Seven Steps To Changing How You Think About Debt (so You Can Get Out Of Debt Quicker)

If you're facing a huge debt, you have probably realized that it is not going to go away on its own. Even if you suddenly came into a lot of money, debt would likely return. That's becasue debt is more of a symptom of how you think (and feel) about debt than a mere financial problem. You have to learn to think about debt in new ways.

First, start by admitting that you are in debt. While debt is really a pretty black-and-white issue, many people prefer to live in denial (it's cheaper) than own up to debt. But denial will eventually crack under your feet and plunge you into the icy waters of reality. Size up your debt.

How do you do that? Take a pencil and paper and start to write down all of your debt. You may have to call the toll-free numbers on your various Credit Cards and look up phone numbers on varies statements. Write down all of your debts and add them together.

Don't look away, even if the number is scary. You need to know the truth. Sometimes it takes a scary number to get our full attention!

Second, you have to "own" your debt. A lot of people act like their debt belongs to someone else. And maybe it did, in a way! Some people come into overwhelming debt because they wound up with the debts of a spouse (or ex-spouse). Some people end up paying off the debts of family members. Others got into debt when a house burned down or the family suffered a medical problem. You might get into debt over posting bond for a loved one.

No matter how you wound up with the debt, you have to recognize it as your own. You must assume the responsibility for it.

There are lots of reasons that people get into debt. Even if you just overspent your way into debt, you probably had a lot of good reasons for what you did. Maybe you had a lot of debt left over from your college days. Maybe you were under a lot of emotional stress and found "retail therapy" helped. Maybe you just did not understand money. I know a woman who wound up paying off a lot of debt she got herself into while in the "manic" phase of undiagnosed manic-depressive illness.

You may have reasons, and that's not the point. The point is: the debts are yours. Take responsibility for them.

You won't ever get out of debt till you admit that you (not anybody else) have debt.

Third, you need to forgive your creditors. That sounds very weird, but have you ever noticed that in the Bible, it talks a lot about "sin" and "debt" being related? The Lord's prayer, for instance, in some Bible translations talks about asking God to "forgive us our debts as we forgive our debtors." In financial terms, overlooking a debt means to "forgive" it.

You probably got into financial trouble because of some other trouble. Whether it was a failed marriage, a natural disaster, disease, devastation, mental illness, or just plain getting through a "rough patch," you probably need to go back and forgive the other people involved.

Let's say you're heavily in debt because you owe child support. And let's say that there is a lot of pain still attached to the relationship that brought that child into the world. Maybe you even feel tricked or cheated into paying the child support. And it could be genuinely unfair.

Forgive everybody involved. Forgive the other parent of your child, forgive your child, forgive the family of the other parent, forgive the state, and forgive the judge who made the ruling.

Forgiveness does not mean that you agree that what they did was right. Forgiveness does not mean you like what was done or that you approve of what was done. Forgiveness means you accept it and you refuse to carry around that wasteful anger and animosity any more.

What happened may or may not have been fair, but that's not the point. It's happened and you are ready to get past it. That's forgiveness.

Fourth, you need to make a conscious choice to get out of debt. A lot of people are digging themselves deeper and deeper into debt not because they want to, they just have not decided to stop digging! Make a decision.

Getting of debt involves one big decision (that's the easy part) and hundreds of smaller, daily decisions (that's the tough part). If you need to, find a way to remind yourself of getting debt free. Maybe you can write it on a paper and stick it on your desk, in the car, or on your bathroom mirror. You can make up a mantra for yourself and just say, "I'm going to get out of debt" whenever you need to and even some times when you don't need to. Don't buy anything new, but if you have a ring or bracelet or something special, you can wear that and use it to remind yourself that it is the symbol of your decision to get over your debt.

Fifth, stop the bleeding. Most debt is a result of a lot of small wounds. Stop as many as you can. This means you have to look for them. A few debt areas will be obvious. Do what you can to stop digging yourself into debt. But search out other ways that money is slipping through your fingers.

Don't be afraid to be zealous. Zealous, passionate people are the ones who can beat debt. Cancel your gym membership, cook at home instead of going to restaurants (even fast food joints), quit cable TV, and buy your clothes at garage sales. Many of us get riled up at some of those prospects, but they are all viable strategies. They work. I'm not saying you have to do all of them or any of them but you need to stop as much hemorrhaging as possible.

Sixth, get a plan. It does not seem to be as important to use a specific plan as it is to use any plan. You need a system. One good one is to line up your debts and start paying them off. Pick your highest interest debt first and devote every spare cent to paying it off. Then proceed from there.

You can also try debt consolidation where you roll a lot of higher-interest debt together into one larger debt at more favorable terms.

Certified credit counselors are available locally (check out ) or online. There are valuable books and courses on money management. Figure it out, get help, or work with somebody. But you need a game plan.

Seventh, keep on. Getting out of debt is a bit like losing weight: it takes hard work, dedication, and just dogged day-after-day persistence.

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How To Make Your Money Propel You Forward, Instead Of Hold You Back

When we are planning for our finances, we must decide how we will measure our success. One measure is achieving Financial Freedom ? but what does financial freedom really mean?

The term ?financial freedom? is thrown around both by traditional financial planners and investment advisors, as well as every infomercial get-rich-quick scheme. Typically, most of the schemes are using the term to mean being so rich you never have to work again. But really financial freedom means being released from uncertainty and being able to confidentially know that you will be able to meet your life goals ? that your finances (or lack thereof) are no longer holding you back from achievement.

This may mean that you have enough passive income (through pension, investments, business ownership, or real estate rental income) to finance your basic expenses. Or, it may mean that you simply know how to use your income, and investments, to create a life where financial issues are no longer holding you back from your goals.

But what I think is not important -- What does financial freedom mean to you? If you lived in a world where you KNEW that you were going to be able to reach your goals, and you KNEW exactly what to do to reach your goals, how would that feel? What words come to mind when you think of financial freedom?

Action #1: Brainstorm some words that mean financial freedom to you. When I say brainstorm, I mean no filter, no editing, no judgment ? just jot down some words, emotions, verbs, adjectives, feelings ? that mean being free from financial issues, according to you.

So, what's the point? Why are you here, trying to learn about your money?

The answer is your Financial Vision. Your Vision is your objective, or ultimate reason, of why you want to master your finances.

Imagine -- you have a Financial Action Plan sitting in front of you on your desk, table, or lap. This Plan spells out the exact steps you need to achieve your goals. You now know exactly what you want to do, and feel confident that you will be able to complete these tasks.

How does that feel? What does it mean to you? And not just what's in your head ? how do you feel in your body ? are your shoulders relaxed? Your achy, stressed-out stomach relieved? Do you sit up straight, chin high?

Imagine ? you have achieved your major life goal, that goal that you are worried about right now. Maybe it's paying off debt, buying a house, starting a business, sending kids to college, or retiring from your job. Whatever it is ? you're there. All the tasks are completed, you've done what you needed to do, and you have achieved your most important goal.

Where are you? What are you doing? How do you celebrate?

This Vision of Success is your motivation. When you are thinking about procrastinating, spending your savings, taking a lump sum to buy a new car you don?t really need, chickening out on taking a risk ? you refer to this Vision to remember why you are here. Why you are learning, sacrificing, taking risks, making change ? so you can reach this Vision of Success that you have envisioned.

Action #2: Create your Vision of Success. Write a few sentences, jot down an email to yourself, sketch a drawing, make a collage. Now post your creation on your bulletin board, log it into your blackberry, stick it in your wallet, save it as your desktop wallpaper ? wherever you will see it every day as you make your financial decisions ? this is your motivation to make every decision in a way that agrees with your goals.

Are you a perfectionist? Do you feel that your tasks are always unfinished? There is always one more thing, you have never really done that much, you always have more to truly reach your goal.

If so, you are probably not acknowledging your accomplishments ? and this lack of finality, of celebration of a job well done, may be holding you back from success.

We all have done something on our finances. You've paid off a credit card, bought a house, opened up a 401(k), raised your retirement contributions, saved money each month, met with an advisor, opened up a life insurance policy. So you say, no, not me, I haven?t done anything yet? You subscribed to this eZine, and are actually reading it! A major accomplishment!

So, did you celebrate? Did you take the time to rejoice in a job well done?

Designing and implementing your new financial plan is a long process, which may take you months to complete. To maintain your positive attitude, you need to acknowledge each step along the way ? regardless of how far you are from your ultimate goals.

Action #3: Make a list of everything good you have done about your finances ? the tiny to the huge. Celebrate Each and Every One of Them. Buy a package of gold stars to paste in front of each item, eat a m?n?m for each task, spend five minutes getting a message per each completed event, drink a martini for each accomplishment

What's holding you back from taking the next step on your finances?

Simply, you are.

Perhaps you have some technical issues that need to be addressed ? finding the right person at the pension administrator to give you the projections, figuring out how to fill out the forms, allocate those accounts, find time to schedule the appointment. But you can deal with all of those issues, with minimal, if any help. Why haven?t you done it?

The Real Reason is likely some issue you have about money, finances, or success. We are all walking around with personal issues from our past experiences, in childhood, our teenage years, our prior relationships, or from our friends and community. Rules such as ? people like us can never be rich, money is the root of all evil, corporations are evil, women are not good with money, I don?t know anything about money, I'm just going to get into debt again, what's the point?

Until we figure out what these issues are, you will continue to subconsciously hold yourself back from taking the next Action Step you know you need to take.

So how do you discover those rules? One way is to keep track of your Roadblocks. Where do you get stuck? When do you stop Taking Action on your finances? Do you see a pattern? When did you start doing this behavior? Do you know anyone else who does this?

Action #4: Start a log of your roadblocks. Brainstorm a list of action items you currently know you need to take on your money, but have not yet done so. List your excuses. See a pattern? Do you see a Real Reason emerging? If not yet, don?t be discouraged, it may take some time tracking your roadblocks for your Reason to emerge.

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Financial Freedom? Here's The Only Real Question

PREAMBLE: The only way to take control of your life, raise your standard of living and move beyond merely surviving is to create your own unique product or service that you offer to increasing numbers of people in exchange for the things of value that you desire. This simple formula applies to countries as well as people. A self-sufficient economy has its own products or services of value to export to the world. Similarly, a self-sufficient individual has something of value to exchange in the global marketplace. That thing of value is based on your natural talent, skill, or interest-in other words, your passion.

NOTE: The following article was originally written for the citizens of the island nation of Saipan. It therefore includes references of a nature unique to that nation's economic situation.

When you think of what can help the you elevate yourself from your current economic situation, it's important not to lose sight of a few important ideas and truths about money, value, and economics.

I. MONEY IS A MEANS OF EXCHANGE
No one ever gives you money except in exchange for something of value.

II. EXCHANGE IS THE REAL ISSUE
Don't let anyone mislead you. The only reason we focus on money is simply because the world has agreed that money is the basis of exchange that we're going to use. I have eggs. You have a cow. If you want what I have, and I want what you have, then we can exchange my eggs for your cow. But you may not want eggs. You may want something that I do not have. And I may not want a cow. I may want something you do not have, like a car. So we all agree that eggs are worth a certain amount of money, and that a car is worth a certain amount of money. I can now sell my eggs for money, and get the money to buy a car. But all I really did was trade eggs for a car, using money as the means of exchange. So it's not the money that's driving the economic engine, it's the exchange.

Now, then, there are four ways that one can engage in the process of exchange:

1. You can accept money but give nothing in return (rip-off)

2. you can accept money and give a partial or corrupted version of what was expected. (short-changing)

3. you can accept money and give exactly what was ordered. (fair exchange)

4. you can accept money and give more than was expected. (exchange in abundance)

By the way, Exchange Method four, (accepting money and giving more than expected) is the only way to ensure one's long-term survival and prosperity. But more on that in a future column.

III. PRODUCTS ARE THE BASIS OF EXCHANGE

"When a whole society demands a high
standard of living and yet doesn?t concentrate
on the personal production of exchangeable
products, it is finished."?The Dynamics of Money

So how does one engage in exchange with the world? Simple. You need a product. A PRODUCT can be defined as ?a high quality service or article in the hands of the consumer in exchange for a valuable. It is something that can be exchanged with other activities in return for support.?

IV. THE QUESTION IS?
So the single, most important question to be asked of those who steer the course of nations, its citizens, investors, business owners, and potential Saipanpreneurs is: WHAT ARE WE PRODUCING?

When someone suggests a solution to the economic situation, ask him, "Great idea, but what are we producing?"

When someone suggests an idea for how to get loans and federal assistance, ask her, "Great, but what are we producing?"

When someone suggests an idea for a business you can start, ask yourself, "What am I producing?"

If there is no production, there is no money?no real, long term money.

A FLAWED PLAN
I always tell my clients that any plan that relies too much on another person's whim, good will or largess for its success is inherently a flawed plan. It may provide a short-term stop-gap measure, but there is no dependable future or control built in.

Selling someone the hope or possibility of doubling their money based on the internal programming of a slot machine is not exchanging something of value. It's essentially giving nothing in return. It's a rip-off.

Sure, you can call it entertainment if you wish, but at the end of the day, you've not improved your lot in life, because you're not exchanging anything of real value that can grow, improve your reputation, bolster your self-esteem or raise your standard of living. Furthermore, since it is not based on anything over which you have any creative input or control, you cannot use it dependably to improve the welfare of the masses.

It's not an industry into which any average person of entrepreneurial aspirations but meager means can venture. It's a limited industry with power concentrated in the hands of the few.

Having people running around throwing their money into slot machines doesn't automatically improve the lot of the general population. Sure, there may be some collateral spending in stores, new jobs in the hospitality/service sectors, but by far the biggest winners are the casino owners. From my own limited travel experience, I've been to Atlantic City, in New Jersey, and witnessed stark poverty just beyond the fences of prosperous casinos. There's no guaranteed ?trickle down.?

The danger in basing economic growth on simply providing a place for people to throw their money into slot machines is that the world doesn't need another place to do that--least of all a place way out in the Pacific Ocean. Any place with better entertainment, a more convenient location or nicer hotels, will win the competition for tourist dollars.

And, it would be sad to think that the only thing this beautiful land and its people have to offer is a place for people to gamble money in search of an easy payoff. It's a slap in the face of the traditional creativity, natural beauty, the spirit of self-sufficiency that have existed here for centuries.
A NEW DIALOGUE
If you continue to perpetuate the idea that we can be saved only by someone else's money, then those presently without money are rendered powerless in the discussion. If, on the other hand, you change the dialogue to discussions of finding our "value" in the marketplace, then everyone can participate.

Without such a new dialogue, and the real, long-term solutions that come with it, we'll perpetuate lowered expectations, and witness the downward spiral of self-esteem and hope that comes with the exclusive dependency on others for salvation. When a people subjugate themselves and their inherent value to the value of a dollar, there are things you cannot see that will be visible only in their absence. For a nation's humanity, once lost can never be replaced.

IV. SUMMARY
Money is a means of exchange.
Exchange is the challenge to be solved.
Products and Services form the basis of Exchange
No production=No Money
The only real question, therefore, is: What Are YOU Producing?

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Personal Finance Budgeting: Major Personal Budget Mistakes

In this article we are going to talk about some of the common personal budgeting mistakes that people make when writing and trying to follow their personal budget. The following personal budgeting mistakes are some of the most common ones that cause people to or quit on or fail on their personal budget.

1) Not creating a personal budget

I decided to put this first because I know that some of you are still thinking that you can get away with not writing out a personal budget for yourself. You think that you can keep it all under control in your head and you are wrong. This is the most important step in budgeting and it is sad that most people do not even make it to this step. You cannot fail or succeed in your quest for financial freedom if you do not try.

2) Being sure that you are adding correctly on your personal budgeting worksheet

This is a somewhat dumb, yet common among budgeting mistake. Often people make simple addition and subtraction mistakes and end up thinking that they are spending $200 less than they actually are. It is always a good idea to double check all of your budget numbers to make sure they are correct.

3) Lack of Consistency in Savings

People need to have a specific line on their budget worksheet that it dedicated to tracking their monthly savings. After doing this people need to establish a specific amount that they plan to save each month and then stick to it.

4) Failing to establish an emergency fund for unexpected expenses

The majority of people do not realize that they need to have an emergency savings funds to help in case unexpected expenses comes up. This money is set aside in a savings account so that you don't have to deviate from your budgeting plan if unexpected expenses come up.

5) Making only minimum payments on your Credit Cards

When people setup their budget they often only budget to make the minimum payments on their Credit Cards. People need to do their best to allocate a large amount of money toward Credit Cards payments each month so that they can pay off their debts quicker.

6) Taking all the fun out of life by having a overly restrictive budget plan

When you make your budget plan you need to plan for a portion of your money to go to fun and entertaining activities. If you do not do this you will find your plan to be to restrictive and will likely not follow it. You can budget for this by cutting out some other expenses.

7) Spending more money than you make

This is often the biggest mistake in a personal budgeting plan. When making your budget you need to make a plan where you are spending no more than you make.

This is a short list of some of the major personal budgeting mistakes that people commonly make. If you can avoid these mistakes it will greatly increase your chances of being successful in your quest for financial freedom.

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