Stuck in the Midst of Debt
Debt is perhaps one of the most pernicious things known to modern mankind. As nobody likes to own someone something (not even a kind remark), we soon become obsessed to pay back our due. Some do it by spending less, cutting back on their lifestyles through frugal habits, others will get a second job or study in the hopes of earning a promotion and generating a bigger income. We all do this because we desire much, hate debt and want to sleep in peace.
Debt is stressful
Often, the most common reason for dispute among couples is money. We challenge our spouse on “unnecessary expenses” and she replies back about the promotion you didn’t get, haunting isn’t it. This is a story we have all heard time and again. When one loses his job and the couple starts to accumulate debt, the note of discord starts to infiltrate the home. Stress increases as are payments accumulate, while interest rates rise due to one or two “forgotten” bills on the kitchen table. The same stress reaches a crescendo when the money is spent (read gone) before it has been deposited into your bank account. You are one step away from payday loans”¦ you are one step away from giving back the keys to your once loved and cherished beautiful home”¦
At this point, you can’t see straight anymore. You don’t sleep well, are less productive at work and constantly run into disputes about money. Debt is literally consuming your entire existence from within. As you can’t walk straight because you are stuck in the fog of debt, saving money becomes an issue. Each time you save a dollar, you think about the 10 dollars of interest you have to pay at the end of the day. Your efforts seems pointless”¦ you are crumbling under the weight of your debt.
There are people to help you see your way through the fog
If you feel as if there is no hope anymore, you are wrong. Debt is like extra pounds, it is quite easy to gain them but much harder to shed! When you are stuck in the midst of your problems, you have difficulty imagining solutions anymore. It is normal, our brain has a tendency to creating a barrier around what we know and rarely accepts an idea from outside of the box. And these walls get thicker as the problem grows.
This is why it is time to reach out for help. The very first step to helping yourself out of debt is to talk about it with other people. I know, money and debt are more taboo than sex these days. But you need to reach out and ask for help. Friends and family can give you tips, point out new solutions because they see the problems from an external, preferably objective, point of view as they are not directly linked to it. Why do you think psychologists are able to help anxious people? Because they see problems from a different angle and help people to see their issues objectively.
If you know a good financial advisor, they would be your best bet to help you get your finances in order. Unfortunately, there are a lot of peddlers in the industry and you are definitely not looking for another salesperson! You need constructive advice regarding your situation.
When you think about debt in a detached manner, you will conclude it is only a math problem. There are 3 variables:
- Your income and possible sources of income
- Your expenses
- The payments attached to the debt built over time
Technically, you need to find the perfect equation:
Your income – Your expenses – Your debt payments = 0 or higher.
You can increase your income in many ways:
- get a second job
- get a promotion
- work more hours
- sell things (temporary)
- have a sideline according to your skills
You can also reduce your expenses:
- by being frugal
- by sharing expenses, i.e. rent with another person (when possible)
- by looking for deals (read this article about how to cut down your grocery expenses by 20% while being lazy)
And you can improve your debt payments:
- by finding a better rate (zero balance transfer credit card) (temporary)
- by consolidating your debt using a personal loan with a longer amortization (it costs more in interest over the term but frees up some cash flow)
- by including your debt in your mortgage (not really the right timing to do so”¦).
As you can see, there are no magic ways to get out of debt. However, by talking with people around you about your problems, they may help you find alternatives to increase your income, decrease your expenses and improve your debt payments in order to help you sleep better at night.
Once you have a plan, the hard part is yet to come; you must follow it. Many people remortgage their house a few times thinking the property was a cash machine (a sort of ATM). Unfortunately, this only works for so long. Sooner or later, you have to look at your budget and make some changes to get out of debt definitively.
Image source: Okinawa Saba