Welcome back to our short 4-part series on How and Why You Should Get out of Debt. If you haven’t read the intro to this segment, start by clicking here.
Sometimes, being so immersed in the PF blogging world, I forget that there are still thousands of family out there who haven’t taken that first step onto the road to debt free. These are the families I’m speaking to, generally, today.
Let me first start by saying that you deserve better. You deserve to be out from under the horrible stress and anxiety that comes from living with a massive amount of debt, consumer or other debt. However, there are certain things that must happen if you are going to succeed on your “getting out of debt” journey:
You Have to Have Reached Rock Bottom
If you’re going to succeed at becoming debt free, you have to be sick and tired of being sick and tired. You have to be at the place where being in debt is more painful to you than the journey to get out of debt will be. You have to be at the “I can’t take this anymore” place. You have to be at that place where walking over a bed of hot, burning coals sounds more bearable to you than swimming in a volcano, know what I mean? The road to debt free is a tough one, but it’s not as tough as the day-to-day smothering of a mountain of debt. If you’re not there yet, go ahead and do some visuals to see if you can get there.
Visualize your life if your were laid off tomorrow and couldn’t find another job right away.
Visualize spending the next 30 years continuing to live paycheck-to-paycheck with the stress of being in debt.
And visualize the peace and joy you would have if someone came along today with a check that would wipe your debt slate clean.
Keep visualizing what you need to see in order for you to get yourself to rock bottom, to that place where your desire to get out of debt trumps your unwillingness to make the sacrifices necessary to get to debt free. If you can’t do it, you’re not ready.
Commitment to Analyzing Present Habits Must Follow
If you aren’t willing to face the leaks in your financial ship, your spending habits are not likely to change. Spend tracking is a must, for a minimum of 30 days, to see where your money has been going and what led you to get into debt in the first place. Create a spreadsheet or find an online plan like Mint, and start figuring out where you’ve been spending your money.
Another part of analyzing your present habits means working to uncover the psychological reasons you’ve been spending beyond your means. We call this “deep sleep debting”. Check out our story of deep sleep debting here. If you can get to the root of why you’re consistently spending above your means, you can begin the process of healing from this destructive habit. And with that healing comes an easier path to following the next step of your debt freedom plan.
You Have to Create a Doable Plan
This means setting specific (i.e. S.M.A.R.T.) goals for your money. Once you’ve analyzed where your money has been going, it’s crucial to make the commitment that your spending going forward is going to match your and/or your family’s values and goals. This may or may not mean a budget for your family, but it does mean that, when considering a purchase – any purchase – it’s important to analyze whether or not that purchase fits within the goals you’ve set for your finances. In other words, a plan has to be put in place as to how you are (and are not) going to spend your money. But in order to do that, you first need to set goals: attainable, realistic goals. SMART goals (specific, measurable, attainable, relevant, time-bound).
My fave “get out of debt with a plan” book: The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
An attainable goal isn’t “Get out of debt”. An attainable goal, one that has the highest likelihood of being achieved, says “Within the next six months I am going to pay off $5,000 of credit card debt, and I am going to do that by cutting unnecessary spending by $800 a month”. Remember that a goal with the highest likelihood of attainability is one that is set based on a specific plan. This means that if your goal is to pay off $5,000 in credit card debt within six months, you must have an achievable road map as to how you’re going to get there, based on your new income and spending plan.
That’s all, folks, for today. Join us next time for Part 2, Getting Through the Rough Spots.
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