Cold sweats, gurgling stomach, headaches, short attention span, fighting with those you love, panicked, anxious and stressed. All of these are emotions or symptoms that people experience when they are facing a financial crisis. I know I did when I lived through my financial meltdown.
While my troubles happened in 1990, they still feel as real as if they happened last week, I was distracted during the day and slept very poorly at night. I watched infomercials to fall asleep and could never fall completely asleep until about dawn, when I had to get up. I was a wreck.
As I watch the financial news in the U.S. and elsewhere go from bad to worse I just know there are millions of people living with some of these very same debt symptoms each day. The strain of trying to keep up appearances of success and stability in an otherwise dynamically changing negative economic environment is difficult.
And ironically the simplest solutions to these financial worries and stress are most often the best and most effective. Here is a list of things to do or avoid in these trying times upon us.
- Don’t Over-Save Because You Are Afraid - In the desire to get out of debt many people make a knee-jerk reaction and try to get out of debt all at once. This leads to putting yourself in a dicey situation each month as all available funds are sent to reduce the debt. The goal is admirable, the execution is flawed. Rather than let go of every available dollar for debt reduction, try this time proven approach.
Instead of sending all the extra cash to your creditors, accumulate it in a savings account. This works best if the savings account is not directly tied to your bank account online. The online link makes it just too easy for many to get their hands on the cash easily and quickly. Try an online high interest paying account like those offered by ING Online.
Your funds are easy to get to via bank transfer but they will be just off limit enough not to be tempted to tap into them for an impulse purchase, and that’s important.
When you have enough saved for a casual emergency, like a auto repair, appliance replacement or unexpected expense, then you can send lump sums from your savings account towards paying down your debt. Be smart about it.
- Quick Budgets Don’t Reduce Fear - The impulse to reduce debt often results in a quick look at the monthly budget. And since most people don’t track their cash with some type of budgeting software or Quicken software to actually know where their money really goes, they take a guess.
Those guesses result in income being overestimated and expenses being underestimated. If you are going to make good decisions about what changes you will make to reduce your expenses, do it with valid data. Track your cash for at least 30 days, keeping track of every penny you spend, and then from that and some budgeting software you might have used along the way, then make cuts you can actually live with.
- Don’t Cut Out All The Fun - Often the first thing to go in a financial panic are things that you label as being fun. Being in deep debt is painful enough but cutting out all dinners out or movies with the family can just exacerbate the pain. Rather than execute a hyperspeed jump from too much fun to no fun, find a healthier balance.
For example, rather than eating out three times a week, turn it down to once a week. Not only will it make it more special but it still gives you something to look forward to. It is perfectly OK to have fun when getting out of debt. If you don’t you just won’t be able to sustain an extended plan of action to eradicate your debt. Don’t feel guilty having fun, just have a reasonable amount of it.
- Slaughter the Sacred Cows - It is only normal to set some expenses as sacred cows that can’t be touched. Typically these are things like private school tuition, car payments, mortgage payments etc. As you can see these are not small expenses and that is both good and bad.
It is bad because these expenses are often set aside as not being able to be touched. The most common comments I hear are things like “I can’t take my kids out of private school”, “We can’t sell our house”, “We need that car”, etc. These are not reasons, they are excuses.
At a time of a financial crisis there is no getting away from the fact that some things are just no longer affordable. Wishing it wasn’t so does not make the situation different. The guilt of displacing your family and losing things you’ve come to expect is a heavy emotion but the sooner you face the reality of your situation and you are prepared to make changes, the sooner you can find a path towards financial recovery.
The sacred cows are usually large monthly expenses that when changed, can have a significant and positive impact on your monthly expenses. The tough part is not making the change, but facing the change.
- Dealing With Failure - The feeling of being a failure is just the icing on the cake when you are down. Failure brings shame and embarrassment for many, it can destroy your self-worth and self-esteem, it can lead to depression in these dark days. Deal with it.
i realize this is easy for me to write now, but remember I lived through all of this once myself. Feelings of failure are not a reality of your situation but an emotion or emotional state that you allow yourself to feel. It is how you perceive yourself, not how other people perceive you. You are only a failure if you allow yourself to be. If you found yourself in financial trouble and you did what you could to remedy the situation, rather than look at the ground, hold your head up. By dealing with it you took action instead of letting it roll over you.
Failing financially does not give you hepatitis or terminal cancer. It just gives you money troubles, which can be overcome but maybe not how your life once was or how you’d like for it to be.
- Don’t Be a Jerk - Everyone that has lived through money troubles and problem debt that has emerged on the other side has learned one universal law of nature. Don’t be an ass about it. What I mean is that there is no reason to yell at anyone or blame anyone. There is no need to punish the kids or your spouse. The people at work did not lead to your troubles so save the bad attitude for someone else.
Being in debt sucks. It does, it just does. But meeting the situation with acceptance, and a smile on your face will go a lot farther towards helping you to emerge in good cheer, than anything else. There is no need to lie, scold, chastise, yell, criticize, blame, etc. Just find three things each day to be grateful for and celebrate those things rather than focus on what is broken. I remember just being happy that today was trash day and that I didn’t hit the traffic lights on the way to work. Hey, small daily victories is a good foundation from which to build on.
- Don’t Kill Yourself or Anyone Else Over Debt - Stories of debt suicide are sad but true. The article about the father than came home and killed the family because he could not face them with the news of financial failure is not bravery, it is cowardice. Murder and suicide do occur when faced with debt problems because people feel they would be better off dead and that the family could use the insurance money to deal with the debt. That’s not what anyone wants. They want you!
Posted under Debt Articles
This post was written by Get Out of Debt on March 18, 2008
