Dear Scott,

I can relate to Nancy's feelings that debt is deadly! I do not know what to do or where to turn. I only know that debt has ruined my self-esteem and caused my family great hardship.

I come from a very dysfunctional family (my mother is schizophrenic, my father alcoholic). The only thing I was ever taught about finances is (1) there is never enough and (2) no one in the family can handle money. If my mother did not have a case-manager that handled her finances she would have nothing. I am going down the same path and it scares me to death.

You see, Scott, my husband makes $75,000 a year, and I have managed to keep us so far in debt we cannot even refinance our home (we did that twice hoping I would learn how to responsibly handle a credit card). The worse part about it is I have nothing to show for the thousands of dollars of debt.

Currently, we are two truck payments behind and two mortgage payments. My husband suffered a back injury and is currently looking at surgery. He has no feeling in his leg. Although he is somehow managing to work 30 hours a week, it tears me apart knowing that he has to keep going because of my irresponsibility.

If one is an alcoholic, there are so many places to turn for help. If there were a hospital for debtors, I would check myself in immediately. I tried going to Spenders and Debtors support groups. However, I was very discouraged by the fact that many people who were there had multiple addictions (mainly drug and alcohol). It didn't seem like an environment that would benefit me. Please help!

Sincerely,
Michelle

Michelle,

I’m sorry to hear about the stress that debt has caused you and your family. I do understand these feelings. I remember when debt was weighing me down, in my early twenties, and I just wanted to get out. Back then, I came to realize that good credit card and debt management would save me money but not necessarily solve the entire problem. It’s more complicated than that.

The lessons we learn from our parents about money are crucial to financial success in the future. I find that most people teach their kids that money cannot by happiness, that rich people are evil, that money corrupts, that money is the root of all evil, and other negative dogma.

The problem with that is we become brainwashed in believing these concepts. As we grow up, we subconsciously believe that having too much money may be bad. Well that kind of thinking will just keep us all poor. You need to believe that there is plenty of money, and there is. You just need to find a way to get it. We are living in the richest country on earth! And we’re lucky that all we need to do is work hard to get our share. I know, easy to say, hard to do--but just look around and you’ll see that it can be done!

Your household income of $75,000 is quite good--far above the national average, but what I find is that the more money you earn, the more potential to have debt problems. This is common, and the reason is that you have the ability to get credit because you have a good income and a home. You do have some things to show for your money, at least a home and two trucks.

You correctly identified the problem. It’s not the debt itself; it’s the spending. I always hear so-called "experts" talk about "bad debt" and "good debt." There is no such thing. There are "good spending decisions" and "bad spending decisions." Borrowing is simply a means to do either.

My approach to handling debt assumes spending discipline. Obviously, there are problems with that assumption, so I’m learning that I need to address this issue more often.

Here are a few tips to help become a more disciplined shopper:

1)	Buy what’s on the list only! No exceptions! Before you go shopping for anything, make a list and stick to it. No matter what’s on sale. If you need to make another list tomorrow, then take that night to think about it.
2)	Always research prices for big-ticket items online before shopping. Look at prices for computer equipment, TV’s, camcorders, digital cameras, etc. at Computers.com.
3)	Track your spending. Use software, or a pen and paper, to see what you’re actually spending money on and then use that information to make a budget.
4)	Focus on money management all the time. Keep your mind thinking about how to save money. How to avoid spending unnecessarily.
5)	Don’t go crazy! No need to reuse the same coffee beans for three days. Be smart--DebtSmart.
6)	Buy my books. That’s the shameless plug.
7)	Go to the library and see what books are available about money, investing, budgeting, and credit. Learn a little each day. I’m always learning.
8)	Hang out with your more frugal friends. Ask them how they handle their finances.
9)	Always discuss spending plans with your spouse in advance. Be a team with your soul mate.
10)	Never buy a brand new car. Instead, get a car that’s two years old. That’s still fairly new. And always research a car's repair history prior to purchase. Consumer Reports is a great resource for this information.
11)	Every day, when you wake up, ask yourself this question, "How am I going to save money today?" Your brain will give you the answer, just listen and do.

Hope that helps!

Keep in touch and please let me know what happens.

Regards,
Scott