All day, every day, I read and hear the same pleas and wishes from people that want to get out of debt. See if any of these sound familiar to you.
“I need fast help in gettin out of debt for free.”
“I don’t know how to get out of debt fast.”
“I need ways to get out of debt.”
“You got any tips on getting out of debt?”
“Get me out of debt.”
“We need help getting out of debt to buy first home.”
The only real way to get out of debt fast is to win the lottery or have someone die and leave you a lot of cash. Without borrowing money you will need a sudden injection of enough cash from some external source to make that dream happen.
So let’s get real here.
Getting out of debt is truly not rocket science. In fact I’ve even helped people that were rocket scientists to get out of debt. Getting out of debt numerically is a simple exercise. If you need to make the numbers change all you have to do is spend less than you make and take part of the difference and use it to pay down your debt.
Oh if it only were that easy.
You see money problems are not about the amount of debt you have. They are about the choices and reasons why you got into debt in the first place.
Some people say that the debt was caused by an unexpected life event like a job loss or accident. In many cases the person was living close to the financial edge without any savings or investments and when one or two paychecks were lost, Kablam, they got in a jam.
So in that case the job loss was not the cause of the financial problem, the lack of savings and preparation was the reason that the financial problem exists. With ample savings in the bank a temporary reduction in income or unexpected expense would be annoying but not totally financially destructive.
A – Acceptance
The first step to really get out of debt is to see and accept the reality of your situation. Continued bargaining with yourself about the reality of your situation only prolongs it, not change it. The quicker you accept that you are in debt and need to pay close attention to getting out of debt and are willing to make changes to do so, that’s when you begin to get out of debt.
B – Behavior
Getting out of debt requires a fundamental behavior change on your part. You need to be ready, willing and able to change your behavior that led to your getting in debt in the first place. Take a close look at your spending. What do you spend extra money on and why?
It can be easy to locate extra money in your budget each month when you identify where money is leaking out of your pockets. For example, a daily cuppa exclusive coffee can wind up costing you $100 or more a month. And when you find your month too long by $100 it really isn’t due to not enough income, but how you elected to spend the income you do have.
I’m not saying that you need to kill Starbucks coffees out of your life, but maybe there are some cheaper alternatives for coffee or upon evaluation you may elect to stay with the designer coffee but cut it back.
If you are going out 8 nights a month to the clubs, why not do the same thing that you love to do but only go out 4 times a month instead? You’ll still have fun and cut your bar bills in half.
C – Conviction / Commitment
You must be committed to achieving your goal to get out of debt. Getting out of debt is slow and methodical work. Even if you got a debt consolidation loan you’d still have to pay it back. Nothing is going to change the month after month payments to get yourself out of debt.
The big secret that people never tell you about getting out of debt is that there are no secrets. It’s just boring, repetitive work that slowly but surely will dig you out of the hole that you’re in.