Debt has a lot to do with your mindset
You would think that debt has to do with money, or the lack of it. Of course it does. But what is even more important in the fight against debt is the mindset you have. That means how you see money affects your ability to live debt free. Does that sound too complicated or weird?
A few decades ago the concept of debt was foreign to most people. Your parents or grandparents, depending on your age, would only buy things if they had the cash for it. People only went into debt if something truly awful happened such as an illness or unexpected death, the home burning down or a business going under because of political upheavals. You didn’t go into debt to buy a car!
But now we do. We go into debt by opening a clothing or furniture account at a big retail chain, leasing a car, signing up to a phone account or taking out an annual gym contract. The biggest enticers into debt are the credit card companies that push up credit facilities as you spend more. At every possible opportunity you are invited into debt with enticing offers to buy goods and services you don’t really need.
This article will deal with changing your Mindset. Topics to be covered will deal with committing to being debt free. It discusses the importance of support from somebody you know and respect. We explore the question of whether you should find a personal coach or rather join a community. And finally have a look at adapting your lifestyle to help your situation.
Let’s get going!
1 Commit to getting rid of All Debt
This sounds really easy, doesn’t it? Commit to getting out of debt just means agreeing it’s a good idea and thereafter forgetting about it. Or perhaps even sticking to it for a month. But then it’s Christmas and you can’t not spend money on Christmas presents, out of town family visits and a weekend away on an anniversary. But you’ll pick it up again as soon as these special events are over. Promise.
Does any of this sound familiar? Have you not had the same struggle when trying to lose weight, attempting to give up smoking or getting fit as some examples. In each case we need to change our mindset. If we didn’t work at changing our mindset we failed. We gave up trying after a few weeks or even months.
This is where commitment is so important. If you are going to commit to getting rid of all debt then that commitment has to cover everything. Most people get into serious debt through not committing to realistic budgets, overspending, facing extraordinary situations such as unexpected operations or accidents, being retrenched and a few more serious situations.
The reason however why so many people get stuck in a vicious debt cycle is that they allow external situations to push them off their commitment. This can be as harmless a spend as presents for special occasions, upgrading a car when it’s not necessary, buying those extra clothes that are not really needed but seem to be so important to get and so on.
What about your credit card company extending your credit. It can’t harm to max out that card again can it? After all the monthly instalments will be low and affordable. However, it’s this kind of thinking that pushes us back into the vicious cycle of high debt burdens until the interest has pushed up the final amount due into the stratosphere.
A true sense of commitment will help you to constantly put the end goal of getting out of debt in front of you. It will seriously help you stick to budgets and cut that spending on little things that add up to huge sums at the end of the day.
2 Take a hard look at why you are in debt
What are you doing that hinders your journey out of a debt ridden existence. What trips you up when you are determined to get rid of this burden of money you owe. This is the part where you look at your particular weaknesses. What gets you pulling out that credit card or taking up instalment based purchase agreements.
Do you need to have your home furnished in luxury so that your neighbours are jealous? Do you think a car will give you a better status in your community. Or do you only feel good about yourself if you wear new clothes every week.
Or what about those small luxuries like expensive chocolates, a bottle of good wine every evening meal. Do you need that expensive gym contract or could you rather walk for free. Do you really need to upgrade to the latest phone model and how about all those toys for your kids that quickly get lost and broken because they have too many already. Is that private school really necessary.
Have a close look at where your money is going and you will see patterns emerging. But it’s not only the spending that is something you can look at. It’s also your income. Are you making do with a job that is below your talents and abilities and that doesn’t pay what you are worth. We’ll look at this more later on.
3 Get support from a friend or close family member
This is a really obvious one isn’t it. But it also one of the most difficult things to do. There is a fair amount of shame attached to being in debt and in particular to be in huge debt. You don’t really want to admit to this to your family and friends. They are going to look down on you for allowing yourself this weakness of accumulating debt that you can’t manage anymore.
Yet having a close friend or a relative support you through this difficult time can be a true life saver. Find that person whom you can phone whenever you need to speak to somebody. Discuss with them the issue, have a sympathetic ear but above all else know you have their support to stick with your resolution of getting out of debt.
You might think this sounds a little like going to the AA and having a sponsor to help you with your alcoholism. In a way it is. Spending more than you have and often is like a drug. ‘Treating’ yourself to new clothes, make-up, a new car or replacing a perfectly good sofa with a new one. These can all be a sign of addiction. You need to spend in order to feel good about yourself. Treat yourself because you deserve it. You’ve worked hard and so on. The reasons are many. None of them truly compelling.
Just as an alcoholic has a better chance of staying sober with a sponsor your chance of moving out of debt will improve with having somebody you can trust to talk to. A person who will support you through any temptations to go further into debt or even just to encourage you in your efforts and to stay on track.
4 Find a personal coach
In addition to a sponsor or personal guide finding a good financial coach might be appropriate. Of course a coach will cost money. However, if you are in serious debt it could really help to find a professional person to help.
If the budget really doesn’t extend to paying for a coach have a look at what books and video based classes and advice you can find to help with your knowledge. Regrettably out of all of the school subjects you have had to study managing one’s finances is not anything that is covered.
This applies to Universities and Colleges as well. Unless of course you attend a bookkeeping or accounting course. Even in these specialised cases the topic of how not to get into debt or managing one’s personal finances is seldom covered.
The good news is that there any many resources available in books or online podcasts, video based courses and more. In many cases very good material is available for free on YouTube. Take advantage of these. Get yourself clued up. We will eventually set up a resources library with videos and courses we recommend.
5 Adapt your lifestyle
Start by telling yourself that you are no longer that person who wastes buckets of money on buying stuff that does not enhance your life experience. Just as a smoker trying to give up tells herself that she is not a smoker in the same way you can tell yourself that you are not a money spender anymore.
Every time you are tempted to spend money on an item you don’t really need you can tell yourself that you are not that person who spends random amounts on even more random purchases. Move away. Do something else. Take your mind off shopping. Stop those trips to the shopping mall.
Continue to tell yourself this and you stand a good chance to give up arbitrary spending. In the same way that a smoker who has decided they are not smokers anymore finds it slightly easier to say no when somebody offers a cigarette. In the same way a smoker has no cigarettes close by, stay away from shopping opportunities.
Go out of the house without credit cards, in fact without any cards. Leave with only a small amount of emergency money. That action alone reminds yourself that you are not going out to spend money and helps you control your urges. You can more easily walk past a shop window without the urge to pop in to buy something if you are not carrying money on you.
Besides not having money on hand start planning your lifestyle to have experiences that cost you nothing. Whether this is a walk on the beach, a climb up the mountain, a visit to friends without planning dinner or drinks. Join a book club and read a book. Cancel that Netflix subscription. Perhaps take up learning an instrument via the internet rather than spending a monthly amount on Spotify.
Eventually you will get used to finding things to do that cost little or no money. In fact challenge yourself to see what you can do that will be free. Might even be an idea to start a blog writing about these activities so that other people in debt can also enjoy them. An article on side hustle will be published soon. in the meantime subscribe to this free Side Hustle School to start learning how to make some extra money in your spare time. Check it here:
6 Make a concerted effort to acknowledge all debt and work to pay it off
This is sometimes the hardest thing to do. Many people in debt have a kind of ostrich approach in that they prefer not to acknowledge the financial situation they are in. This is perfectly understandable. We prefer not to reflect on the bad things in our life.
But to get out of debt means being totally honest about the situation and making an accurate note of all that is owed whether the credit card debt, the bond on the house, a gym contract that can’t be cancelled and the list goes on. Be sure to fully determine the full extent of the problem so that you can tackle it head on.
7 Get financially wise
Money is a big deal in everybody’s life. It pays your bills, if enough is available it can bring great pleasure and can make your life truly comfortable. Talking about actual money here, not credit. Yet we approach money with the least amount of knowledge. Very few people truly know how to handle money. It’s just not taught at schools or even by our parents.
Once in debt we know even less on how to manage this and how to get out of it. Take heart there is an amazing amount of free information available on the internet. There are courses you can take and a library of books to read.
Get yourself clued up about loan consolidation offers, the principle of debt consolidation. Are debt consolidation loans a good idea or should you rather make your own efforts to pay back the debt. Check the various interest rates and learn how your interest could be more than your debt if paid over a long time.
To get you started on this path to financial wellness read these articles by Debt Plan. Do remember though this is just the start. Read everything about debt settlement that you can lay your hands on.
A final word for this first step on How to Get Out of Debt
As much as these articles deal with guidance on how to get out of serious debt, the topics covered could also help people who want to purchase a house, pay for a college education for their kids or save up for their retirement.
This series of articles will most definitely not be the definitive last word on how to get out of debt. Add your own thoughts or share them with us on this blog or on our Facebook page. Help us grow this series so that not only do you benefit but will assist others in your position.
Here is the list of articles that will be compiled into an eBook once all have been published. Download this article if you can’t wait. It’s free and you don’t even need to leave your email address. If you do part with your email address you will know when the next articles are published. Might be worth it then.
Here are all the articles in this series.
Intro: 7 Pro Steps To Get out of Debt By the Experts at Debt Plan
How to get out of debt by changing your Mindset
Learn about cash flow to help with managing debt
Pros and cons of a loan consolidation
Debt consolidation as an option for debt relief
Full implications of a debt consolidation loan
Getting into good money habits with a savings plan
Keep the debt collector away – earn more
DIFFERENCE between DEBT REVIEW and Legal Assisted Debt Restructuring
Debt Review (Counseling)
1.) Listed with credit bureaus
2.) Court procedure
3.) Consolidation or credit applications not allowed
4.) Court procedure needed to cancel Debt Review
Legal Assisted Debt Restructuring
1.) We don’t do credit bureau listing.
2.) No court procedure (informal procedure)
3.) Consolidation applications and normal credit applications allowed
4.) No court procedure to cancel. Cancellation allowed anytime