Debt can be a sometimes overwhelming part of your financial life. Debt is bondage: it weighs down your spirits, occupies your mind day and night, and makes you feel backed into a corner.
It is of the utmost importance that you be honest with yourself and your loved ones about your situation. Relieving yourself of the burden of secrecy will lighten your load immediately. These six questions and answers will help you deal with the emotions of debt.
How do I know if I’m in trouble with debt?
If you can’t pay off all your debt right this minute, whether it’s a personal loan you arranged with your brother or a R20 000 balance you owe to various credit card companies, you’re in trouble. If you cannot pay your credit card bills in full at the end of every month, you are asking for trouble.
Why do so many people get into financial trouble?
People get into debt for many reasons, but I have often noticed a correlation – an inverse relationship between self-esteem and debt. I call it your debt set point. The lower your self-esteem the higher your debt set point.
If you feel generally great about yourself and are dealing with your life in an honest, responsible way, chances are you don’t have a lot of outstanding debt. The less self-esteem you have, the more debt you create.
What do you mean by my “debt set point”?
Your set point is your personal bottom. It’s the point at which you are finally willing to put a stop to all this credit madness. It can be terrifying when you reach it, but in the end it is a blessed relief, since it forces you to take decisive, positive action.
But remember, working on your debt includes working on why you got into debt in the first place. This usually involves working on your self-esteem, defining who you are rather than what you have.
Are there any other personality traits that put a person at risk?
That’s not so simple to answer, but in my experience I’ve found that people with large amounts of debt often avoid looking themselves – and their debt – squarely in the eye. Sometimes they are people who have problems with impulse control.
People who grew up without much money in their household and who later make a good living, sometimes spend too much to make up for everything they didn’t get when they were children; without even realising it. People who feel entitled to the good life, or who are unconsciously copying a parent who lived beyond his or her means can be prone to credit card trouble, too.
If you feel you need to impress people with what you have rather than who you are, then you are at high risk for credit card abuse. It’s also worth noting that debt doesn’t discriminate; it afflicts the rich and poor alike.
Is there ever a time in life when it’s okay to have debt?
Yes. Debt has a time and place in all our lives, but your debt must be in alignment with the goals you’ve set for yourself. For example, do you want to pursue your dream of attending university? Then a student loan that will help you finance your university application is “good debt” since it is in alignment with your future aspirations.
Adapted from Suze Ormon’s Ask Suze...about Debt