A Debt Mentality

I heard a commercial this morning advertising the services of a local credit union. There were little testimonials from members; several of whom were exclaiming about the great service they got when taking out their second mortgage. Another person talked about the great rates on a car loan. Not one person mentioned savings accounts or CDs. It was all about the debt.

I think that so many of us have gotten caught up in a debt mentality without even realizing it. A mentality where borrowing money seems to be the solution to all of our (financial) problems. It’s also a way to fulfill our dreams. (Or sometimes borrowing money is all we can think of out of desperation – I’ve been there.)

Anyway, if your first inclination when figuring out how to get out of debt is to see if you can transfer existing credit card debt to 0% interest cards, or to consider taking out a consolidation loan or a HELOC, consider shouting “stop!” to yourself instead, at least briefly. Those can be good ways to reduce the amount of interest you pay while paying down debt, but in my experience starting by doing those things is often like putting a bandaid on a deep wound. Until you do what’s needed to heal the wound itself, slapping a bandaid on it isn’t likely to help. (And it can even make things worse.)

I didn’t start to improve my situation until I figured out that what I needed to do wasn’t to borrow more money, get a better interest rate, or change the monthly payment amounts, but instead to stop spending more than I made. It takes a while to get in the habit of health spending, but once that is done the changes you make will be lasting and far-reaching.