Despite the significant improvements to the consumer savings rate over the last several years, a majority of Americans are still struggling with debt in one form or another. On one extreme you have more and more outlets telling you to consolidate all your debt in favor of one monthly payment. While a select few of these programs might be worth some attention under certain circumstances, most just end up shifting the existing burden at a great expense to you and your financial future.
On the other hand, you have the usual financial gurus pushing, sometimes even yelling, to rid yourself of debt immediately by any means necessary. While this is more likely the direction you should head, it’s rarely that simple. While their intentions are good, this tactic just serves to make an already challenging task seem much more daunting to most.
To understand where you’re going, you must understand where you’ve been. The first step in dealing with debt issues is to do just that, decide that you’re going to address the problem. Decide that it is time to stop ignoring real life out of some irrational fear and start being truthful about where the money has gone. This can be painful and difficult, but the earlier you know what you’re facing, the greater your chance of success. Meet with a professional and take thoughtful steps towards developing a workable plan to get where you want to go. As with investing, diet or anything else in life, there are no shortcuts to long-term success.
Attacking this process with the right attitude is the key. You can choose to see this as a terrible time where you cut back on all your wants and do without, or as an opportunity to get to know you and your family’s values in a truer way than ever before.
Debt is often used to attain those things you “think” you need for true happiness. Try to redefine what that means for you using renowned life planner’s George Kinder’s three questions. First, take a step back and think about how you would live if you really had it all. Then think about how you would live if you only had five to ten years left to live. Lastly, what would you have missed or what would you not have accomplished if you learned you only had 24 hours left on Earth? This last question gets to your core values and priorities and the answer rarely has much to do with money. The answer can, however, help refocus where and how you spend your resources to live the fullest life possible.
I don’t want to stray too far into the touchy, feely. These are real challenges. If you really want to make lasting changes to your financial habits, the work will be extremely difficult. I do, however, want to suggest that this is an opportunity to face what may seem like an insurmountable problem, stop wallowing in uncertainty and “what ifs” and look at your personal finances in a new light that will give you the motivation and will to start down a path towards improvement today.
The known is better than the unknown. Living a life that matches your truest priorities and values will be more rewarding than living with those things you feel you must have for happiness. If you don’t do it today, it will just be that much more difficult tomorrow. Don’t be afraid to ask for help. There are financial and life planners out there ready to help put this all in context and begin to help you live the life you want to lead.
Chip Workman, CFP®, MBA
The Asset Advisory Group