Why are you in debt? How did you get there, and what’s keeping you there?
The answers might not be what you think, so it pays to test your assumptions. Doing so can literally change your approach and give a huge boost to your progress.
Let me give you an example of an assumption I had in another area of my life. For months, I got frustrated at something that people I know weren’t doing. I beat my head against the wall, and did quite a bit of complaining to others who shared my frustration.
But you know what I didn’t do? I didn’t even think of asking them why they weren’t doing it. I assumed they were either overlooking it, or that just they didn’t want to do it.
By chance, I learned the real reason: they didn’t know how. So I spent ten minutes putting together some instructions, and poof — no more problem. Something that had bugged me (and the other people involved) for months was easily fixed in ten minutes.
How this works with debt
Let’s go back to some of my original questions: How did you get into debt, and what’s keeping you there? Write down your answers to both. For example, for “How did you get into debt”, you might come up with something like “I needed a car” or “I wanted to attend school and had to take out student loans”. And for “What’s keeping you there”, your answer might be something like “I don’t make enough money”. Whatever your answers are, write them down.
Then start testing those assumptions — especially when it comes to “what’s keeping you there”. For example, suppose you make $32,000 a year and have $10,000 in credit card debt, and believe that you’re still in debt because you don’t make enough money. Well, that number can seem overwhelming when compared to your income and your other bills, but ask yourself “Has anyone else in my situation ever paid off that kind of debt on that kind of income?” (The answer is yes, by the way.) Then figure out how they did it, because if they can, you can too.
Do the same thing for your answers to how you got into debt: going beyond the obvious. For example, even if we accept “I needed a car” at face value, did you buy more car than you could have afforded? (If you had to use debt to do so, the answer to that is yes.) Could you have bought a cheaper used car instead? With cash, and used that temporarily until you could afford a nicer car? Even though it might have sucked? Be deeply honest with yourself.
Keep in mind that the point isn’t to defend the choices you’ve made in the past or to feel badly about them. The point is to look deeper at what you’re doing now and what you’ve done in the past. Then you can look for fixes that will help you to get out of debt, and prevent you from collecting more of it. In other words, once you find the real cause(s) of your debt — instead of accepting the first things that come to mind — you can make a plan to do things differently from here on out.