Although more and more people are experiencing financial crises, the hardest part of solving financial problems is still admitting that they exist. For many people whose debt burden has become unmanageable, the same personality elements that got them into trouble in the first place can also make it very difficult for them to get out of trouble. Even though there are pragmatic solutions, such as consolidation loans, many people can’t bring themselves to do what they need to do.
The fact is that the political, religious, and cultural diversity of the world is being changed by global commerce; as money becomes more available worldwide it also plays an increasingly important role in people’s lives. It is the gold standard by which people are judged, both by others and by themselves, a fact which can cause financial problems to snowball at an alarming rate.
Our spending is what tells other people how much money we have. Almost everyone will, at one point in their lives, be tempted to display more wealth than they have, and the only way to do this is by spending more money than we’re making. Once we start doing that, it doesn’t take long for us to develop nearly unbreakable spending habits.
The problem is that overspending is usually driven by psychology. We may not be able to afford the payments on a luxury car, but we like how it feels to pull up and see people react to us. We buy designer clothes on a credit card that we’re never going to be able to pay off, but we like the way people react to our wardrobe; we like feeling good and being told we look good.
Spending within our means puts an automatic limit on how much we can spend. If we have $20 in our pocket, we cannot spend $100 for a pair of shoes. If something else (like a visit to the dentist) costs a bunch of money, then we have to skimp on other things. But when we use credit and overspend, there is suddenly no limit. We can buy the $100 pair of shoes, even if we’ve just come from the dentist, and we can put off paying for both for quite a long time. We get deeper and deeper in debt, but we aren’t forced to deal with it.
At some point, overspending will get us in too deep, and when it does it’s hard to face the pain that it takes to dig our way out again. Even as we realize that our behavior is destructive, and even though we might have thirty or forty thousand dollars in credit card debt stacked up, most people will actually continue to avoid the issue (and overspend) for some time before confronting the issue.
The debt itself is in many ways the easy part. Psychologically, it’s more difficult to confront the fact that we’ve made a mistake. We racked up the debt trying to make ourselves appear more successful than we are. Now to pay it off we have to give up to the facade. It means admitting that we’ve been living a lie. For most people, that’s almost impossible to do.
But it’s better to do it sooner than later because the longer we wait the bigger the problem is going to be. When the time comes to face it, there are options like debt renegotiation, consolidation loans, and debt management to help us out. And in the end getting out of debt feels better than anything else money can buy.