How to Start Reducing Your Deb, Part One
In the world of financial fitness, getting out of debt is perhaps the ultimate challengea marathon of money management requiring discipline, skill, and endurance. But just like getting in shape physically, the rewardsmore money, less stress, and great financial habitsare tremendous.
If you don’t owe a lot of money, you may want to go for the fast burn and just get rid of your bills as quickly as you can. But if you’re like most people, and owe a bundle, you’re going to have to dig your way out the slow and steady way. If you try to go at it too fast and too hard, you’ll burn out long before the bills are retired.
Either way, you’re going to have to face the facts: Getting out of debt means you’re going to have to find money somewhere to pay what you owe.
Figure Out How You Got Where You Are
You’ll never be able to get out of debt until you understand how you got into debt in the first place. Sometimes it’s truly something extraordinary that sends people’s finances into a tail-spin: unexpected medical bills, a new child with special needs, a messy divorce, or a failed business. But often it’s more like the leak that never gets fixedeventually those little drips of money turn into a waterfall that you can’t control.
What is it that’s really keeping you from getting out of debt? Are your finances so disorganized you can’t keep on top of them? Are you forking over cash to the kids every time you turn around? Are you living in a house that’s too expensive, or driving a set of wheels (or two or three) that cost a small fortune? Do you and your spouse have no clue how much the other is spending? Are you toiling in a job that doesn’t pay enough? The truth will catch up with you sooner or later; you might as well ‘fess up with yourself now.
The purpose of answering these questions is not to assign blame, point fingers, or rub your own nose in the sand. It is important because, as Steve Rhode of Myvesta.org says, the debt itself is rarely the problem. Chronic or excessive debt is usually the symptom of something else. Those “something else’s” could be:
• Self-esteem issues: a need to “keep up appearances” or shop to feel better.
• Addiction: For some people spending money can create a “high” in the same way using drugs or alcohol does.
• Underearning: staying in a low-paying job, or failing to get the skills or credentials to move up; may be tied in with self-esteem.
• Money fights: One spouse or partner may be using or abusing money as a source of power in the relationship.
• Gambling: not just in a casino, but with business “opportunities” or get-rich-quick schemes.
• Denial; an unwillingness to face money facts head-on.
• Unconscious Living: living only for today, leaving the future at risk.
