Friday, April 15, 2011, AM | 3 Comments
Recently, the advertisements about debt consolidation has been on an upward spiral. All media carry them. Even some companies are advertising on billboards along the highways of this great nation of ours. Debt consolidation will fail if you don’t change your mindset. It has seldom worked if you don’t change your financial lifestyle. Nobody can help you except you.
You will never get into debt when you spend less than you make. For some, it’s probably one of the easiest thing to do. For others, it’s one of the hardest thing to do in life. For still others, they just simply cannot meet their needs because of lack of income resources – the unemployment and the underemployment.
You must analyze your debt problem
One way to get out of debt is to know and realize how the heck you got into it in the first place. Then and only then you can do something about it. Otherwise, you would just keep making the same mistakes time and again.
In many cases, the problem is due to our inherent human psychology. Let’s look at a simple but frequently occurring scenario. Your neighbor buys a new car. All of a sudden, at that very moment, your 3 year old car doesn’t look that appealing to you anymore.
Car loan is still readily available to almost everyone. On the way back from work, you stop by the nearest dealership telling the salesman you are there just to kick a few tires, so to speak. But subconsciously you keep thinking about your neighbor’s brand new car. Half an hour later, you are driving a new car out of the dealer’s lot. Your debt belly was already swollen. Instead of going on a debt diet, now you have put on some more debt weight.
When you get home, the first thing you do is park the new car in the driveway and your wife’s older car inside the garage. You want to let folks see it who are driving by especially your neighbors next door. Because of them, you bought a brand new car even though you didn’t need to. Your neighbors in this case are better known as Mr. & Mrs. Jones. People have created them in their minds and have followed them all their lives. That’s one major reason why many folks have swollen debt bellies.
I bet many folks who are reading this post, chances are that they own anywhere from $10,000 to, in many cases several hundreds of thousands of dollars on credit card, line of credit, and various other unsecured credit sources. This problem gets multiplied many times over when these folks don’t get tired of their debt burden and instead they keep borrowing.
It’s very easy to accumulate very large quantities of debt. For some it eventually becomes a nightmare, for others they just don’t give a shit what they have done to their financial life. They think they would declare bankruptcy and everything would come back to normal. Less than 40 years ago – even less than 30 years ago, it was big embarrassment and shame to go under. Many folks would be ashamed to even talk about it. Those good old days are gone.
Solution to your debt problem
I have been saying this for quite some time. But among the so many solutions about debt, once you understand the following two statements, you will not get into debt, period.
- You always save when you save before you spend.
- You seldom save when you spend before you save.
Even though on the surface these two statements are simple and easy to follow but for many following them has turned out to be the the hardest thing to do in their financial life. Understand and follow the two statements and you will be on your way to financial success. Maybe you won’t become a millionaire, but you will achieve and maintain your financial sanity for the rest of your life.
Some experts suggest debt is dumb. I say debt is dumb if you are smart. On the other hand, debt is smart if you are dumb. Remember, debt is good – mortgage, student loan with potential return in investment – when you play it smart and use it for your family livelihood. At the same time, debt can be the worst thing that can happen to anyone in life if you fail to control it, even slightly.
Debt consolidation can never help you. The debt remains. The only thing is it delays the total payment for an extended period of time, longer than you had it originally. Like I said before, if you are in debt, start spending less than you make. Over the years, it will eventually get you out of debt.
In a Nutshell
There is nothing wrong with good debt that you are able to return to the owner during the mutually agreed upon time. Debt is bad when you lose control over your finances. Seek help right away when the gap between your spending and earning gets created no matter how small that gap is.
- Apr 15, 2011: reddebt.co.cc » Blog Archive » Debt Consolidation Will Fail With Old Mindset