Managing Debt

Help! I’m In Debt… Again

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You hate debt.

You got out of debt once and vowed you’d never let it happen again. But here you are – stuck in debt again.

It’s not fair! How did it happen so quickly?

And what can you do to create a permanent debt solution so that you never repeat the pattern again?

The Permanent Debt Solution

Defining the source of your debt problem is critical to solving it. You believe your debt is a financial problem, but it’s actually a personal problem masquerading as a financial one. That’s why a permanent debt solution eludes you.

Treating debt as if it were a financial problem is similar to trying to cure the flu by blowing your nose. You relieve an obvious symptom but don’t address the underlying cause. When you don’t address the cause, you don’t get better.

In other words, debt is often just a symptom of a much larger problem: an addiction to an unsupportable self-image and lifestyle that results in overspending. Until you address the real problem, the symptom will recur, which may explain why you are in debt again.

What that means is debt’s real cause is often personal life habits and attitudes that result in overspending. The rule is simple – you must spend less than you earn. There’s no way around it.

However, teaching a chronic debtor to spend less and earn more is like telling an overweight person to lose weight by eating less and exercising more. Everyone already knows what to do. The difficult part is actually getting it done.

How to Permanently Slay the Debt Monster

Sure, you want to get out of debt as fast as possible, but superficial financial solutions result in repeat offenders. Using debt consolidation, or transferring balances to a HELOC or a 0% credit card, or selling assets such as a house, boat or car does not address the root cause of the problem. You are trying to relieve the symptom by looking only at financial issues.

Instead, what you must first do is figure out what is causing your debt. What are all the ways you spend more than you earn? But there are ways to identify these habits and change them.

The permanent cure is to plug all the habitual ways you leak money so that you never go into debt again. This isn’t sexy, but it permanently solves the problem. You must persist in plugging these leaks until you are spending less than you earn.

It may take you months (or years) to achieve this objective. That’s OK. The key is to avoid becoming overwhelmed. Just pick one debt-producing habit that causes overspending and correct it. Then pick another. Rinse and repeat until you completely pay off your debt.

You must be patient to create a permanent solution. Most people overestimate what they can accomplish in one month and way underestimate what they can accomplish with three years of dedicated effort. Be persistent and you will reach your goal.

Finally, set proper expectations by realizing this isn’t a quick-fix solution. It’s about long-term financial management using permanent habits that convert your debt into wealth.

When you learn to spend less than you earn, your debt problems should vanish forever… and that is a good thing.

[Editor’s note: It can be helpful to see how your debt affects your credit scores.  As you make your monthly payments, you can see your progress over time by monitoring your credit scores. There are free tools that can help you do this, including Credit.com’s Credit Report Card, which updates your credit scores and overview of your credit every month.]

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