Huge debt? Change your mind-set
Posted
Jul 09 2009, 08:28 AM
by
Karen Datko
Rating:
This post comes from Trent Hamm at partner blog The Simple Dollar.
Mitchell writes in:
Currently, we have around $100,000 in credit card debt and we're having a very hard time making the interest payments. How can we consolidate that debt and get a lower rate? Should we go to our credit union?
Mitchell is falling into the same trap that I see a lot of people who e-mail me falling into. To put it simply, they're just prolonging the inevitable -- putting off the necessary changes in their lives because they don't want to face it. They want to keep living their life as it is now.
I know all about this. For years, I did it myself. From 2003 to early 2006, I racked up tons of debt, and near the end of that period, I was concerned not with actually fixing the problem, but with thoughts about how I could move the pieces around to keep the game going.
My thoughts weren't directed toward the choices I was making to create that debt. I was instead thinking about how I could use tricks to not have to face those choices.
But no matter what kind of clever juggling I did -- even once going so far as to do cash withdrawals from one card to pay the bill of another card -- eventually, I found myself backed into a corner. I found myself with a pile of bills, no way to pay them, and a little child completely dependent on me to make good decisions.
When I finally faced facts and realized I had to make a change, I found out something painful. All of that shuffling of money to prolong my current standard of living had made my situation far, far worse than it would have been if I had just faced facts earlier on. The actions I had to take for recovery were more drastic and the lifestyle changes I made were much more stark. Even now, after years of working myself out of the situation, I can easily see how, if I hadn't been so focused on just maintaining my lifestyle in 2005 and 2006, I would be in much better shape today.
The choices you make today will affect your future. You can either make the choice to keep spending with reckless abandon, or you can choose to take a real look at what you're doing and see if you can make some changes.
Where can you start? I suggest five things.
Think about what makes you truly happy. What do you do that brings you sustained joy? Most people immediately begin thinking about whatever action brought them a burst of excitement and joy recently -- like a shopping experience -- but that's not what I'm talking about. Those bursts of joy fade quickly and don't bring lasting happiness. Instead, look for the wells in your life that constantly provide joy, even days later when you think back on them. Family? A few very close friends? Good books? Going to church? Don't worry about what others think -- focus entirely on what makes you feel good. Whatever you find, that's what you should be focusing your energies on. The other stuff can just fall by the wayside.
Think about the things that are broken in your life. Most of the time, I've found that when people overspend (myself included), they're doing it to overcome bad feelings about something. For me, it was a lack of self-esteem, which manifested itself in a desire to impress those around me. Other people might spend money to cover up feelings from a hurt relationship. If you find those broken pieces, don't flinch. Instead, address them head-on. End the painful relationship. Make an effort to patch up a relationship. Find new friends who lift you up instead of constantly dragging you down.
Set a one-day goal. Can you get through today without spending frivolously? Instead of diving into opportunities to spend, look for inexpensive or free ways to enjoy the things in your life. Don't worry about big things. Focus on the small. Then, when one day is a success, look to the next one. Then the next. Take it one day at a time. And pair it with gravitating toward the positive things in your life and moving away from the negative things.
Discover things around you. Look around your town for free things to do. Try new things. Glance at your community's calendar (you can find it online easily enough). Visit the parks in your area, the museums, the community festivals. Dig into all of the opportunities out there instead of just doing the same old thing all the time. You can't break bad habits and build good ones without dipping your toes into the pool.
Focus on building relationships that aren't based on spending. If all of your friends focus on shopping and going out all the time and criticize those who aren't wearing expensive clothes, you might want to back slowly away from that circle. Instead, look for the people in your life who don't focus on such things. The best friends are the ones who are perfectly happy to kick back on the couch and watch a movie together or simply have a great conversation over a bowl of ice cream. They add value to your life and don't subtract from your bank account.
Yes, consolidating your debt at a lower interest rate can be a tactic for financial recovery. But if it's not coupled with some other behavior changes, it's just postponing the inevitable. At some point, you'll have to face facts or face destroyed credit and possible bankruptcy. Stop prolonging the inevitable -- and instead start thinking about what really brings you happiness.
Related reading at The Simple Dollar:
Billy Mays, Michael Jackson, your heart and your bottom dollar
7 ways I use Evernote to improve my finances
Everything you ever really needed to know about personal finance
