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In recent discussions with a number of friends, I have again been reminded of the seriousness of the debt problem in our lives. Many of us know we need to reduce or eliminate debt, we know we are not standing on solid ground, but do not know how to do something about it. It is extremely hard to reduce our debt burdens, while we either do not have 'disposable' money-extra money, or we do not know what we can do to create that 'disposable' money that could be applied to our debts, and so, nothing changes.
Psychologically, a typical response to the stress of anxiety, worrying, and trying to confront a situation, is to avoid the situation. This makes it nearly impossible for us to see clearly our own options, our own solutions, as we are just too close to the problem. We have no emotional distance, and cannot see the road forward.
It is excruciatingly easy for us to see why we cannot possibly do anything about our situation, and we continue to see the obstacles and problems that are holding us down, and become unable to find an entirely different approach that would let us to see what can be done to allow us to slowly dig out.
Are there any easy solutions? Probably not. Will it take a serious plan, and dedication to our plan? Probably so. For most of us, it IS possible to arrive at a plan that will slowly but surely relieve us of our burdens and in the end, remove anxiety and make life easier. There are many difficulties in life, many detours that pull us off the road to freedom, throw us onto a side street, and it can be an overwhelming task to get back to the main road.
Let's look at some of the normal traps that cause us to detour and can discourage us from even trying, or prevent us from getting back on the road at all.
1. MISCONCEPTIONS-FALLACIES: We will make a plan and STICK TO IT! We can do this, and if we just pay a tiny bit extra every month, we will be out of debt in...let's see... 29 1/2 months!! Faulty sentence, faulty thought, faulty plan- because it does not FLOAT, it has no allowances for life, has zero flexibility built in. It also does not even take into account human emotions, wants, and sometimes- just the need to buy something!
2. FAILURE TO LOOK OVER OUR TOTAL SITUATION. This is a really deep topic, and we will come back to it later, because we need to look over every single aspect of our life, even if we do not see how that applies yet to reducing our debt. Being short-sighted may be a term that expresses this idea, not seeing how our total living, all of our choices, apply both to debt burdens and the willingness and the ability to develop a plan and be able to adhere to it fairly closely. Without seeing our Total Living Situation, we will run into ourselves, and be bumped off the road.
3. THE BUCKET FUND: We need to realize the importance of establishing a 'bucket fund' right now, from the start. My husband relates this to: "Rent yourself your bed, every night." Every single night, he would put money under his mattress. I began a 'bucket fund'. I drop money into my 'bucket' and cause that to build, up to a level that gives my bucket some EMERGENCY FLUIDITY. No matter what, the 'bucket fund', or your 'bucket money' must build before you can begin to pay down, pay off debt. Emergency Contingency Money, to cover life's little situations... a flat tire, lost your car keys, a sick dog, need a plumber- little things that just happen, and add a LOT of stress. It is impossible to begin any debt pay down plan without it- it allows for flexibility, for LIVING. I use a simple envelope, which I have marked with a BRIGHT RED MAGIC MARKER, to which I have added a skull and crossbones: To dip into this envelope is DEATH!! Is this an EMERGENCY?? Or is it that I would really like some butter, or new slippers, or a steering wheel cover? There is a need to train yourself! Emergency or NOT?
4. FAMILY SUPPORT, FAMILY UNITY. Hardest part. How strongly can I suggest the importance of this? NOT NEARLY STRONGLY ENOUGH. You must have it. Repeat: You MUST have it. A house divided against itself cannot stand. Part of the family cannot be dedicated to saving, cannot be dedicated to digging out, while the rest of the family continues to spend, continues to run about with all the lights on in the house, or will not change any of their spending habits, or adjust their life style for the end goal. I cannot stress this enough. It can cause serious resentments, serious misunderstandings and discord within your family, if you are alone in working on the finances. EACH member of your family needs to fully understanding the need to be living free of the effect that debt is having on you. Being TREMENDOUSLY IMPORTANT, this step is not always easy, nor exceptionally quick. You might not gain full co-operation immediately by all, but you need to help everyone understand that changes need to happen...(and hope you're all on board).
I recall here, my teen-age step daughter, who was used to not only having her way, she was used to 'placing orders' for shampoos and conditioners of her choosing! She did have beautiful, waist length hair, I must admit. She also did not appreciate sharing her Dad with me, and having the way it had always been- changed. Challenge. How to handle this? HMmmmmm..?
I knew we could not keep buying $12.00 shampoos and conditioners for one 15 yr. old girl, and she DID occasionally babysit in the area.... So, we bought her one last bottle of her 'special order', and we also bought a gallon container of shampoo, and a gallon of conditioner, and told her we would not be buying any more special products or make-up; she would need to earn those items if she chose not to use what was available. There was a month of a few harsh words, after which we noticed her babysitting money began to buy more than soda and potato chips!! The only reason this change was effective was due to standing together, and when I could see Dad ready to waver, I called him away - quick!!
In our efforts over the past three years to eliminate all our debts, we have had an occasional bad word, when a WANT or a moment of 'SELF-PITY' has overwhelmed one of us. At that moment, tempers flared, after which reason set in. Is this a time that it is appropriate to dip into the 'bucket money'? The 'bucket fund' is there to allow for some flexibility, occasionally. So, 'offered' OUR money, offered what was needed for the wanted item, kindly, without resentment, put the money in his hand. After all, I could sure understand WANT, and the frustration of doing nothing month after month, sticking pretty close to our decisions. Once the CASH was in his hands, he felt better, and decided to wait for the item. There ARE times we purchase a 'want', if little, but we have also decided to earn extra dollars somewhere for our wants... Babysitting??? LOL, but somewhere. We have chosen to allow the 'bucket money' to remain untouched, so we can continue to pay off debt, and we can do that with less anxiety, because we are safe guarded against the daily 'little things'.
In order to change things, change HABITS in your home, all people need to see both the problem debt is causing and the benefits gained to all, or at least to you, by getting income available once again as debt is paid off. This is a great opportunity to draw family together- do not skimp on this part of your effort, and do not expect to see no resentments until this is achieved. The effort will not be painless, but most family members WILL join in, if they know the problem, understand it, and are asked in an honest, serious discussion to help out now. 'That's it- we need to make these changes, and I thank you for all your understanding and HELP". Who is the adult and who is the child? Do you know it has to happen? Then, stop indulging your children. your debt problems need to be seen and FELT by all of them, too. Until they can FEEL the effects, they have no reason to help affect the outcome. Do not buy the CD or DVD they want. Simply, without anger, explain the truth- in full. "Sorry, right now we have.. $435.00 going out every month going out in extra bills, and they need to be paid first; there no longer is any money to buy these things." Show them the electric bill, and explain... this month it is .... $200.00, if you would all turn the lights off, maybe this bill would be $25.00 less next month, and we could use that money to pay off our debt sooner, so we can begin to buy these things again.They will actually begin to help, and will become more 'family oriented'- less 'me-me-me-', if you involve them. If they do not change, remember the 15 yr. old teenager, and do it yourself!! No need to be anything but calm, for every action there is a reaction. Who is going to be reactive? You or your child?
In Trap #2, we touched on: FAILURE TO LOOK OVER OUR TOTAL SITUATION, every aspect of our lives. as we sit down to consider our own unique home, every dime, every dollar, that it costs for your household to make it for 31 days, one entire month, needs to be written down, looked at, and included in the beginning so you CAN SEE your situation in your home, and all of your costs. When i began to address our debt, I put all gas receipts in one envelope, all grocery receipts in another, all HOUSEHOLD items ( T.P, paper towels, bar soap, shampoo, dish soap, etc.) in another, all pet costs in another. Separate everything for a month or two. look at not just the cost, but how many rolls of paper towels? How many pkgs. of T.P.? How many bottles of shampoo? etc, etc. You are the only one that can change the road you are on, and to do so, you need to lay the pavement for your trip!
5. Next, once these are 'accomplished', assign the ONE THAT IS THE MOST WORRIED ABOUT THE DEBT TO BE THE ONE TO HANDLE THE DEBT. That may not end up being the one that has to actually see that the payments are sent off on time, due to schedules, but it needs to be the one that says..."this IS what we are paying, and no less." One of you is stronger than the other, each has strengths, now is time to utilize each other. The one that is the most WORRIED, is the one that will try the most to pay DOWN the amounts due. One or the other is usually more of a spender than the other, so use your heads, but remember: you are in this effort together. Do not dictate or ORDER, and on the other side- do not resent that ...he or ...she is now calling out the amounts or totals to pay here or there... partners! My husband did not really get serious about not spending, until I had to go to a 'loan shark loan', for 25.99% interest, and then, he wasn't serious until I kept whining, and whining...(men hate that stuff).. "Oh, Oh, what are we going to do?- how can I pay this bill? OMG, what should we not pay this month-(dear), the water bill, the car insurance, or the LIGHTS, (HONEY)?" "OH.. I DO NOT KNOW WHAT TO DO-... OH, ...... ..... ...!!" "This is Rape!.. Loan sharking, that's what this is!! 25.99%- 26%... (honey)" "Boy, the things we could have this month, if we didn't have THIS payment!!" My biggest job- DRIVE IT HOME. My biggest job with the kids, when they were here: DRIVE IT HOME!! I am no longer alone in the effort, and my job is easier. not fun, yet, but easier. No longer have the added stress of struggle within the family unit. We both are heading in the same direction.
Now, all the groundwork has been laid for the trip. I told a friend of mine the other day that I am approaching 'OUT OF DEBT'. Once your 'bucket money' is established, GROW IT!! $2.00, $2.00, $5.00, $1.00, $20.00- EVERY DAY, ADD TO THIS FUND!
Skip going out to dinner, skip the movies, look at your newly looked over family expenses and purchases: Do you usually use 6 bars of soap? melt all the ends together, and use 5! Make your own hot tea or ice tea out of things you have picked, there are many simple drinks. Buy a bottle of lemon juice in the dollar section, make lemonade. I buy a 5# bag of flour, for $0.99/BAG!!, WHEN ON SALE. Out of my bucket fund, now that it is established, I can catch every SALE. I make 6-7 loaves of bread, and I now make my own yeast, so the bread costs me $0.15/ per LOAF, PLUS seasoning, herbs, sometimes a little cheese, plus 3/4 day, plus oven time of about 2 hours! I no longer buy store bread at $2.00/loaf, and that money goes RIGHT INTO THE 'BUCKET'. Looking for additional cash, to apply to the debts. 'Disposable' money. Next, work on your electric bill- HARD!! You can get it to drop, from ...$125.00 to $115.00... from $115.00 to $100.00. You can! Little by little. I unplug the coffee pot the very SECOND it is done. I have no 'silent thieves' left. We have a timer on the water heater, and it is now wrapped well! We run the water heater no more than 3.5- 4.0 hrs./week. I heat up a pan of water for dishes, I no longer heat up all the water in the water heater. Reduce, Reduce, Reduce! Once you see more 'disposable money', apply that to the SMALLEST DEBT YOU HAVE 1st. Make your monthly payment, plus add... $25.00- $50.00, all of your conserving benefits. Your 'bucket money' is there, so it is O.K. if you put yourself right down to only ...$20.00 on hand for the month... all your needed grocery money is in an envelope, all your standard bill money is in an envelope, you have planned very well for the month's expenses- take yourself right down to as low as you can, with extra cash on hand!!! It does not matter which debt has the highest or lowest interest rate anymore: pay the smallest bill first, then, once paid off, take ALL the money you were paying...(including the extra every month), and apply it to the 2nd SMALLEST BILL you have, including that bill's normal monthly payment, which you are already used to. Now, you have the money from bill #1, plus additional, and money from #2, paying down on #2, and it pays off more rapidly. Once the 3rd one is paid off, you have a lot of money every month going onto #4. You can fall back on your bucket money if you fine you were off a little bit, and correct your ideas next month. If an emergency comes up, use the least amount of the bucket money you can. It hurts to need to build it back up- I know. On the other hand, be glad it was there- didn't need to put something BACK ON a credit card!
So, there ya go... that's probably it, for now. One of the biggest things is to not be embarrassed that you are in debt, or in trouble. Life these days isn't 'normal', and income isn't predictable, and then, they jumped the interest rates way up for awhile... just starting to drop them a bit..
Oh, take advantage of every 0% card that is offered you. If you don't qualify, a family member can (if they trust you) take out the card, and can pay YOUR DEBT WITH IT, when they do a balance transfer. Maybe you could offer them 2-3% for doing it...
