How to Get Out of Debt Series Part 3: Why can’t you get out of debt?

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To read Part 2 of How to Get Out of Debt Series, go here.

Why can’t you get out of debt?

Debt is one of the top 3 financial challenges people come to me with.

The other two are struggles with:

  • Saving money
    • Clients say, “I want to save more,” or, “I can’t seem to save money”
  • Spending money
    • Clients say things like: “I’m overspending,” “I don’t know where my money is going,” or “I need to keep my spending in check.”

Chances are if you have debt, it isn’t just a number. It feels like a heavy weight that impacts your daily decisions, your long-term dreams, and maybe even your self-worth.

If you have debt, there are likely a lot of uncertainties around your debt. Things you’re trying to figure out like:

  1. Does the order I pay off my debts make any difference?
  2. Which one should I pay off first? Will one have a greater impact than another?
  3. How do I tackle these?
  4. Is there a way to pay less interest and otherwise manage the debt better while I’m tackling it?
  5. How do I make progress on my debt while living and enjoying life?

These are all important things to figure out when it comes to your debt, but they’re not what’s most important. Before I tell you what the REAL problem is, let me tell you what it’s not.

It’s not that you’re bad with money.

Your debt is not a determining factor of how strong, solid, savvy, or confident you are with money. I’ve seen individuals from all walks of life – with various backgrounds and education levels – grapple with their debt.

Debt is universal, and it does not say anything about who you are, what you’re capable of, or what your future potential will be.

It also has nothing to do with your discipline.

Some of the most disciplined people I know – those who wake up at 5am for workouts or sit in ice baths daily – still find managing their finances tricky. Even the most ambitious and disciplined people can find themselves in debt.

So then what is it? What’s the real culprit?

It boils down to clarity, or more accurately, a lack of it.

Your debt happened because you couldn’t see your money clearly.

Picture this:

You have transactions coming out of your checking account every day or every other day. Sometimes it’s $55, sometimes it’s $7, and sometimes there’s 5 transactions in one day. Some days your paycheck comes in, and on those days you also have 4 bills clear your checking account.

There’s a whole bunch of intermittent expenses (we call these “whammies”) that feel like they smack you in the face when they happen – your annual car registration, the kids’ upcoming dance recital, the family vacation that was planned months ago, the new car tires (just to name a few – I could go on forever).

Some months are okay and you think, “Alright, we can do this, it’s not bad,” and maybe that month you pay extra to your debts or you try to move a little bit of money to savings. You sigh – you really needed a month where you could get ahead.

Then a hard month hits – the kind of month where a whole bunch of those whammies seem to happen all at once. You have to use the money you just transferred to your savings account, or you use your credit card, just to get by.

Either way, your progress the month before feels futile. Two steps forward, two steps back. 

Rinse and repeat. It’s exhausting and disheartening.

Conceptually, you probably know that all of these moving pieces are connected. We all know that if we spend money today, we will have less of it tomorrow.

But exactly how much you can spend today before you won’t have enough for what you have coming up next week or next month?

What is that exact dollar amount and how is the decision you’re making today connected to (and impacting) the decision you will make for your money in the near future?

Not having that level of clarity is where the real issue is.

You lack that precision. You lack that complete clarity.

If it were easy to see the impact of our decisions, everyone would be making better financial decisions. I certainly don’t believe people are out walking around being like, “Well, this is stupid. I know I don’t have the money, I know I should not buy this but I’m gonna do it anyway.”

I think most people are thinking, “Okay, I think this is okay. I don’t really know for sure, but I’ll figure it out. I’ll be fine.”

Sometimes it is fine, but not every time.

You might not really know how it will work out, or how you’ll figure it out… but imagine if you did. Imagine how if you had complete clarity and confidence about how each decision impacted your finances, you’d be able to make much more empowered decisions, right?

If you could see how the decisions you’re making today really impact you, then you’d be able to plan better for the things coming up in the future – whether it’s the unexpected stuff, the big purchases, or even the goal you’re working toward.

You would have a better sense of control, so you can be more prepared and feel more confident making everyday decisions.

Instead of focusing on your debt, ask yourself, “How can I gain more clarity of all the moving pieces of my money?”

Solve that problem first, and watch what happens to your debt.

This is where I start with every client. When I look at your numbers, a picture begins to form in my mind. I consider it my job to take this picture and describe it to you so that it is just as clear in your mind as it is in mine.

The best part? Once you see it, you can’t unsee it.

And then it becomes so much easier to see the solutions and strategies that will finally help you make financial progress and become more financially fit.

I’m not saying debt isn’t a problem, I’m saying it’s not the problem.

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