A while back (has it been almost eighteen months already?), I wrote a very detailed article about coming up with a debt repayment plan. This plan works – it’s what I did when I realized that I was in serious financial trouble and needed to overcome it.
Yet it’s not the first step in the process. The absolute first step in getting out of a bad debt situation is to break your personal cycle of debt usage.
If you’re not willing to completely stop using debt and to spend less than you earn every single month, no debt repayment plan of any kind will help you.
This is often harder than it sounds. For many people who find themselves in a desperate debt situation, living above their means is simply a way of life. I know that it certainly was for me. I wouldn’t even think twice about spending small amounts of money and I usually found “good” reasons to spend larger amounts as well.
I firmly believed that I deserved lots of material items and the simple fact that I didn’t actually have the money to pay for them didn’t matter. I had credit, after all.
I had part of it right: I did deserve the good things in life. What I didn’t understand, though, is that the good things in life aren’t bought with a credit card.
The good things in life come from having less stress in your life. Stress is derived from a job that you can’t walk away from because you have so many bills to pay. Stress comes from facing a mountain of bills without much cash in your checking account. Stress comes from wondering whether or not you’re going to be able to make rent or make the mortgage payment next month. Stress comes from having more stuff than you can enjoy or possibly deal with. Spending less than you earn alleviates all of these stresses.
That reduced stress helps you across the board. It improves your health. It improves your energy level. It improves your attitude. When you improve in all of these areas, people notice.
When I was in debt, I had all the material trappings I could ever want – but that’s all I had. I stayed up at night worrying about my bills. I was stuck living in a tiny apartment – and even then I was sometimes struggling to pay the rent. I was scared to death to step out of line even one inch at work, which meant that I constantly played it safe, which meant that much of the enjoyment of the job evaporated since I was now doing work I didn’t really want to do. My wife and I got upset with each other quite regularly because of the money issues.
But, by golly, I had myself plenty of electronic gadgets and nice clothes!
Those material items were a prison. They kept me sequestered away from the life I really wanted to lead.
When I realized that those very things that I thought I truly wanted were the very things that were making me unhappy, it became easy to make some changes. I tossed the credit cards, sold off a lot of my gadgets to whack down my debts quickly, and started discovering new things to do.
Who would have ever thought it was more fun to go on a bike ride on a lazy afternoon than to buy yet another barely-played DVD or video game? Even better, when I got home, I wasn’t facing a stack of bills.
The first step towards getting out of debt is to recognize where the real problem lies. It comes from the things you choose to spend your money on – the very things you’ve convinced yourself that you need. Those splurge purchases that are the “spice” of your life are the very things that are causing you to be stressed out, stuck in place, and looking for a way out.
You don’t need that stuff.