While I was browsing the internet looking for information about my current situation I came across Todd Tresidder's article about getting out of debt from Financial Mentor. He says, "Debt is not a financial problem. Debt is actually a personal problem masquerading in financial clothing to deceive us." Hard to believe, but it is true. That's why so many people have persistent problems with debt and I am no exemption to it.
Defining our debt problem correctly is critical to solving it. Most of us mistakenly define debt as a financial problem, thus developing financial solutions. That's why our debt returns shortly after paying it off. We fail to identify the root cause of debt, opening the door to repeating the vicious cycle.
A permanent debt solution requires a plan of attack based on proven principles that will actually work.
When I just pay off my balances, I relieve the painful symptoms. But the underlying condition that put me in debt in the first place still lurks under the surface like an insidious cancer ready to return.
It's a key principle. Understanding this principle is what will make or break our success in slaying the debt monster – permanently.
Defining our debt problem correctly is critical to solving it. Most of us mistakenly define debt as a financial problem, thus developing financial solutions. That's why our debt returns shortly after paying it off. We fail to identify the root cause of debt, opening the door to repeating the vicious cycle.
A permanent debt solution requires a plan of attack based on proven principles that will actually work.
When I just pay off my balances, I relieve the painful symptoms. But the underlying condition that put me in debt in the first place still lurks under the surface like an insidious cancer ready to return.
"Debt’s real cause is personal life habits and attitudes that result in overspending. In other words, the true solution is personal – not financial."
Step #1 - Avoid treating the symptom instead of the cause.
When we get a headache, what's our logical response? We reach to the medicine cabinet for immediate pain relief. Unfortunately, the various pills do nothing to cure the underlying disease. It merely treat the symptom. The cause could be excessive stress, brain cancer, dehydration, eye strain, or any number of other issues. By taking a pill we’ve treated the symptom, but not the underlying cause.
The same is true with debt. Everyone knows we need to make more and spend less to solve our debt problems. As a result, we pursue financially driven solutions to relieve financial symptoms. It all seems logical on the surface. The only permanent solution is to change our life habits and attitudes that got us into the problem in the first place. We're the cause of our debt, and we will be the solution.
The same is true with debt. Everyone knows we need to make more and spend less to solve our debt problems. As a result, we pursue financially driven solutions to relieve financial symptoms. It all seems logical on the surface. The only permanent solution is to change our life habits and attitudes that got us into the problem in the first place. We're the cause of our debt, and we will be the solution.
Step #2 - Purchase only what you can afford.
We have this belief that we magically deserve all the good things in life regardless of what our financial statement says. After all, why shouldn’t we have the latest I-phone, a big screen TV, pedicures, and a new car? Everyone else does, right?
The wealthy habit is to only purchase what you can afford to immediately pay for. The wealthy attitude is you are only entitled to what the balance in your savings account shows you’ve earned.
The wealthy habit is to only purchase what you can afford to immediately pay for. The wealthy attitude is you are only entitled to what the balance in your savings account shows you’ve earned.
Step #3 - We must plan.
Debtors (including myself) tend to disconnect spending, saving, and earning from each other. There is no budget, no plan for retirement, no tracking of numbers, and no strategy for increasing earnings.
In short, the debtor lives month to month because there's no plan to do anything different. Many questions are never considered such as how to handle a job loss or medical emergency. The default answer is often debt because there was no better plan.
The wealthy habit is to run your personal finances like a business with plans and actions steps designed to produce a financially secure result. Develop reserves for the inevitable rainy day and insure those risks you can’t afford to lose. Save monthly from earnings for retirement.
In short, the debtor lives month to month because there's no plan to do anything different. Many questions are never considered such as how to handle a job loss or medical emergency. The default answer is often debt because there was no better plan.
The wealthy habit is to run your personal finances like a business with plans and actions steps designed to produce a financially secure result. Develop reserves for the inevitable rainy day and insure those risks you can’t afford to lose. Save monthly from earnings for retirement.
Step #4 - Taking responsibility of our debts.
We're the cause of all our debt problems including debt resulting from unexpected events. Maybe you lost your job because of an economic downturn, or you ran into unexpected medical expenses, or a sudden and desperate family problem came up. These are all very common paths to debt, and they all imply the debt was not your fault.
While it might be true that the unfortunate circumstances were beyond your control, the fact that they resulted in debt is fully within your control and 100% your responsibility. For some, this is a bitter pill to swallow. Facing this truth can be uncomfortable, but you must see the cause of your financial problems looking back in the mirror, or you may never get out of this vicious cycle of debt.
While it might be true that the unfortunate circumstances were beyond your control, the fact that they resulted in debt is fully within your control and 100% your responsibility. For some, this is a bitter pill to swallow. Facing this truth can be uncomfortable, but you must see the cause of your financial problems looking back in the mirror, or you may never get out of this vicious cycle of debt.
Step #5 - Risk management planning prevents debt.
Financially successful people know that bad things happen to good people and manage those risks with appropriate insurance and reserve funds. The rule is simple: always insure those losses you can’t afford to take.
When you plan for unpredictable (but inevitable) adversity, then you are prepared so that the inconvenience of a temporary setback doesn’t result in financial calamity. Proper insurance and emergency reserves are a normal and necessary budget item similar to food and utilities.
If you don’t think you can afford insurance, then look for ways to reduce your spending so that you can. It’s not optional because eventual debt is the likely alternative.
When you plan for unpredictable (but inevitable) adversity, then you are prepared so that the inconvenience of a temporary setback doesn’t result in financial calamity. Proper insurance and emergency reserves are a normal and necessary budget item similar to food and utilities.
If you don’t think you can afford insurance, then look for ways to reduce your spending so that you can. It’s not optional because eventual debt is the likely alternative.
The truth is nobody looks forward to adversity. But when you are prepared, the consequences are temporary and manageable. When you don’t prepare, the financial results can be devastating.
There are many ways to get into debt, but there's only one key principle to eliminate our debt problems permanently. It begins by taking responsibility and recognizing our habits and attitudes are what caused our financial debt symptoms to appear. Remember that our debt is a personal problem masquerading as a financial problem.
Please feel free to share your idea on the comment section. Your opinion matter the most and is one of a million grace for more financial growth and development towards the author and readers.
It's still up to you.
There are many ways to get into debt, but there's only one key principle to eliminate our debt problems permanently. It begins by taking responsibility and recognizing our habits and attitudes are what caused our financial debt symptoms to appear. Remember that our debt is a personal problem masquerading as a financial problem.
Please feel free to share your idea on the comment section. Your opinion matter the most and is one of a million grace for more financial growth and development towards the author and readers.
"The cause of your debt is within you – not outside of you."
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