Let me be the first to admit to you that facing personal debt isn’t easy. I remember being worried about debt collectors and being tempted by credit card offers coming in the mail, thinking that if I could use the new card to pay down my old debts just for a little while, everything would turn out alright in the end.
Most of all, I remember being ashamed. I didn’t want anyone to know about my situation, but I didn’t quite know how to help myself out of the situation, either.
But deep down inside, I knew that all of my strategies—avoidance, denial, self-deprecation—were cowardly. They’d only keep me in debt longer, and only make the damages graver in the process. If I truly wanted to be free of debt, I had to find a way to deal with it.
Facing my debt required two things: an attitude adjustment and a plan. The first meant acknowledging that I had debt and that I wanted to be free of it. Saying it out loud to yourself or someone you trust helps.
Then the truly hard work began: coming up with a plan and having the discipline to stick to it. I found that breaking down what I should do into these steps helped me to create some organization and set goals in the midst of an otherwise chaotic, overwhelming situation:
- I made a list of all the debts I owed
- I pinpointed where I could cut my spending
- I figured out a payment plan
Let me tell you, writing a list of all the money I owed—student loan payments, credit card debts, etc.—was painful. But again, with some organization, I figured out how much money I owed and to whom, as well as the minimum payments I was supposed to make and in the case of my loans and credit cards, what their interest rates were. I recommend keeping this list someplace where you’ll see it every day—on the refrigerator or in an important notebook—so you don’t slide back into the denial or avoidance stage again. And when you start making payments, it will feel incredibly good to be able to put a big fat checkmark next to the debts you’ve cleared.
The second list I made was one that included my monthly expenses. To help me with this, I compared several of my most recent credit card and bank account statements to get an idea of when and where I was using my card, and how much I was spending. I recommend clearing your wallet of old receipts to factor in cash purchases, too. In my list, I included both major expenses and impulse purchases—think rent and utilities as well as morning coffee runs—to get a better picture. After all, I knew I couldn’t start skimping on rent payments, but I could start making my coffee at home and bringing my lunch to work every day.
Once I had my monthly expenses tallied up, I had to set goals and figure out where to focus my payments. Here again, I can’t stress enough the importance of organization. I suggest setting realistic payment goals—and by that I mean goals that factor in spare cash for emergencies and some wiggle room for a night out every now and again—to help you get started.
I also had to figure out which debts took priority. Some people prioritize credit card debt by targeting the card with the highest rate first. Others choose to pay off the card with the lowest debt and then work their way up. Still another option is to find a card with a lower interest rate and transfer all your debts into that account. Whatever strategy you decide to use, sticking to it will help keep you positive and optimistic because little by little, you’ll start to feel like you’re making progress.
I know implementing a debt management plan is harder than it sounds. Do whatever you need to do to get organized and stay focused. Make daily checklists. Send yourself email reminders. Create a list of free and cheap things to do in your city so you have options when temptation inevitably strikes. But never give up. You do have the inner motivation and courage to free yourself from debt; you just need to believe in yourself.
Photo by B Rosen
Gettng into debt is pretty easy. Overspending, not knowing your expenses and not having a plan. But getting out of debt is easier said then done for most folks who are aren’t as disciplined. I personally never really thought about how much money I was spending a day, week, month, year on outside coffee. More important to me than drinking the coffee was my routine of driving through the drive thru to get my coffee. My car and body had a mind of its own. The habit of driving for coffee was what I had to change to see a real difference in my desire to spend.
Getting out of debt and not falling in again requires lots of practice. You’ve to work on changing your spending habits, plan new routines, get in the company of friends who don’t just pull your pocket off your pants and creating a lifestyle that works.
Your desire to drive for coffee must have been a routine. Routines that don’t have happier alternatives are hard to change.
I got myself out of debt years ago, and thankfully have not went back into debt. My problem is I am now disabled, and live on Social Security. SUCKS what the government thinks I am worth. But I am having an awful time saving any money. I just can’t seem to stick to a plan, and even then, there is just not much to save. Anyway, glad you got out of debt too.
Thanks for sharing your story Michael. Being in debt is no way to live a prosperous life.
We just paid down a HUGE chunk of our debt from a big bonus I received from work. We never even let ourselves think we would spend the bonus and we just used it to pay off debt.
It was hard to see all that money disappear but liberating to think that we are now debt free except for our credit card (which has a minimal limit anyway)
In South Africa we have an expression called GATVOL. The literal translation means ‘stomach full’ but what it means is that you can eventually get to a stage where you have had enough and then you do something about IT. Often people are like that when they put on weight – they keep ignoring the problem, till one day the stand on the scale and say ‘that’s enough’ – and then go on diet. It sounds like that’s exactly what happened to you. When you became ‘gatvol’ of being in debt – you did something about it. we all have some sort of threshold that is a sign to take action.
Well done and thanks for sharing your story.
I once had a client who sat in my coaching room and cut up all her credit and store-charge cards. It was an empowering moment for her, and she did sort out her debt issues after she reached that ‘gatvol’ moment.
Kirtsen Long
http://www.coach4life.co.za/blog
I like the analogy comparing debt to eating too much. Often that is the case, there is always a tipping point where a debtor says enough is enough and starts to make lifestyle changes.
Good for you! I grew up without any responsibility for money and when I hit adulthood, I didn’t have a clue about how to manage my finances. I learned over time, but I made sure to teach my kids how to budget and live within their means when they were young. That doesn’t mean they always do it, but they have the knowledge and skills that I didn’t have at their age. Great advice here.
As my student loan paperwork starts to roll in, this post came at a good time. I need both an attitude adjustment and a plan, and I need to start now before repayment starts. Thanks for this post, it was a little kick for me to start now.
Prioritizing payments and cutting the spending plus increasing the current income must go together to be able to live a debt-free life.
Thanks for this post.