A few times a month, I would like to open the floor here to a few guest writers from the personal finance blogosphere. I am very fortunate to have Paid Twice from I’ve Paid For This Twice Already to contribute a guest post today. Paid Twice is “a 30-something married mom of two with a PhD that sits in her closet and a 3rd degree blackbelt in taekwondo.” 
Money-wise she maintains some debt, including student loan debt (that PhD can be expensive!). Her target date for getting out of it? 2010, though I’m not sure whether her student loans are included in this short term goal. She’s also incredibly prolific, writing several times a day and enjoys discussing her personal experiences with shopping, frugality and debt reduction. I find her to be an inspiration for all those who are managing their debt. And by the way, her site name “I’ve Paid For It Twice Already” alludes to the concept of double paying for a purchase via credit, due to having to pay for the actual item and the interest on top of it!
You’re in debt! How did that happen? Who cares! Too often, we spend so much time focusing on the how and become paralyzed about improving the situation and starting the process of getting out of debt. Yes, in a global sense, it may matter how we got in debt so we can learn something from that and not make the same mistake again, but focusing all your energy on past mistakes and not the present and future improvements you can make harms you in the long run. Stop beating yourself up over the how and start working towards the never again! There will be plenty of time to analyze your mistakes once you’ve established a plan and a workable flexible way to climb out of debt.
So now that you’re ready to forgive past transgressions (or at least, feel like you can temporarily let go of them) and start moving towards a future of financial independence, what do you do?
Change your attitude.
Instead of seeing the act of acquiring more debt as a way to fix unexpected short term problems, view acquiring debt as a LAST RESORT when there are honestly no other options. Without this significant attitude change, every step forward is in jeopardy of being sabotaged by one unexpected setback. This may seem obvious and elementary. But as with many things, debt acquisition is as much a state of mind as it is a financial predicament. If credit card usage, payment plans and the like seem like reasonable options “just in case”, they become reality. And NOT looking to credit as your “backup” plan really does necessitate a significant shift in mindset. Piling more credit debt on top of all of the existing debt will just make the hole you are in that much harder to climb out of.
Count on yourself.
If you can’t count on your credit cards, what can you count on? Count on yourself. Trust that you have the ability to solve your own money problems. This isn’t going to happen overnight. Start investing in yourself, little by little. Open a savings account. Start an automatic savings plan. If you get a small (or large) windfall, put that in your savings account. Build that account up little by little until it is your safety net, not your available credit limit. This won’t happen overnight. Like all good things, it takes time. But you are investing in yourself, and that state of mind is priceless. And when an emergency happens – don’t be afraid to use the money in savings instead of credit! Too often people save an emergency fund and then don’t want to touch it in an emergency and use credit instead. Don’t be that person. Stay away from credit.
Move forward.
Take a cold hard look at your finances. What is really necessary and what have you just become accustomed to? What is worth staying in debt over? Use the money you’ve now collected from eliminating those things that don’t make the cut to pay down your debt. Make a reasonable yet ambitious plan and keep paying down the debt bit by bit.
Keep trying.
There will be setbacks. Maybe you’ll have to spend some of the money you saved for emergencies. But that’s what it is for, emergencies. Maybe you’ll slip up and use a credit card. Don’t beat yourself up, but do resolve to work harder to avoid debt and credit. And keep moving forward. Don’t let setbacks become an excuse for abandoning everything.
I’ve been there – overwhelmed by debt, barely treading water and feeling like I was drowning, and feeling like there was no way out. The only thing that started to make a difference was changing my attitude from thinking about how I got into this mess to focusing on how to get past it. I still have moments where it seems overwhelming and I feel trapped, and I am sure that will be the case until the debt is all paid off. But don’t think of things as impossible, or they become impossible. I’m moving forward now, I have a timetable and a plan, and it all seems manageable and possible. And possible is the key.
You can subscribe to Paid Twice’s RSS feed here.
Image Credit: Photo by Marcia Ledford, U-M Photo Services
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Love the picture!
Thanks for giving me the opportunity to write on your blog!
(and yes, my student loans are included in the 2010 goal, as are my spouse’s.
)
Thank you for your encouraging post as well! Well to be able to get rid of all the debt including student loans by 2010 is a great feat! I look forward to watching your progress. I have my own goals too, involving how to get out of the 9-to-5. It’s great how our blogs are helping us chart and display our progress towards all these goals.
How much did your PHd cost you? Is going to be hard to get rid of that debt in just 3 years unless it not as costly as I think it is.
Great post Paid Twice, it’s all about attitude. I like the picture as well…Borders is one of my biggest temptations!
lol the PhD was “free”. SVB thought that my student loan debt was from the PhD but it’s from my undergraduate education. I had a fellowship and also worked as a teaching and research assistant for a small stipend while doing my PhD. No student loans involved there.
Great post paid twice!
I only started really paying off my debt when I stopped feeling sorry for myself.
Good luck:)
Thanks!
Great post Paid Twice!
Too many people prefer to pity themselves to the point that they just keep contracting debt thinking “what else could I do? It’s not my fault, it’s just bad luck”.
By changing your state of mind, you have much better chance to survive your debt and breath a little.
Great post! Since I’ve started looking forward with my debts (looking forward to the day I no longer have any that is!)I’ve made real changes and real progress in chipping away at them.
Attitude is everything as they say.
Encouraging! Fortunately, a lot of our debt is student loans and car payments. So it’s not like I have to worry about making more or breaking certain habits. But sometimes I feel annoyed with Mr. Micah for having gotten so many student loans instead of more scholarships….not a useful feeling.
Building good habits, happily, is the best approach, I think.
I think looking for something to blame is human nature. I run a personal fitness blog and I can’t tell you how often I have to tell people to stop looking for the reason they got fat and out of shape and just focus on the future.
Yes, there is a lot of benefit from studying the past. We should learn from our past mistakes so we can avoid repeating them. But there’s a point at which we focus on the past so much that we become paralyzed. We’re so concerned with what happened and who’s to blame that we devote no time to solving the problem.
So thank you for this great article, I’m going to link back to it on my own blog and tell people this kind of attitude isn’t just about money.
Gal
It’s all about attitude and determination and Paid Twice really nailed it on the head with this piece that clearly resonated with so many. I strongly encourage you to subscribe to her feed! Here is the link. I’ve also placed it under the post.
Great Post Twice!
Consolidation can help too!
Hey great topic, you are absolutely right. YOU are the solution. No easy button or quick fix.
Debt CONsolidation doesn’t always work. That’s why they call it Debt CONsolidation, because it’s a CON. (Not legally but it works out that way)
80% of people who do debt CONsolidation go back into debt because they feel like they paid off their debt when in reality they just moved it.
If you do debt CONsolidation be very aware of this, or you are at risk of ending up with twice as much debt.
@ “Maybe you’ll slip up and use a credit card”.
That’s not a slip up, it’s a conscious decision. You don’t suddenly realize, “hey,. I just charged something I can’t afford on my credit card! I wonder how the heck that happened?!!”, do you? No. YOu make a choice to do it.
Also, I would say, formulate a reasonable plan, one that is maybe 75% of what you can do, and do at least that. Make a progress chart of payments and dates and check them off as you do them so you can feel your accomplishment.
Also, realize that savings is just the difference between what you earn and what you spend. It’s not something you mysteriously create by setting up a savings account or category in your budget and siphoning cash off into it. Savings is simply just the difference between what you earned and what you spent. So cut your expenses to a level below your monthly income consistently and you will have savings.
Great topic, you are absolutely right. Every person has to keep trying to solve his or her financial problems by himself or herself. Debt consolidation may not always work.
If you’ve got a problem, then make up your mind about it. Like you say in your article, everyone has to keep moving forward. To overcome your problems, we must learn to invest and save money. Always move with some backup plans. As you say — never look back and keep worrying about what mistakes you have done which have caused you to go into debt but keep thinking about how to overcome debt and be careful not to repeat the same mistakes.