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 email me falling into. To put it simply, they’re just prolonging the inevitable – putting off the necessary changes in their life 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 towards 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 could 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, especially if all you really want to do is just keep up your lifestyle? I suggest five things.
First, simply think about what makes you truly happy in your life. What do you do that actually 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.
Second, 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 some 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 just 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.
Third, 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 – just focus on the small. Then, when one day is a success, look to the next one. Then the next. Take it just one day at a time. And pair it with gravitating towards the positive things in your life and moving away from the negative things.
Fourth, discover things already 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.
Finally, focus on building relationships that aren’t built around 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 is a good tactic for financial recovery. But if it’s not coupled with some other behavior changes, it’s just prolonging 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.