The answer to getting out of debt ?
Stop spending !
Oh wait! It isn’t that simple because if it was none of us would be in debt!
Aside from life circumstances that I am certainly not diminishing here, we have some sticky habits that are keeping us trapped in our bad debt cycle.
Let’s take a look at the four biggest and see how we can break their hold on us.
Keeping up with the Joneses
This is a personal favourite.
The desire to have all the things those “Joneses” have.
Because the Jones get to live the good life and the Jones have status.
People admire and respect the Jones and we need that.
Newsflash though. The Jones most likely are living their life on debt and the truth is no one cares about the Jones’s at all. They merely look at them as a source of jealousy and envy.
The irony is that we are so dead set on living the Jones life that we forget to live ours.
And while we go about creating the same debt noose for ourselves we lose sight of the life we actually want.
Eventually surrounded by the results of what we have bought, and burdened with a whole lot of debt, we cannot understand why we still don’t feel like we are living our best life.
Not planning for the future
If we haven’t created a clear future vision, we have absolutely no incentive to put money away to achieve it.
The here and now is our only reality and in our impatience to live out our entire time in this moment and have all our desires met right now it is easy to get seduced by debt.
Debt is a stealthy parasite. It hides behind the shiny things that ignite our desire for instant gratification.
We don’t see the full force of its venom lying below the surface. We only see the “small” manageable amount we have to pay each month.
And each item and each debt translates into that small monthly amount. Our brains are transfixed with the stupor of getting and don’t add each debt together to see the monster we are creating.
Until we do.
And then we feel the might of the monster as it swallows our money up and our future.
Not planning for emergencies
“It won’t happen to me.”
Most of the time we operate with a negativity bias, after all that is how our ancestors managed to survive, by always being primed for danger.
However it seems over time we have developed one caveat to our natural negativity and that is that we are biased to optimism when it comes to the possibility that something negative we have been warned about will happen to us.
And in the face of possible danger, for example in the current environment and the global pandemic we take risks. Because, you know, it won’t happen to me.
This is known as optimism bias.
While optimism is a wonderful thing it is not so great when it leads us to ignore the potential risks and not take actions to mitigate them.
Insurance is one example of this.
We assume we will always be healthy and have plenty of time ahead of us before we have to consider things like this. And so, no insurance is taken out to protect our income should we no longer be healthy enough to work or to provide for our loved ones should we die.
Similarly we take the view that money will come from somewhere when we need it.
This means we don’t take the time and effort to save and create an emergency fund to serve as our cushion if things don’t go as planned.
And this is inviting fate in to do its best and teach us a life lesson.
And it does.
And what are our options when it comes to managing the situation?
More debt is often the result.
It’s time to step off the debt travelator and onto the wealth escalator
It’s time to reinstate your power and slay the debt monster. And it’s not too big and you aren’t too late.
You have option and that means you have the power.
Build a blockbuster future vision that you desperately want
You have to know your why.
That means knowing what you want your life to look like. And once you have that vision your next step is getting all the resources available to you to work towards your goal.
Money is one of those resources.
And once you understand that money running out of your life is not just money but is also your future dreams going with it, it becomes a lot more important to you to hold onto it and to start measuring your immediate wants against your future vision.
And don’t get me wrong the immediate wants are very powerful. That’s how we originally got seduced into them and possibly fell into the debt trap.
This is the moment when we have to talk up our vision and really compare like with like.
And if you have done a good job of energising your vision many of the things you want now will quickly lose their lustre when pitted against our big dream for ourselves.
So build that dream vision and build it so big and bright and beautiful and so compelling that it excites you to think about it and know you can create it.
Tackle that debt and redirect your money to building your vision
Armed with the knowledge and the compelling vision of what you want in your life it’s time to tackle the debt monster and redirect your money to creating your dreams.
Create a schedule listing all your debts. How much you owe. What the annual interest rate is and what each monthly payment is.
There are many ways to tackle the debt.
My favourite is the Dave Ramsey Debt snowball approach. This approach focuses on the debt with the smallest amount outstanding first. The theory is that the easy win of getting this debt paid off inspires you to keep going and as you move along slaying the next and the next in size you build momentum for tackling the last and biggest one.
The other method is the less emotional more numbers based approach and looks to pay off the highest interest debt first. Thereby saving you the most money. This sounds good in theory but in my opinion unless you are seeing quick progress at the beginning you will get demotivated irrespective of whether you are saving money.
The best position is where your smallest debt IS the one with the highest interest but if it isn’t, no problem, because your debt is going paid off either way.
Reach out for support where you need it
If you have done the steps of creating you vision, or even if you haven’t because it is all just too overwhelming, and you have listed your debts but still see yourself being swallowed up by the debt monster as opposed to being empowered to pay it off, don’t give up.
You have come so far in taking action to get clear on what you owe. Now is the time to reach out for help. Contact a free debt helpline such as StepChange. They were created especially to be there for you and their sole function is to help you find a solution to your debt. Reach out, your dream future needs you too.
Speak to family and trusted friends and make sure you get the support you need. This monster is big and ferocious and life limiting. Fight it with all that you have at your disposal.