How to Get Out of Debt – be Debt Free
Q. How do you move a mountain?
A. By loving to shovel.
Debt can be overwhelming and the cause of many things including health problems and ruptures in relationships.
- The most common responses to debt are denial, procrastination and hoping for a miracle (gambling disguised as investing, or worse, lottery tickets). The first step in dealing with debt is to end the denial and examine the root cause of the reality of your money situation. This one is often uncomfortable.
- The fact is that debt, in most cases, is caused by spending more than you can afford. It sounds silly when it is said like that but it is true. So why do we do such a thing? No it’s not the credit card company’s fault; they are only using human nature to further their own interests (profits). The answer is because we want instant gratification. We want what we want and we want it now; the credit card just makes it easy to cave in to this destructive voice. The credit card whispers, “it’s easy, you won’t feel a thing”. If you adopt the habit of spending money that you don’t have on things that you don’t need, and do it consistently, you can end up with serious debt.
– We are the feel good society; buying stuff for ourselves feels good. I remember when I would go Christmas shopping and spend as much on myself as I did on other people.
- The way to start breaking the “using your money for a feel good” trap is to gently begin to examine the inner dialogue that goes on when you are spending money. What is really motivating this purchase? Are you trying to buy a feeling to cover something uncomfortable inside? If you are using a credit card, are you really connected to the number of (after tax) hours that you will have to work to pay for this item? Is it worth it? Is it the best and most balanced use of your money?
- If you can begin to let yourself see the real reasons that you have for putting yourself in debt, then you can begin to enjoy not spending money. You will begin to acquire a taste for saving your money and putting it towards purchases or investments that can create long-term advantages for you.
- Once you can enjoy not spending then the debts can begin to shrink and then the enjoyment of a rising net worth (even in the form of shrinking debts) will kick in.
- The great truth about money is that it is systematic. It is created through consistent long-term effort. Whether it is compound interest or building a business, money comes if the consistent effort is there.
- One of the great myths of being in debt is that “if only I earned more money I could get out of debt”. In my own case, this proved to be untrue. Debt is a result of bad habits with money, when I made more money the bad habits just grew as well. More money, even to the point of winning a lottery, will just magnify your problems if you don’t have a solid foundation in managing money wisely.
- There is no easy way to get out of debt. Unfortunately, networth is like mountaineering: it’s much harder going up than down. However, there is always a way. Start with the tinest steps in the right direction.