Don't tell me where your priorities are.

Show me where you spend your money and I'll tell you what they are.

-James W. Frick

Plan YOUR work! Work YOUR Plan!

Monday, August 16, 2010

Fear and Your Money

Fear often stands in the way of doing what we want; including getting out of debt. Often times we are afraid to admit that our finances are out of control and we have no idea how to gain control back. We don’t want anyone else to see just how bad things are so we keep falling deeper and deeper into debt. Let’s face it, admitting you are in debt and need help is scary but finally admitting that you need help dealing with your finances is the best decision you can make.

Money is one of the things in life than can bring anxiety to a new level, no matter how much or how little we have. Those with it are afraid to lose it and those without it are afraid because they don’t have enough. No matter what else is happening in life bills need to be paid and food needs to be bought. Neither of these can be accomplished without money.

What we fail to realize is that we are not the only person on Earth that is in debt. We feel ashamed and guilty because we feel we have failed, especially at such a young age. The first step in getting over this fear of money and debt is to realize you are not alone. You are not the only one.

Being embarrassed is ok; just don’t shut down because of the embarrassment. Get over this fear by taking the time to understand why and how you got into debt. For some the reason is illness or job loss and for others spending is the main reason. Once you understand where the debt came from you can begin to tackle it. Understand this is a long, hard road to financial independence. (I say financial independence a lot, what do I mean? Financial independence to me is being out of debt; outside of a mortgage and large student loans that will be paid down in time; fully funding retirement fund or 2 and being able to use your money for your own use, not to pay to others).

The road to being financially independent is another thing we fear. Compared to getting out of debt, admitting that we have a problem financially is the hardest part of actually getting out of debt. We have to admit that we haven’t been doing something right with our money and that we need help. Getting out of debt includes some scary things like tracking our money, budgeting, finding ways to earn extra money, dealing with creditors, and saving for things we want instead of getting them right away. all of these things aren’t fun, or we would be doing them already.

I have developed a series of stages that we go through in our debt journeys, each stages takes as long as it takes before we can move onto the next. The steps are much like the 12 steps an addict goes through for recovery only shorter, because, well addiction is a big reason people are in debt (not the only reason).

Stage 1 – understanding and coming to terms with our debt. Here is where we admit to ourselves that we are in debt, being understanding why we are in debt, and seek some type of help in order to deal with the debt. In this stage we learn a lot about finances by reading material and talking to people in the know.
Stage 2 – putting everything we learned in stage one into action is next. We make a budget we can live with. Start to live frugally and learn to save for things we want. We understand our wants and our needs and Set and pursue our financial goals.
Stage 3 – once we are able to comfortably adjust to this new lifestyle, we begin to see progress. Don’t let this progress trick you into falling into old, bad habits. There is still work to do, keep watching that debt disappear!
Stage 4 – after getting out from under debt comes being financially independent. Our money is truly ours. We have no debt. No credit card debt because we have become accustomed to paying the balance in full every month. No auto debt because it has either been paid off or you paid cash for your vehicle. No other miscellaneous debt. You have an emergency fund you are comfortable with. You fully fund your retirement each year and can retire when you are ready, not when someone else tells you that you are ready. You have savings for your children’s college funds. You are able to take vacations without worry.

Doesn’t this all sound great? It is all possible! All because you took the first step and overcame your fear of money and debt. Don’t be afraid to ask for help and don’t be afraid of the journey towards financial independence.

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