By Jeena Cho
Money, especially in the context of debt has a lot of emotions surrounding it. If you’ve been avoiding your debt because you’re feeling guilty, shame, embarrassment, fear, anger or some other emotion, this post is for you.
Being in Debt is Painful!
Frequently, when I meet with clients, I can feel the increased tension in the room. You see, we have all sorts of associations with money. Money represents success, power, ability to purchase things for yourself and your loved ones. Clients will frequently express the emotional pain of being deeply in debt. Common emotions are: shame, fear, denial, frustration and anger.
How Did You Get Into Debt?
Most people don’t end up with unbearable debt overnight. For most people, it’s very gradual. Maybe you don’t have enough money to buy holiday gifts for your children, so you charge it on your credit card. Then when you get your next paycheck, you need more money for unexpected house repairs. So, you charge that too. Then the car breaks down. Or you’re faced with an unexpected hospital visit. Sometimes, it’s simply wanting what you know you can’t afford. You don’t want to feel left out when you see your friend carrying the latest designer purse so you charge it. This feeling of wanting to belong, wanting to keep up with the Joneses is powerful.
Who is to Blame for the Debt?
There’s a tendency to play the blame game. You blame your spouse, your significant other, your parents, your children. The hardest part of the blame game is blaming yourself. Berating oneself for the financial mess and constantly beating yourself up for debt - that’s very common.
You’re Not Alone
Another thing I hear frequently is “I feel so alone.” Debt doesn’t exactly make polite dinner conversation. People in debt go to great lengths to hide their problem. It can feel as though everyone else around you is earning more, spending more, yet doesn’t have the financial woes you’re facing.
If you feel like you’re the only one in debt, read the headlines in any newspaper. Debt is everywhere. We’ve gone through a mortgage crisis and now a student loan crisis. Chances are many of your friends, family, and co-workers are suffering with debt too. It’s just we’ve all gotten very good at masking the problem.
What’s Stopping You from Being Debt Free?
Despite the pain of being deeply in debt, most people resist change. It’s like resisting healthy living. Most of us know we need to drink more water, consume less fat, eat more fruits/veggies, exercise more, yet, we all struggle.
Basic math requires that in order to pay off debt, you must (1) increase income or (2) decrease spending or do combination of both (1) and (2). Some clients resist this idea. They will buy lotto tickets, gamble or try various other ways of coping with their debt, including simply ignoring it. You can guess how well this works.
Kick the Debt Habit
Oftentimes, I’ll meet with clients that struggled with debt for years and they want me to make it better instantly. Frequently, clients want to avoid bankruptcy. I can certainly understand. However, non-bankruptcy options are often more costly than bankruptcy. This includes repaying the debt in full or paying in part, such as debt settlement.
Bankruptcy can only fix existing debt. It can’t help fix your broken budget. If you’ve always been borrowing from the future and subsidizing your lifestyle by using your credit cards, it will mean you have to cut expenses to remain debt free. It means taking a hard look at your budget. It may mean you have to drastically curb your shopping habits. It may also mean you have to give up certain expenses. Like the saying goes, you can’t have it all.
Make it a Priority
I firmly believe that in order to get out of debt, you must make it your number one priority. Look at your budget as though you were a CFO reviewing your company’s P&L. Grab that red pen and start figuring out what expenses go.
Start Big
When reducing your expenses, start with the large line items like rent, and car payments. The reason is that it’s much easier to save if you can reduce your rent by $500 per month than trying to reduce your food budget by $500. Is it possible to get a roommate to offset your rent? How about renting your apartment on Airbnb temporarily? Can you drive your car on Lyft or loan your car on getaround or relayrides?
Go Small
After you’ve figured out ways to reduce your spending on the big items, look at all the tiny ways you’re wasting money. This can be anything from your daily cup of joe to buying lunch everyday.
Yes! You Can Be Debt Free!
The journey to a debt free life isn’t easy. It’s full of challenges. There may be disappointments. You may have to make difficult choices like deciding to file for bankruptcy. In addition, you may need to make some serious adjustments in your spending habits.
Similar to starting a new diet, there will be days where you won’t meet your goals. The important thing is to not give up. Don’t beat yourself up for not sticking to your budget. If you go over budget one day, tomorrow’s another opportunity. Responsibly managing personal finances is a lifelong goal. Don’t let one defeat stop you.
Image Credit: morguefile
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