The Thing You Didn’t Know About Debt

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This post originally appeared on Credit.com.

Are you tired of having credit card bills? Do you wish you could get out of debt once and for all?

If you want get out of debt permanently, first consider this: Debt is not a financial problem. Hard to believe, but true.

Debt is actually a personal problem that masquerades in financial clothing. That is why so many people have persistent problems with debt. They look outward for financial solutions when the true solution is found by looking inward.

Planning a Permanent Debt Solution

Defining your debt problem correctly is critical to solving it.

That is where most debtors run into trouble. They mistakenly define debt as a financial problem and develop financial solutions. That is why their debt returns shortly after paying it off. They fail to identify the root cause of debt opening the door to repeating the vicious cycle.

credit card debtFor a debt solution to be effective your plan of attack needs to be based on principles that actually work. Unfortunately, when you just pay off your balances you relieve the pain but the underlying condition that put you in debt in the first place still lurks under the surface, ready to return.

Let’s face it, the real causes of overspending are your personal habits and attitudes. In other words, the true solution is personal — not financial. That is a key, and understanding this principle is what will make or break your success in slaying the debt monster for good.

Masking The Problem

When you get a headache what is the logical response? You reach to the medicine cabinet for immediate pain relief. Unfortunately, the various pills do nothing to cure the underlying disease: they merely treat the symptom. The cause could be excessive stress, brain cancer, dehydration, eye strain, or any number of other issues. By taking a pill you’ve treated the symptom — not the underlying cause.

The same is true with debt. Everyone knows they need to make more and spend less to solve their debt problems. So they pursue financially driven solutions to relieve financial symptoms. It seems logical on the surface.

Whether you choose to consolidate your credit card debt to lower interest rates or you choose any of the quick-payoff strategies (inheritance, gift, sell an asset, bankruptcy, home equity line of credit, or refinancing), the reality is you are treating the symptom and not creating a lasting cure.

Your financial problems are merely the accumulated reflection of the many small financial mistakes you are making on a daily basis — often without knowing any better. That’s why teaching a debtor to spend less and earn more is like telling someone to lose weight by eating less and exercising more. Everyone already knows that is the answer. The difficult part is not knowing what to do, but actually getting it done. The solution lies in your daily habits and attitudes.

Money Breakthroughs

I first discovered this approach to debt recovery in my work as a money coach. I started out making the same mistakes as everyone else. I thought debt problems were financial so I coached my clients to financial solutions. The lackluster results proved it was the wrong approach.

  • Helen

    Successful Consumer
    Debt management invariably requires addressing both Cause and Effect. Cause
    being your own spending habits and personal budget control.
    Effect refers to the
    result of your debt; the cost of it monthly and in the longer
    term.

    One critical thing
    that consumers in general Don’t Know About Debt – is how the industry uses
    terminology interchangeably to describe services and options.

    What is Debt
    Consolidation, Relief, Settlement, Plan, Program etc?

    Anyone contemplating
    debt consolidation (with or without outside service help) should be clear about
    their options, how things work pros and cons etc.

    This site clearly
    explains Consumer Debt and Consolidation
    Options and Alternatives.