To get out of debt, you need to figure out what got you into debt in the first place.
Even if you are in debt because of a medical issue, a layoff, or other unavoidable life catastrophes, there is almost always an underlying issue which caused you to spend money where you shouldn’t have, which means you didn’t set aside enough money for emergency savings.
Do you spend too much on your family? Do you buy lavish gifts, pay for private lessons, splurge on expensive vacations? You need to realize that doing so is ultimately hurting your family, not helping them. If you don’t have a year’s worth of emergency money set aside, and a healthy chunk of money going into your 401k and your children’s college fund every month, you CAN NOT afford any extra spending.
Do you spend money try to impress others? If so, when you are laid off or your mortgage resets or you are laid off or your company goes out of business, are those “friends”, neighbors, et cetera, going to pay your bills for you because you spent all your money and have no savings? Highly unlikely. You need to put your needs and your family’s needs FIRST before you buy expensive toys or a house you can’t afford or a Hummer instead of a VW.
Do you spend money to feel better about yourself, to fuel some inner need? If you can’t stop yourself and rein in your spending, you might want to seek counseling so that you can find healthier methods of rewarding yourself.
Do you spend money to impress a significant other? Keep in mind that if you want a long term relationship to be successful, you need to be financially compatible and you need to be honest with that person. Spending money that you can’t afford is not being honest. If they will only stay with you as long as you are spending money you don’t have, you’re going to run into problems sooner rather than later.
So if you are in debt, you need to examine what caused you to be in debt in the first place if you are ever going to truly get a handle on your finances.
