There is a saying that you may have heard: When the going gets tough, the tough go shopping. I believe that President Bush actually suggested that after the September 11th disaster. Many of us have needed no prodding to follow this rule. The result is a society of debt and foreclosures.
This morning as I was driving I saw an advertisement about becoming debt free painted on a car window. The way to become debt free is not by waving a magic want. It is about debt consolidation. “Wow,” you may say, “pay just one amount every month and I can pay off everything I owe. Life will be fine and I will live happily ever after.”
It is so easy to use a credit or debit card. You might think that it is only a piece of plastic, but every time you pay for something with it you are spending money that you may not have. If you use a debit card and can’t pay the balance you will be charged enormous penalties; the same with credit cards. What’s a person to do?
As I thought about this offer I remembered a couple I counseled many years ago. Bob and Carol were deeply in debt. They could barely pay the mortgage each month. Their credit cards were maxed out and the bill collectors were phoning to demand payment. Then they decided to consolidate their debt. The only trouble was that they didn’t change how they behaved with money.
They didn’t go on a money diet and say No to temptation. If Carol didn’t feel like cooking they ordered take-out or went out to eat. If there was a big sale at one of the department stores or home improvement centers either Bob or Carol had to check it out and then couldn’t resist the bargains. Before they knew it, they were in debt with new bills piling up on top of the monthly consolidation payment. They were right back to where they started.
Another couple, Dave and Terri also had too much debt but found a non-profit agency that helped people make arrangements to pay off their creditors and guided them to learn to spend in a more responsible way. The credit counselor asked the couple to cut up their credit cards. Terri felt a great relief as they did this. She was determined to live within her means and pay off the debt. What she didn’t know was that Dave hid one of his cards and continued to use it without Terri finding out.
Dave loved to gamble and went on a spree without telling his wife. He told her that he was going camping with a pal, but instead headed for Las Vegas where he spent lavishly and gambled away a great deal of money. When Terri found out and discovered the huge credit card bill she felt betrayed, furious and defeated. The upshot was that the couple had to declare bankruptcy and Terri filed for divorce.
These two couples represent many of us today. Credit cards are easy to get and encourage us to keep on spending. We tell ourselves that we deserve nice things. We are bombarded with temptations. Bob and Carol were “binge buddies” who egged each other on and believed that they would pay what they owed someday. Debt consolidation didn’t change their attitude or magical beliefs.
The solution to this problem of overwhelming debt is very simple. Live within your means. You may read this sentence and have an immediate reaction of “Yes but I need this new dress, new sofa, vacation,” etc. You are afraid that you will feel deprived if you say No to your cravings or have to cut back. If you want to create a new and solvent lifestyle the first thing to do is to open your eyes and take a look at your situation.
Make a list of how much your life is costing you each month. I bet that you don’t know. List monthly payments for housing, water, electricity, phone, car and credit card payments, medical expenses, debts and other necessities. Put in all extras like entertainment, hobbies, haircuts, clothing, pets, gifts, and impulse purchases. Add this up and see what it costs you to live each month. Multiply the monthly total by twelve and you can see how much you are spending yearly.
Now list all your earnings monthly and yearly. This includes salary after taxes, income from investments, alimony, etc. Compare the numbers. Are you living within your means? Do you save money? What did you just learn? If you feel unsettled or fearful are you willing to make a promise to yourself to take action without delay?
Perhaps your community has an agency that helps people get their finances in order. If so, find out more about this and follow through. If, like Dave, you are a compulsive spender who can’t stop money binges, find the nearest chapter of Debtors Anonymous and admit that you have a problem that is harming you and those who love you.
At first you may resent having to say no to certain purchases and impetuous acts. If there is something that you really want like a vacation, save up for it. Think about how it will feel to live within your means without worrying about whether you can pay your bills each month and save for a rainy day.