My debt ballooned as my drinking got out of control. I was spending $400-$500 a month on bar tabs and taxis and as you can imagine, I wasn’t particularly concerned with facing with my financial reality. When I got sober and was faced with all the credit card debt I had accumulated, a new financially responsibility emerged and the debt started to melt away.
What’s blocking you from getting out of debt? If you’ve struggled to get out of debt with limited success chances are that you’re carrying something around that’s either got you stuck or keeping you stuck. The side effects of being in debt are the same as its causes in many cases.
Some life event or condition helped lead you to your present debt situation. Perhaps it was something beyond your control like the loss of a job or reduced work hours due to the economy. Maybe you’ve had to unexpected emergency costs like medical bills. Maybe you’re like me and have a disease like alcoholism that led to impulsive spending and poor financial planning. Maybe it was a divorce or poor communication with your spouse? You got in debt. And for many of you, what happened?
You gained weight. Your stress increased. You may have even slipped into depression. People that are over-indebted are 20% more likely to be overweight, twice as likely to be obese, and four times as likely to be depressed. And as we all know somewhat intuitively, “a depressed emotional state can lead to increased food intake. In the situation of over-indebtedness, eating can become a compensation and gratification. The subsequent positive feeling might be a substitute for other deficits.” [1] As a result, the debt perpetuates.
And a vicious cycle emerges.
How do you break free?
Develop an awareness of the problem.
If you’re reading this article and you’re in financial trouble, chances that are that you’re already aware that you’re indebted. Take an inventory of all of your debt. Add up all the totals on your credit cards, loans, and other debt payments. Get an assessment of your monthly income and expenses using your bank statements or an aggregator like mint.com that will link to all of your accounts. Also make a list of the other life situations and pinpoint what’s keeping you in debt or got you stuck.
Acceptance is the key to all our problems today.
Acceptance is the next step and it is a deeper level of awareness. As you’ve acknowledged that you’re however much in debt, acknowledge that you’re powerless over your spending. Accept this moment as if you had chosen it. This acceptance offers you the power to dig your way out. You got yourself into debt so you are fully capable of making your way out provided bankruptcy isn’t the only tenable option. Consider consulting a financial advisor.
Take action – stop digging!
Take action on two fronts. Take action against your debt by creating a personal action plan and challenge the other root problem that is keeping you in debt.
On the debt front, you’ve already made a promising start. You’re aware and have accepted your problem and itemized your income and expenses. In what ways can you increase your income or decrease your expenses? Create a budget of your monthly expenses with all your major spending categories. What gets measured gets manages so as your track your spending against a budget you are more likely to control your spending. Are there are any ways that you can increase your income, perhaps by taking on some side work? What expenses do you have that are not absolutely necessary? Eliminate them. Create a monthly savings target and stick to it by funneling savings directly from your paycheck directly to a savings account that you’ve set aside for debt reduction. Then you can create a weekly transfer directly to your credit cards and loans. Cut up your credit cards and switch to a cash only system. I’m not a financial planner but would be happy to share my experience and help set up a budget for you for free. [Email me at dealerity at gmail dot com]
On the other front, what other commitment can you make to address the other problems that are keeping you in debt? Do you have an untreated medical condition that you can get care for? Can you commit to start take a walk every morning? Will you discuss your spending problems with your spouse? Can you share a secret with someone?
For those of you that have successfully dug out of debt, what other life situations did you have to overcome?
Thanks again to the Carnival of Debt Reduction for including this post!
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