In some ways, extreme debt can be compared to other addictions. Just as the drunk feels as if he needs another drink, those of us who find ourselves in deep debt can feel like we need to spend. And just like an addict we find ways to justify our addictions, we deny that they exist and we fail to take an unbiased and realistic look at our spending habits. If you are drowning in debt, the best thing for you could be to take a truthful look at your situation and how you’ve arrived there.
- Do you spend on unnecessary things even though you have credit cards and other loans you know need to be paid off? This is simply a form of denial. You do not fully accept the levels of your debt and the extreme effort it will take to pay it down and finally rid yourself of debt…just like kicking a bad habit. Before you buy that next latte, electronic gadget or useless membership, ask yourself if there is a better way to spend that money. If you have any credit card debt the answer will most certainly be a resounding “Yes.” Then do the right thing and walk away from the purchase and go make a payment on your credit card instead.
- Do you avoid looking at your total debt load and the amount you are paying each month in interest? Again, you are in denial. Next weekend instead of going to the mall or that great new restaurant gather all your bills together and redo your budget. Get a true picture of how much you are spending each month and more importantly, how much of that is going to the credit card companies and other lenders. Find out what interest rate you are paying on all your loans and how much that amounts to in dollar terms each month. I am willing to bet that the answer is going to surprise you.
- Do you buy things you can’t afford and tell yourself it is because you deserve it? You know the old mantra; “I work so hard, I really deserve to treat myself to X.” This is such a western mindset. We have become so accepting of the idea that we “deserve” all the world has to offer. I personally know people who are working 16 hours a day just to make ends meet here in Thailand and I would say that they “deserve” some luxuries, but guess what? They have a very different idea. Their extra cash does not go to the bank in the form of interest payments and it does not go to purchase expensive dinners or fancy electronics. Instead it goes into investments such as their children’s education, land purchases and business interests. In other words, they have a mindset that what they deserve for all their hard work is more successes and a better life for their families.
- Do you have fights with your significant other over your spending habits or has your personal life disintegrated because of your spending? Does it seem normal to you to fight over the things you buy? Is it normal to pay off one credit card by borrowing from another? These are both signs of a serious problem in your personal relationships and in your relationship with your money. Admit to yourself that these things are not normal, make a sincere effort to change them and you will be on the road to debt recovery faster than you might think possible.
Here’s a quote for you to keep in mind when you get the urge to spend money on something you really can’t afford or don’t even need: “Today is a damn good day to stay out of debt.”