When I worked outside the home, I had a co-worker, Penny, who was very open about her finances and the fact that she was in debt–deeply in debt. A few hundred thousand dollars in debt.
To her credit, Penny worked hard. She was the first to sign up to teach additional classes, and she often volunteered to chair committees and run extracurricular activities because that meant she’d get some extra pay. For awhile, she even took a seasonal job at Barnes & Noble.
There was no doubt that she was a hard worker, and she said she was committed to paying off the debt. I cheered her on, and as I did, she began to share more and more about her debt, which she argued she was committed to paying off.
However, after a while, I couldn’t help but notice that the needle on the big debt-o-meter scale never moved. Sometimes it even went up. After awhile, I started to feel like I was watching the slow sink of the Titanic.
Penny may be a good barometer for the many in America who are deeply in debt. Certainly she gave me a clear glimpse of her finances in a way that very few people do.
If you have debt to pay off, are you serious about paying it off?
Here are 4 signs, ala Penny, that you may not be serious about paying off your debt:
1. You shuffle money between credit cards.
1. You shuffle money between credit cards.Moving a credit card balance with a high APR to a credit card with a 0% fixed APR is one thing. To continue to shuffle around your credit card debt without making much progress actually paying it down is a good sign that you’re not dedicated to the repayment process.
2. Over a year’s time, your debt load has not changed or has only changed by a small amount.
If you begin January 1st with $150,000 in debt and by December 31st you have $148,200 in debt, can you really claim that you’re serious about paying it off? I don’t think so.
3. You continue to buy things that you can’t afford.
Yes, you need to live your life while you’re paying down debt. However, if you pay for non essentials like a new trailer for the family to go camping because you found a great deal and you were going to eventually buy one anyway, you’re probably not serious.
4. You cash out your retirement account.
Unless you’re at risk of losing your home or you need the money to pay bills for a sick family member, there is generally no good reason to cash out your retirement account. If you do so, you may not have yet curbed your impulse to buy. There’s usually no good buy that warrants robbing your future, even if you have the best intentions of paying it back.
Cashing out your retirement to pay off debt isn’t a very wise move, either. I cringed when Penny did this. She paid penalties, emptied her retirement, and applied it to her debt. However, her debt was so massive, that even after this move she was still deeply in debt, only now without a retirement fund.
If you have debt to pay off, it’s your choice whether or not you want to attack the debt.
Some people don’t. Some people make the same payment month after month and don’t accrue any new debt. These people will eventually be out of debt, though it may take them longer. However, the end result is still to be debt free, which is great.
However, if you want to eventual be free of the debt demon, you must change your behavior and stop going deeper into debt.
There are definitely changes that need to be made to get out of debt. If you can’t make more than a minimum payment on a huge debt load, you obviously will need to make some drastic changes if you ever hope to free yourself of the debt load. Making a plan can be a great first step.
I talk to “Penny” a lot in my 5 years of coaching. Folks like this need to get emotionally upset about their situation. The pain of staying the same has to get greater than the pain of change. People in this situation need to get sick and tired of being sick and tired. I tell these people straight up, if you’re serious about change, I can help you change you but you have to want to change you. Your money management system, your thinking, your behaviors, it all has to change. Another obstacle to over come is getting the spouse on board if Penny has a partner. The Penny’s of the world are stuck in a rut. It’s hard work getting out of a rut. But it is worth it.
Breaking free from that debt cycle has to become your top priority for this period of time. The more factors we can stack up in your favor, the better. Reading this blog helps. Pete’s blog is top notch! Reading books on getting debt free helps. Take a class. Join a support group. Enlist support from your friends as accountability partners. People who break free almost have to declare a holy jihad on debt. If the lower cost items aren’t getting the results you want, hire a personal trainer for your wallet. You wander in debt but if you want out, you gotta break free. There isn’t one way out. There isn’t a magic bullet for debt. You really have to work every angle you can. The trick lies in finding the right combination of tactics.
You’re right on here, Melissa. I’ve got people in my life just like Penny. I think Chad’s right on when he says “The pain of staying the same has to get greater than the pain of change”. That’s what worked for us. We hit “rock bottom” and said “Things have got to change”. Great post.
That is really scary to think that someone might never get out of debt, especially someone you know. But even those who are in the lowest pit of debt can still recover with the right methods. Hope this doesn’t happen to me or to anyone.
I’m saddened by your friend’s example. I reminds me of people I know who want to lose weight or pursue a dream – but who never take concrete steps to make it happpen. I believe it is possible to confront people stuck in such dead-end behavior patterns with the truth about the gap between their words and their deeds. If spoken with sensitivity and good will, absent of any judgement, such loving confrontation can help to free a person from self-imposed dead-end.
#3 seems the main factor to me. Moreover, it’s the definition of “affording” that matter most. The best thing a person in debt cad do is adopt this approach: “if I *think* I can afford it, I can’t”.