Now Apply This Logic To The Debts You Currently Face

Category: Finance, Credit.

After finally making the decision to tackle your debts two months later you are wondering why you have made no real significant progress.

And your goal of debt freedom further and further away. That mountain of debt you are trying to climb just seems to be getting bigger and bigger. It s easy to get caught up with the initial euphoria of starting a new venture. You feel excited because you feel that you are taking back control of your life. When you finally make the decision to tackle your debts you feel excited and relieved. You feel relieved because you know that if you can achieve your goal of paying off your debts then you will be free from the worry that comes with financial burden.

It may be a New Year s resolution or you see how a friend has managed to pay off their debts and you think I can do that . From somewhere you get an initial jolt of motivation. You go enthusiastically about researching debt management on the web. You think about how you are going to payoff your debts and how you are going to manage your money. You talk to friends and family about how you are going to tackle your debt. You have a plan.

You ve read all about it on the internet and in the debt management books. Now please correct me if I am wrong but you re plan is to tackle some of your larger more expensive debt first right? Tackle your more expensive debt first. Then what? For most people their most expensive debt is their credit cards so they go about trying to pay them off first. Then after about three or four weeks the motivation is gone. You can no longer focus on your debts and the feelings of hopelessness are made worse because you think you have failed and are doomed to a life of debt slavery.

You ve made a small dint in your credit card bill but you ve slipped back into the old routine and get an uncomfortable feeling whenever you think about your debts. Does this sound familiar? The first wave of enthusiasm and motivation quickly wanes as they try to do too much all at once. This is a common experience when people set out to achieve big goals. Focus is lost easily as people do not see the massive progress they expected. Then the next New Year s they try it again only to repeat the vicious cycle. After a while the experience can be soul crushing and people lose all hope.

What many people fail to realise is that the timeline that they give themselves is restrictive. The approach they take may also be incorrect. In their mind they say" I want to have my debts paid off by this time next year. " whereas in actual fact they may need to give themselves a lot longer. They are trying to eat the proverbial elephant whole. So compare the elephant eating approach to the approach that most people take. I m sure you ve heard the clich�d question in relation to goal setting- How do you eat an elephant? the answer being one piece at a time . Can you see the difficulties you re going to have when you try to eat the whole elephant at once or in your case payoff all your debts in one big flurry of activity?

The truth is there is a much simpler and more effective method. Now when you think about it logically there has got to be a better approach to debt management than the all or nothing approach that most people seem to take. The thing is this approach goes against conventional wisdom( the best ones usually do) and you are unlikely to read about it in the debt management magazines. In an ideal world this makes sense as these types of debt are the most expensive and are costing you money. The standard debt management advice is" Pay off your high interest debts first" . In the long run you will end up paying a lot more for them especially credit cards.

To get out of this situation you need to pace yourself and rock out of it gently. Unfortunately we do not live in an ideal world, its taken lack of self control and years of overspending for you to get into this situation. Discipline is like a muscle. You just need to think of it as a debt free muscle. The discipline you need to pay off your debts is no different. Now if I wanted to be a bodybuilder how would I build up my muscles? No I d get the smallest weight that I could and I would train my muscles to gradually use heavier weights.

Would I go to the heaviest weight and start trying to train with it? The whole idea behind weight training is to work your way up to using heavier weights and by default your muscles will respond and grow. From a discipline point of view it makes no sense to tackle the biggest debt first. Now apply this logic to the debts you currently face. It s not sustainable. The ideal way to start paying off your debts is to start small.

If you do and make very little progress then you will become disheartened and the self flagellation will begin. Think of paying off your debts starting with the small ones the same way you would think about a small snowball starting down the mountain. It is the same principle of momentum that you should apply to tackling your debts. In a short time the snowball has grown into a much larger ball of snow and eventually it turns into an avalanche. Build the momentum. Knock out your debts one by one starting with the smallest.

Start small, electricity bill, your phone bill. The key here is that the good feelings you will have from paying off the small debts will act as a motivating factor to help you tackle your larger debts. Like an out of control freight train once you build up a significant momentum you will be unstoppable when it comes to tackling your debts. You will build on your success and success in paying off your debts is exactly what we are after. The great thing about paying off your small debts first is that allows you to not only build up the internal discipline of paying your debts off but it also lets you get a great understanding of how to manage your money. Which is better? Think about it another way.

To have a crazy burst of enthusiasm about tackling your debts and last about two months and make very little impact on your debt burden. I know which one I would prefer. Or take a much more measured approach starting small, having a clear long term plan and building up the self discipline that will serve you a lifetime? Simply put when tackling your debts you have to be your own best friend. Debt is an emotional issue. Don t be too hard on yourself.

Money for most people brings with it incredible baggage. You need to give yourself time, time that will pass anyway. Instead of seeing money for what it is- a means of exchange- people see it as a way of carving out their place on this earth through buying crap that they do no need. It s better to settle in for the long haul than to face a life of short attempts to tackle the problem. When it comes to your debt you need to get serious about getting serious.