Debt Reduction: Figure Out How You Got Into Debt
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Figure Out How You Got Where You Are
You’ll never be able to get out of debt until you understand how you got into debt in the first place. Sometimes it’s truly something extraordinary that sends people’s finances into a tail-spin: unexpected medical bills, a new child with special needs, a messy divorce, or a failed business. But often it’s more like the leak that never gets fixed—eventually those little drips of money turn into a waterfall that you can’t control.
What is it that’s really keeping you from getting out of debt? Are your finances so disorganized you can’t keep on top of them? Are you forking over cash to the kids every time you turn around? Are you living in a house that’s too expensive, or driving a set of wheels (or two or three) that cost a small fortune? Do you and your spouse have no clue how much the other is spending? Are you toiling in a job that doesn’t pay enough? Be honest here! The truth will catch up with you sooner or later; you might as well ‘fess up with yourself now.
The purpose of answering these questions is not to assign blame, point fingers, or rub your own nose in the sand. It is important because, as Steve Rhode of Myvesta.org says, the debt itself is rarely the problem. Chronic or excessive debt is usually the symptom of something else. Those “something else’s” could be:
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Self-esteem issues: a need to “keep up appearances” or shop to feel better.
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Addiction: For some people spending money can create a “high” in the same way using drugs or alcohol does.
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Under-earning: staying in a low-paying job, or failing to get the skills or credentials to move up; may be tied in with self-esteem.
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Money fights: One spouse or partner may be using or abusing money as a source of power in the relationship.
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Gambling: not just in a casino, but with business “opportunities” or get-rich-quick schemes.
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Denial; an unwillingness to face money facts head-on.
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Unconscious Living: living only for today, leaving the future at risk.
All of these problems can be addressed, but only when they are recognized first.
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