Two days ago, I received an email from a reader complaining about being in debt, feeling trapped by it, and feeling like a failure because his (or her?) friends are buying houses and are able to afford new cars. They felt really bad that they could not give their family the type of life that they thought they deserved. I wanted to touch on this email here because I am sure there are tons of people out there feeling the same way.
Let’s get one thing straight…if you are carrying consumer debt, it does NOT make you a bad person, ok? I know we see all the ads about people being in debt up to their eyeballs, homes being foreclosed on, bill collectors going on rampages, but you must keep one thing in mind:
You must learn from your mistakes, but making the mistake in the first place does not brand you a bad person.
People that are not able to pay their bills are often labeled with a bunch of derogatory terms, but if you are one of them, do not let this get you down. We all make mistakes; its how you start working on them that makes you the kind of person you are. I racked up a ton of debt in college because I had to have the latest clothes, stereo equipment and those newfangled compact discs that were becoming so popular. It took me years to pay this stuff off once I graduated; I think I was 30 by the time most of my debt was gone. If you find yourself in financial trouble and continue on the path you are already one, it is only going to get worse and worse until you are either a. living on the street or b. having to move back in with your mom. But by taking small actions now and remaining positive, you CAN turn it around, even if it takes a while. Here are some simple things you can do starting today to beat the odds stacked against you.
1. Stay positive. Do not let the radio, the television, your friends or co-workers get you down. You know what you did and you are going to work on it. Deep down, chances are that you are a good person who let their habits get away from them. You are GOING to stop this.
2. Gather the bills from all the credit card companies you owe and sit down. Start writing down the balances on each and the interest on each amount, starting with the lowest balance first going all the way down the page to the highest balance. Do not include your car or mortgage, as we will consider those fixed prices for now and we will leave them alone.
3. See what the minimum payment is on each card. Write these down as well, next to the corresponding card. Now you can clearly see how much you owe each month. I don’t really care what the interest rate is or what you spent the money on; I want you to see how much money you are sending out the door every month for stuff you probably don’t even own anymore.
4. Take a look at your monthly income. Within that dollar amount I know that there are a few extra bucks you can put towards debt. If there isn’t, cancel your cable TV, get a second job, change your wireless plan. Sure, you might think some of these expenses are essential, but for right now they are not. You can have them back when you get rid of your debt.
5. Take that extra amount and add it to the minimum payment on the card/account with the lowest balance. Rinse, repeat, month after month, while continuing to make the minimum payments on the other cards. As soon as the first card is paid off, take whatever you were paying on it (minimum plus extra found money) and add it to the minimum on the card/account with the next lowest balance. Do this over and over again until every debt is gone.
I know its hard; no one says that getting out of debt is easy. This is a basic method that thousands and thousands of people have used to get out of debt, so everyone knows that it works. The difference for you is that you are going to remain POSITIVE about doing it. You are not going to let it get you down, you are not going to look at how long its going to take, you are going to stop spending money you don’t have. Trust me, it will not take as long as you think it will when you keep adding bigger and bigger payments to your bills. Getting into debt is something that happens to tons of people, and most of them are just like you; they made mistakes and they are now drowning in despair and on the verge of bankruptcy. Don’t become one of them, be different. Pay your bills, get rid your debt, change your habits. Filing bankruptcy doesn’t help anyone; the habits remain the same and the debt usually comes right back. A relative of mine did exactly this; she got out from under the umbrella and was debt free, but now she is right back in the whole big time. She is depressed, angry, and working 3 jobs just to keep her head above water. You can change things…you are not a bad person that deserves to be punished by this. Be diligent, stay strong and focused, and the debt will be gone. No one can tell you otherwise.