth to reduce or eliminate the burdensome debt.

Beyond the financial consequences, all-consuming debt can cause undue stress, sleepless nights and potentially risky behavior.

Resilient financial planning often involves pouring hours of analysis into scenarios: best case vs. worst case. Probability of success vs failure.

Don’t let high-interest rate debt cripple your prospects of attaining your short and long-term goals. Avoidance of decisions that lead to nothing but trouble are just as important as the ones that bring you closer to your desired outcomes.

Crippling expenses or a sudden loss of income can seemingly arise out of nowhere. So how on earth can you plan for them? Build a fortress.

The Non-Negotiables: High-Interest Debt