Warning Signs You’re Headed for Trouble With Your Debt
I have a confession to make. When I was in a job I didn’t love, I shopped for the week. I bought new clothes to make myself feel better. Instead of being honest with myself I used retail therapy to justify my choice to stay. Shopping became my motivation.
A new outfit made me feel good and helped me get through the day. Sounds pathetic right? Seeking pleasure in material things was an unhealthy pattern. I eventually left the job and my shopping addiction subsided.
I no longer substitute spending money for real happiness.
It’s very easy to use spending as a way to solve personal and/or financial problems. Debt can be used as motivation to keep you stuck in a job you don’t love or a relationship that doesn’t serve you anymore. Debt can help you achieve a certain lifestyle beyond your means and accomplish personal goals. It can also become a bad habit and make you a victim of a vicious cycle.
Are you addicted to debt and using credit?
- Do you spend money you don’t have without knowing how you’ll pay it back?
- Do you have trouble paying your bills every month or have past due bills?
- Have you ever thought about consolidating your debt or using a balance transfer to avoid payment?
- Do you use credit cards for your basic needs?
- Is your work life affected by your spending?
- Do you only make the minimum payment due on your credit cards?
- Have you taken out a home equity line of credit to fund your lifestyle?
- Do you find it difficult to save money because all your money goes to your debt?
- Do you get anxious before making a purchase?
- Does your debt interfere with your relationships and/or you and your spouse fight about money?
- Do you feel a sense of relief or guilt after making a purchase?
- Have you used a credit card to “afford” an item?
- Do you charge more than you can pay?
- Does your debt keep you up at night?
- Have you made changes in your priorities or habits to accommodate your debt?
- Do you feel depressed about the amount of debt you have?
- Have you tried to hide your debt from family or friends?
- Are you ashamed of your debt?
- Are you unwilling to make any changes to your behavior despite the amount of debt you have?
- Have you experienced increased aggression or irritability with anyone who tries to talk to you about your debt?
- Do you not know how much you owe?
- Have you been ignoring your debt in hopes that it will go away?
If you’ve answered yes to one or more of the questions you may be addicted to debt and using credit. If you’re ready to make a change follow these three steps.
Step 1: Admit something has to change
If you admit you have a problem you can make the changes you need to avoid debt. It’s important to understand why you went into debt in the first place. Are you being honest with yourself and your life choices? Are you living above your means to impress other people? Or are you just not being self-disciplined with your finances? Only you know the answer. Your debt is your responsibility and never beyond your control. It’s easy to continue down the same comfortable path but taking responsibility for the choices you’ve made will help you make different choices in the future.
Step 2: Create a budget
Create a plan for your money by using a monthly budget template (I have one for you in my resource library). Find ways to earn extra money to pay off your debt. Be aware of your spending habits and find ways to stay motivated.
Step 3: Create a plan to pay off your debt.
Once you’ve created your budget you’ll need to create a plan to pay off your debt. Make a list of all your debts. Prioritize your debts by either the highest interest rate or lowest balance. Target one debt at a time and always pay more than the minimum payment. Create a pay off date for each debt.
Be willing and ready to make sacrifices. Paying off your debt might mean you go without that instant gratification for a while. It takes time to develop new habits so stick with it.
Have you started paying off your debt? Share any tips that have helped you in the comments below!