When times are tough, it can be tempting to turn a blind eye and look the other way regarding your finances. I admit, I’ve done that, and I’ve thought about doing it again. But looking the other way or making excuses for yourself can mean disaster for your finances. I know, because this is exactly how I got so deep into debt.
When I finally started tracking my finances, I took a step back to see where I went wrong in the first place. When I was racking up debt, I wasn’t being honest with myself. Each time I took on more debt, I had an excuse as to why it wasn’t a big deal. Sure, I called them “good reasons” but they weren’t. They were excuses.
When I got a business loan, I told myself I'd make the money back and pay off the debt within a year—I didn’t.
I justified my student loan by saying I’d have a higher paying job when I was done—I didn’t.
When I lived off credit because I couldn’t work, I told myself I’d pay down the debt as soon as I was working again, but . . . I didn’t.
Instead of taking responsibility for my debt, I ignored it. I wanted to forget it existed. But by doing this, I only made things more difficult. I share this with you in the hopes that you won’t make the same mistakes I did.
I’m not saying all debt is bad. My mortgage allows me to live in a house and make payments that are less than what I’d pay if I had to pay rent. For that, I’m grateful. But if you’re considering getting a loan or increasing your debt, make sure it’s the right choice for you. Take the time to think very carefully about it.
Make sure your reasons for going into debt or increasing your debt load are based on facts. Don’t use hunches or excuses to minimize the impact of debt like I did. Eventually you’ll wake up and realize how deep in debt you are, and it’s not pretty.
In economic times like we’re facing now, you may not have any other choice but to go into debt, and that’s okay. Sometimes there’s no way to avoid it. Be realistic and do what you have to do in your situation. But don’t give up on your finances by ignoring them.
When You Forget About Your Finances
Forgetting about your finances all together will only make matters worse. It feels good in the short term not to worry how you’re going to pay off your debt, but it also has dire consequences.
You lose control. It’s that simple. When I ignored my debt, it just kept growing because I didn’t care how much I charged on my credit card. I didn’t consider how my reckless spending would impact my future.
Forgetting about your finances looks like:
- Ignoring your bills when they arrive because you don’t want to know how much you owe.
- Not planning how you will pay down your debt.
- Not curbing your spending.
- Not asking for help.
Acknowledging Your Reality
In my Prosperity Planner, I say, “Think of debt as a wound. It will never heal if you can’t stop the bleeding. Unnecessary spending = bleeding.” The key word here is “unnecessary.” If your situation is such that you need to put groceries on your credit card so you can eat, then that’s what you need to do. I’ll share more about what you can do in that situation in the next section.
Getting real with yourself may be tough, but things won’t change for you financially until you do. Take a look at your situation. Where are you forgetting about your finances? Are you being honest with yourself? Do you need everything single thing you’re buying on credit?
Choosing to Do Something
Giving up is easy. Turning your life around takes work. If you’ve decided you’re tired of living with all this debt hanging over you and you want to make a difference, congratulations! That’s the first step.
If you’re in a position where you need credit to physically survive, there’s still something you can do. You can use credit responsibly and you can keep track of everything you’re charging so you don’t let yourself get out of hand.
When I was living on student loans, I needed credit to buy groceries sometimes, but I sure didn’t need all the extra things I was buying because I told myself, “I’m already in debt, what’s a few more dollars.” The thing is, it’s never just a few more dollars.
Unlike giving up, taking action is hard. It takes work, and you’ll need to remind yourself every day why you want to make this change. Your journal will help as you undertake this change. Mari’s 7 Days to Money Mastery is a great place to start.
Small changes every day is how you break old habits.
Thinking About Your Options
So, what else can you do?
There are many places you can go for help with your financial situation. Unfortunately, there are also many people who will take advantage of people who need help. If seeking professional advice—do your research! Look for someone who belongs to a professional association such as a lawyer or a Licensed Insolvency Trustee.
Filing for bankruptcy is a legal proceeding, so you’ll need someone who has the ability to deal with the courts on your behalf. Many professionals who handle bankruptcy filings also offer free consults to determine if that’s the right way to go.
A simple method I used (and still use) to improve my finances is my TREE Method. It involves Tracking your income and expenses, Recording future expenses, Eliminating excess expenses, and Expanding your income and your mindset.
I want to focus on tracking and recording today, because these steps tie into forgetting about your finances. When we want to forget about the money we owe, we stop acknowledging our bills and tracking where we’re spending our money (at least that’s what I did).
Even if you’re not sure if you’ll be able to pay your bills, it’s important that you still track and record what you’re charging on your credit card. This helps make you consciously aware of how you’re spending your money. It can even help you spend less as you realize there are certain things you really don’t need!
Look at your future payments as well. If you know the bills you need to pay in the coming month, you give yourself the opportunity to find ways to pay them.
I know it’s tough when the economy’s uncertain and you might not know when you’ll be working and earning a steady paycheck. Here are some affirmations to help maintain a positive financial outlook.
- I always have more than enough money to pay my bills.
- I pay my bills with ease.
- I’m creating a plan to positively influence my personal finances.
Some affirmations may feel unnatural and hard to believe at first. The more you say them, the more they will change your mindset and you’ll start to see things improve. (Remember, it takes work!)
Money can come from anywhere, even the most unexpected place. Keep believing in yourself and your ability to turn your finances around.
How does spending money make me feel?
This can be a loaded question, but I’ve included it because I noticed a pattern in my own spending. When I was living off student loans, I would spend money to cheer myself up. This was a vicious cycle because I would feel bad again once I received my credit card bill. If you’ve fallen into a similar pattern, what can you do to cheer yourself up that doesn’t involve spending money?
What can I do today to improve my spending habits?
Little things add up! It’s the little things that often get people into debt in the first place. Many small purchases can add up to thousands of dollars. This also means that many small payments will result in you paying off your debt. Where can you cut expenses so you can put that money towards your debt instead? Every little bit helps.
How will my life feel when I’m in control of my debt?
This is the most important question of all. When you have goals you want to reach, it’s key that you feel what it will be like when you reach your goals. Write as many details as possible about how it feels to be completely in control of your finances. Imagine yourself debt-free. Where are you living? What are you doing for a living? Who are your friends?
Turning a blind eye won’t help you achieve your goals. You’ve got your work cut out for you. Grab your journal and see what it tells you. One small step every day will make a difference. I have faith that during these uncertain times, you won’t forget about your finances!
Have you read this Money Matters article? *How To Face Your Financial Fears
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Author bio: Michelle Cornish is the author of Prosperity Planner: Manage Your Personal Finances and Get Out of Debt, an undated planner where she shares more about her personal financial journey and her TREE Method for keeping her personal finances in check.
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