debt

photo by Jeff Keen

This list may be a wake-up call. If it is, start making some changes because there is no way you’re going to get out of trouble unless you change you mindset, change you habits and change you life.

1. You’re having trouble saving your income.  Pick an amount and start today.
2. You don’t know how much money you owe.  Big problem.  Go get a reality check and add it up right now!
3. Your friends wonder how you manage to live so well.  Ouch – the truth is you’re wagering your future against the present and you’re losing!
4. You’re paying some of your bills with your credit cards.  First problem is you can’t pay the bill.   The second is you just increased the bills amount by adding finance chargers.  The third, you probably can’t pay the credit card bill either!
5. You borrow money from relatives and friends.  They don’t mind helping you out because they like you. Right? … For now.
6. You’re bouncing checks.  Pay attention!  Each mistake you make like that has a fee attached to it makes the problem worse.
7. You don’t need or want some of the things you buy.  Go find the stuff you don’t need or want and return it or sell it.  Find a way to return some value from your poor decision.
8. You get turned down for credit.  First off – why do you need MORE CREDIT?  Second, GOOD!  Fix your current credit and solve your problem that way instead of looking for more.  Additional credit will only make the problem worse.
9. You stop opening mail and start ignoring bills.  You can’t ignore this problem.  It won’t go away unless you make it go away.
10. Money is haunting your thoughts, keeping you awake, and causing you anxiety.  This is your mind trying to send a message. WAKE UP! You’re making the wrong decisions.

Stop right now and start over.  You can get yourself out of this.  Start here.

1. Map out a plan.  Start by figuring out how much you owe.
2. Look at your expenses and cut out everything you don’t need.  And I mean NEED, not want.  This means everything except food, clothes, housing, transportation – the essentials.  The rest are LUXURIES that you can’t afford.
3. Start paying off your debt and don’t stop until it’s gone.

If you make it that far, you’ll know the changes you made and you’ll already know how to make sure you don’t fall into that trap again.  Start right now.  You don’t have a choice.

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I keep reading the argument that people have too much going on to worry about their money.  My response? If you worried about your money more, you wouldn’t be running around like a crazy person!

I just read a post by Ramit over at I Will Teach You To Be Rich and it struck a chord with me.  The post talks about the importance of automating transactions to do the right thing be default.  This is good, but what if you don’t have an extra $100 a month to move to a savings account? You need willpower and you need it now!

If you’re spending too much, too often on the wrong things, then personal finance is ABSOLUTELY about willpower. It’s about changing habits. If you’re automating a transaction to put money out of reach, that doesn’t change the habit. It just moves the location where you will go to get to your money when you want to spend it. For example, Ramit wrote:

If you think personal finance is about trying harder, ask yourself: How has that worked for you in the last month? The last year? Have you really saved more? Invested more?

With the problem we’re talking about though, trying harder is the wrong thing to attack here. If you’re trying anything, then you’ve got willpower. The point to attack is WHAT are you trying harder AT?

You need to change the desire to spend if you truly want to change the fact that you’re not saving. Willpower is required to make such a change. There’s no way around that. If you have willpower you’ll find a way to keep pushing. You’ll find another option out there. Maybe it’s a cheaper replacement for a necessity or cutting out something from your budget that you don’t actually need. That type of analysis will start the engine and willpower will provide the fuel.

One more general point – there’s a fine line between automating payments and “setting and forgetting”. If you want to stop losing money, start saving more, start making more, etc. You need to start PAYING ATTENTION to your finances. You need to learn how to manage money. Creating an automatic transfer doesn’t teach you anything. It just moves your money around when you’re not paying attention. If you don’t change your spending habits, you will find the money you have and you will spend it. Your habit will see to it that it tracks down what it needs. In this case, that’s your cash.

Change the habit and you will learn the importance of saving and investing.

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I just wanted to drop a note and mention that my recent post on Snowflaking Your Way to an Emergency Fund is being featured in the latest stop of the Carnival of Debt Reduction being hosted by Consumerism Commentary.

There’s some great reading at the carnival so stop by and take a peak.  Here are a few of the posts I thought were interesting.

• What to do when your credit cards are closed due to inactivity
• Managing frustration with money goals
• Consider a part-time job to help jumpstart your debt reduction

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I just read a post by Laura over at No More Spending called Never reaching my emergency fund goal. Like many people, I’ve struggled with putting together an adequate emergency fund. The decision often centers around a choice between paying off debt and saving for an emergency fund. The argument I’ve experienced and seen shared most often is that it’s hard to keep money in your bank account knowing that you have debt out there accumulating interest. So instead of building up your emergency fund, most people just continue to pay off the debt.

The problem with this approach is that if you do have an emergency – and you will, we all do – you will have to rely on your credit to cover the emergency costs. So if your refrigerator breaks or your car dies, you’re left with no other options and will end up paying interest on those emergency expenses.

So why not try a different approach.  This worked for me and may do the trick to get you over the emergency fund hump as well. (Click to Continue…)

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When you make small changes in the way you spend or save, most of the time you can expect small results.  There’s nothing wrong with small results, because after all, with time they add up and can have a big impact.  But sometimes you need more than a small change to kick you in the butt and get your moving in the right path. Here are four BIG changes that can give you a huge boost and get you moving in the right direction.
(Click to Continue…)

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Poor money management can lead you down some dark and dangerous roads.  Ever hear the term “dead end”? Of course, we all have. The image that comes to my mind when I think of “dead end” is being stuck, unable to move or unable to make a decision.  People use “dead end” in all sorts of different situations and almost always use its perceived meaning.  Something has ended or will inevitably end. 

Let’s take a closer look at “dead end”.  Just that fact that we say ‘end’ assumes that something has concluded – most likely a trip or journey of some sort. When you add ‘dead’ into the mix, that just reinforces how serious the conclusion is. There is clearly no going back. The real problem though, is that’s not true at all.

(Click to Continue…)

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