The Debt Mindset
Many people just expect to be in debt. It is part of their world view. People who were raised in debt and much less likely to even think it is possible to live debt free. So much of what we believe is based on what we experienced growing up. Another strong influence are our friends. Take a good look at your friends and their financial situation. If you are hanging out with people who are even more in debt than you are, it is not a good sign. Humans tend to gravitate to the average. If you are hanging out with people who are worse off financially than you, it might be time to consider getting new friends–or at least expanding your circle. Here are some signs that your friends, might not be the best influence on you:
1. Most of your friends owe more than $7,000 on their vehicles.
2. Most of your friends carry a credit card balance each month.
3. Very few have any type of retirement account (401k or IRA) setup.
4. If any one was laid off work, they would be in serious financial trouble in less than 4 weeks.
5. Your friends never discuss investing or savings strategy. (Get rich quick schemes don’t count.)
6. You feel uneasy suggesting lower cost activities because your friends would make fun of you for trying to cut back on your spending.
7. Your friends borrow money for items that depreciate rapidly (electronics) or instantly (vacations).
If you find that you are hanging out primarily with people who exibit some of the previous traits, you should seriously consider the toll it might be taking on your financial mindset. If you want to get out of debt, you need to think like someone who plans to live debt free. Debt consolidation, is a tool to help you take steps toward getting out of debt by giving you a plan and the ability to pay off your debt faster. However, it can’t change your mindset. Debt settlement is another tool, but it can’t change the way you think. Even if you are able to get out of debt, you need to seriously consider if you’ve changed your habits enough to stay out of debt.
Sustained financial problems from debt are usually an indication about who you are as a person. If you want to be debt free you can’t take the easy way out, you have to change how you think–you will probably have to change who you are.
This may not sound popular. There are a ton of companies out their that would like to sell you their debt consolidation solution. That is how they make money. If everyone was to change away from a debt mindset, many of those companies would eventually go out of business. I’m not saying that debt consolidation doesn’t have its place, but it can’t be used as a quick fix.
Taking responsibility for your financial well being is the first step toward getting out of the debt mindset. Any financial difficulty you are currently in is your problem. Even if the original cause of debt was something beyond your control, it is still your problem and you will have to choose to either live with it or confront it. Many people in the US decide just to live with debt and they continue to borrow more money than they can possibly pay back. This is not how you take financial responsibility. This is not how you live with a debt free mindset.