It's possible that you played no part in the accumulation of debt - you may have inherited it from others or acquired it as a result of circumstances beyond your control, such as a serious illness or a natural disaster. In that case, you simply need to address the mechanics of paying bills and rebuilding credit. With the disciplines of a new money-saying and debt-retiring strategies, you may find yourself in a stronger position than before your debts accrued.
Most people, however, have a pattern of debt - a series of behaviors that get them into the hole. The more uncertain you are of how you get into trouble, the more likely it is that you'll need to change some of your behaviors.
This important exercise will help you determine how you got into debt. You need to be really honest with yourself for this to work. If you have run up thousands of dollars in credit card debt, don't call it "bad luck". Get a sheet of paper and start to write down behaviors or triggers that get you into trouble. Don't judge yourself or your debts as you write. No one else needs to see this list. Simply write everything that's fueling your debt.
To get started on your list, answer the following questions:
- Why did you take on your first significant debt load?
- How do you feel about debt?
- How does spending money make you feel?
- Do you ever "binge shop"? If so, what sorts of things trigger the binges?
- What reaction do you have to advertisements for items that you want but you can't afford?
- Do you believe that paying the minimum amount on your credit card will get the balance paid off?
- Are you ever surprised by how high a bill is?
- Do you forget about money that you've spent?
- Do you balance your chequing account regularly?
- Do you have any expensive hobbies or habits?
- Do you feel competitive with or threatened by those around you?
- How often do you eat out?
- When you eat out with friends, do you collect cash from others, charge the meal, and then buy something else with the cash instead of paying down your credit card debt?
- Do you plan your purchases or do you buy on impulse?
Review your list on how much you owe. The information may give you even more ideas about how you got into debt. Add any discoveries to your list of trouble behaviors and triggers.
As you write, ideas come to you. Record everything that crosses your mind regarding your spending habits, whether it's a feeling that you must pamper yourself to deal with stress, a hope that you can overcome your sense of dissatisfaction with life, or a belief that you need to impress someone.
A journal can be particularly helpful in identifying emotion-triggered spending, as well as in tracking your progress and recording what you learn, both about the process and about yourself.
