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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
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