The Problem With Stories About How to “get Out of Debt Fast”
You’ve seen them. These are sensational online profiles of people who have achieved ambitious goals that most of us can only dream of in an incredible amount of time. How this 30-year-old quit his job and became a millionaire, or how this millennial bought a house in New York with a salary of $ 30,000, or how this couple paid off $ 200,000 in debt a year.
These stories are great inspirational porn, but they tend to be as practical as any other get-rich-quick story, that is, not very practical.
The “how” part of the story usually boils down to a unique or obvious circumstance: their parents gave them a large amount of money, they came up with a brilliant business idea that took off, or they have a job that is already making six figures. and then he just spent that money on paying off the debt. I’m not saying that the contributors to these profiles don’t work hard, but these headings suggest some usefulness to the reader, but don’t really tell us how we can achieve this.
In other words, these stories do not teach anything useful about money.
But not all “getting out of debt” stories are the same, and there are some that offer more honesty as well as practical implications. Melanie Lockert, author of Dear Debt , tells her story of paying off a debt of $ 80,000, but she didn’t do it right away. It took her several years. And for several years, she was overworked and battled with depression . Lockert is telling the cruel truth: getting out of debt is a struggle.
Keith Flanders paid off the $ 30,000 debt in two years. It may be fast by some standards, but Flanders did it through realistic financial habits (cutting costs, using windfall income to pay off large chunks at a time). She also wrote about being in debt in reality: she wants to say “damn it” and give up completely .
These are stories about debt that are worth reading because these stories tell you the truth about what it takes to manage your money: persistence, thinking outside the box, and time.
The most realistic stories of getting out of debt boil down to a few habits. And these habits are not about getting a huge financial gift from your parents, keeping your entire already big paycheck with another high-paying spouse, or magically imagining tens of thousands of additional dollars in income a year. The habits that will help you get out of debt are more attainable than what you might read about in the clickbait article, but they take time and effort:
Learn to be resourceful
The golden rules of personal finance like “spend less than you earn” are somewhat useless because, well, heck. As former Lifehacker writer Eric Ravencraft put it:
The problem with this advice is not that it’s bad, but that most people already understand it instinctively. This does not mean that everyone knows how to follow it, but instinctively we understand it. Why not? This has been hammered into our heads since kindergarten. “If Billy has 10 apples and he gives 12, how many kneecaps will Billy break the moneylender?” On the other hand, life is less intuitive than simple subtraction.
Everyone’s situation is different, so general financial advice isn’t always helpful. Instead, you need to make the rules work for your own scenario, and it really comes down to resourcefulness : optimizing your resources in a way that will benefit you the most. It’s also easier said than done, but there are certain ways to hone your resourcefulness.
First, you can learn to seize opportunities. The windfalls are a perfect example. A windfall is an unexpected amount of money that ends up in your lap, such as an inheritance from a distant relative or a bonus at work. Our natural inclination is usually to spend windfall profits. We didn’t budget it anyway, so what’s the harm? Nothing, but think of this money as an opportunity to achieve your financial goals, such as paying off a debt. You can pamper yourself too, but you have to admit that such an opportunity exists. In other words, learn to use your luck.
Learning to feel everything under control
Most of us find it difficult to control the money, but on the basis of my own experience and the experience of listening to the other, a sense of control is crucial to restore order in their finances . Especially when you feel defeated, it is important to create an inner locus of control – the belief that your actions can affect your destiny. Here’s how to work with it.
This can help to create a small selection for yourself . Charles Duhigg talks about this concept in his book Smarter Faster Better (we covered it here ). The idea is to make choices for yourself and then link your actions to a broader goal. No, one small choice won’t magically get you out of debt, but that’s not the idea. The idea is that making decisions gradually will help you feel strong. Here are some examples:
- Choosing a debt repayment method: snowball or stack
- Decide which areas of your budget to cut
- Choose between an online budgeting tool like Mint or YNAB
It also helps you set important goals and ask yourself why you want to get out of debt at all. Thus, all your actions support this goal and ultimately serve you .
Overcoming the plateau
Finally, one of the most difficult roadblocks to debt is overcoming the plateau stage. When you first set yourself the goal of getting out of debt, the novelty is exciting. You are motivated and ready for change. After a while, you get tired of living beyond your means, and the goal becomes boring.
This is when many people go back to their old habits and give up their goals completely. However, there are several ways to combat this. For example, you can set smaller milestones. If your goal is to pay off $ 3,000 a year in debt, reduce that amount to $ 250 a month, or even $ 60 a week. Thinking about your goals in the shorter term makes them more actionable and relevant.
Plus, as writer James Clear points out, you should be in awe of the process. He explains :
… that if you look at people who consistently achieve their goals, you begin to realize that it is not the events or the results that set them apart. This is their commitment to the process. They fall in love with a daily practice, not a single event.
Fall in love with boredom. Love repetition and practice. Love the process of what you do and let the results take care of themselves.
I have found that during any financial plateau, it also helps to explore the next step. If you are paying off debt, it may mean that you need to read a little about investing. This keeps you motivated to stay on track with your current goal so you can move on to the next step. It also helps to be ready when the time is right.
Paying off debt is no easy task, and for most of us, it takes time. Get rich quick stories are much more fun, but they can also undermine all the boring and hard work that most of us actually need to achieve high goals.