7 Realizations That Will Help You Get Out of Debt

7 Realizations That Will Help You Get Out of Debt - picture of man looking at piece of paper and celebrating

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I’ve been in debt. You’ve been in debt. We’ve all been in debt.

The thing is, some of us manage to get out of debt, eventually. And most of the time, it’s the result of drastically cutting your spending, starting a side business to earn extra money, or trying a combination of the two strategies until something sticks.

There’s no way around it. When you’ve got credit card debt, monthly payments on a short-term loan, car payments, and who-knows-what-else to contend with, you have to do something to improve your situation.

But here’s the thing – anyone who has paid off huge sums of debt can tell you that it takes much more than the desire to become debt-free to make it happen. In addition to wanting it, you have to change your mindset as well. And that part of the equation is sometimes the hardest part of all.

7 Realizations to Help You Get Out of Debt

If you’re in debt and struggling to find a solution that sticks, you have to change the way you think about the money you earn. Here are 7 unfortunate things you need to come to terms with before you get started:

No one is going to help you.

If your debt-free strategy involves buying lottery tickets, you’re not alone. For some reason, a lot of people hobble through their problems with magical thinking; they think that, somehow, some way, someone else is going to solve the problem for them.

Short of a surprise inheritance, a winning scratch-off ticket, or the Publisher’s Clearinghouse Sweepstakes knocking on your door, no one is going to help you through this. To start making progress, you need to take action. No one else can do it for you.

You can’t afford everything.

This is shocking, I know. When every television commercial you see is trying to convince you that you can afford their product, it can be difficult to admit that you can’t. Unfortunately, this is the trap that gets far too many people into trouble – spending more than they can truly afford on things they don’t truly need.

You need to cut your spending.

Getting into debt is what happens when you spend more than you earn. It’s true that earning more money might save you, but the flip side of that – cutting your spending – is often the fastest and easiest way to make a difference. If you’re in debt, cutting your spending is one of the first things you should do.

Your debt is your problem. Fix it.

Why do people schlep through life thinking everything is someone else’s fault? I ask myself this all the time. It’s like your debts – and your problems – magically appeared one day out of the clear blue sky. But instead of doing something about it, you’re busy crying in the corner.

Does this sound like someone you know? If this describes you, it’s important to know that you have the power to make a difference. Oh, and quit being a baby.

Yes, you can live without _____.

Even though it might not seem like the case, we really need very little to survive. Things like pricey smart phones, cable television packages, and going out every weekend aren’t really that important in the grand scheme of things. And if you really want to get out of debt, you should learn to live without them for a while.

You’re running out of time.

When you’re deep in debt, it’s easy to think your problem will work itself out somehow. Unfortunately, that is almost never the case. Further, the problems associated with your debt – interest payments, delayed retirement savings, and low standard of living – can actually be exacerbated by your procrastination. The longer you’re in debt, the more money you’ll ultimately pay.

Things will get better.

One of the main reasons I believe people put off debt repayment is because they can’t stand the idea of sacrificing the things they want for the long-term. But here’s the thing – once you start making progress and turn your financial situation around, you can add some of the things you love back into your budget. Just because you need to cut cable for a year, doesn’t mean you’ll never have Bravo or HGTV again, am I right? So suck it up, and sign up for Netflix for heaven’s sake.

Being in debt is one of those things that never gets better; it only gets worse. Unless you do something about it, your problems will simply escalate over the course of months and years.

If you are ready to make a change, you need to change your mindset first. And part of that includes telling yourself a bunch of things you don’t really want to hear.

How did you change your mindset before you decided to pay off your debt? What would you add to this list?

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33 Comments

  1. I think the other big one is realising carrying debt (other than a mortgage) is NOT normal. Sure lots of people have it now but our grandparents and their grandparents would never have carried consumer debt equal to their yearly earnings (and in many cases much, MUCH more). Perhaps a better way to put it is, just because you can get credit, doesn’t mean you should.

    The mindset that truly changed my view of debt (and pretty much everything else) is that I didn’t like being at its mercy. When you’re in debt your choices evaporate. I really don’t like that. 🙂

  2. Maybe one ome realization to add is why people have gotten into debt. Was it a string of bad luck? Big unplanned expenses? Job loss?

    Or was it simply just overspending?

    Having a real self realization about where the debt has come from will help with preventing it in the future.

  3. Great list! I think one other thing people have to realize (similar to Things Will Get Better) is that all the sacrifices needed are temporary. Or better yet, as temporary as they make it.

    The reward at the end of this journey is well worth the sacrifices. It’s amazing how the behavior required to get out of debt (and/or properly manage money) seems to transcend other areas of your life.

  4. Not changing the mindset means you’ll just rack up debt again, even if you pay it off. We went through that a few time before finally getting in the right mental place to be debt free. The whole personal responsibility thing goes a long way too. We spent part of the weekend with Jim’s parents who are still blaming everything under the sun for why they are in such a financial mess. It almost made my ears bleed!

  5. These are awesome points that everyone needs to hear! I think much of it comes down to the desire to have things instead of money.

  6. You so hit the nail on the head here about magical thinking. Typically preschoolers are magical thinkers, but I have definitely seen adults who are in so much denial about the state of their finances that it is almost like they are secretly hoping for a fairy godmother to show up and take care of it all. Great post!

    1. Yes. Or they think that doing things the same way they have been doing will magically work eventually.

  7. It’s mindset changes, behavior changes and being disciplined enough to stick to them. Taking the extra time to cook dinner, instead of picking up take out, coming up with the shopping list before you go to the grocery store, etc. You have to commit to the work and stop taking the lazy approach. Once you are ready for that the money piece can be easy.

  8. I 100% agree with the idea that your debt is your problem. The sooner you take responsibility for changing your financial situation, the better off you’ll be!

  9. I was just watching a neuroscience class (free online class I’m taking) and one of the things they said was that people fail with big goals unless those goals are really broken down into very small tasks. I think the idea of debt and paying it off is overwhelming to a lot of people, especially if it’s huge numbers, but if you break it WAY down, it can be done by just focusing on what you can do TODAY…this hour, this minute.

  10. We actually did have some help from my mom, but yeah, mostly we were on our own. I think getting out of debt is kind of like a diet. You have to change the way you eat, not just do a temporary fix. Not that I’ve ever actually approached a diet like that, but I know that, in theory, that’s the best route to permanent success.

  11. I never had consumer debt but I had student loans. From what I remember what really triggered my to pay them off fast was the fact that some had high interest rates, they weren’t going away, and I hated owing people money for something not-tangible (and owing people in general).

  12. Realizing your a slave to your debt is the most important factor for me. That and knowing that an emergency WILL come up for you (just like it will for everyone) and being in debt makes it 10 times worse.

  13. I recently met with a client who has a bunch of debt and when I told her about cutting expenses in her life, she looked at me like I was crazy. It sometimes blows my mind when I get reactions like that because my clients aren’t stupid people, but sometimes they just don’t think through financial choices rationally. Unless you have the ability to earn extra income, your paycheck is your paycheck and you need to make choices within the confines of the paycheck, which means that you can’t afford everything. It seems simple, but not everyone gets it in reality.

  14. “You’re running out of time” is such an eye opener! I can totally click with how debt is my problem but I just keep sitting around waiting for the day student loans will be paid for. Why wait?! Pay them off early now!

  15. I think in order to get out of debt once and for all it’s important to look at making smart financial decisions as a lifestyle change. Being disciplined enough to do the “right” thing will help you get out of debt and avoid racking it up again in the future. Just as with any lifestyle change, taking small steps over time will get you towards your goals. Like you said, things will get better if you take responsibility for your situation.

  16. Realizing that no one is going to help me was a huge step for me in getting real!

  17. I haven’t changed our debt paydown strategy much. It’s pretty much all student loans (if you don’t count the mortgage) and we are just trying to stay consistent with our payments while we are both in grad school. We also are going to use side hustle income to pay for my MBA, which will help keep our grad loans minimal. Ah debt is terrible!

  18. These are great tips!! I think that so often we really can get caught up in feeling like we “need” things like a fancy iPhone and a million TV channels, but you’re right…those really are NOT necessities. Does my iPhone make my life slightly easier and provide some entertainment and convenience? Certainly. But definitely not a necessity by any means, and is something that I’d definitely cut out should we need to for debt repayment purposes.

  19. Great points. One tip I share with people who want to clear their debts is to immediately setup a debt repayment plan. Without a plan they end of winging it and that rarely works out well.

  20. Ouch, “no one is going to help you” feels so lonely! But you’re absolutely correct — it goes along with “there is no magical solution.” Only a few get lucky enough to inherit great aunt Suzie’s estate, and the rest of us need to work hard.

    My realization was that I didn’t actually own anything I was still paying for, including my education!

  21. Things always do get better! Mostly because people find out they don’t even want to go back to the high rate of spending. That, or they can go back to some of their old ways (just not all of them!) ha.

  22. The two challenges I have face are “You can’t afford everything and You need to cut your spending”.

    Early on in my financial independence journey spending was a big problem. After years of work and budgeting, we have that monster under control.

    The challenge I face now is that after years of living way below my means, that little spending devil is appearing on my shoulder. He is saying things such as, you deserve it, you can afford it (we can), and why wait any longer? You only live once. I have a feeling it will be many more years until I can stop that self-talk. Fortunately I very seldom act on it.

  23. “Your debt is your problem. Fix it.” Taking full responsibility is huge. When we first realized our debt was a problem (and we lived in debt loooong before we realized it was a problem), my husband’s income had taken a severe plunge. “This isn’t our fault,” I thought at first. But of course, it was. Living below your means, keeping out of debt, and growing your savings allows you to absorb bumps in the road – like prolonged under/unemployment – so much more easily. The unexpected is going to happen. I stopped using that as an excuse. (And all of our non-mortgage debt is gone now : )

  24. The worst thing I found for me being in debt was falling into the mind set of “we’re already X dollars in debt, what’s another few hundred on X item,” which is obviously not a sustainable mindset.

  25. One of my biggest realizations about our debt was that our house was a problem. It was something we convinced ourselves was a necessity. We could totally buy something smaller and get rid of junk we don’t need. And when you buy smaller and cheaper your taxes and insurance are less, your heating and cooling costs are less.we could save ourselves SO much money just by letting go of some of our stuff and fitting into a smaller place.

  26. Great list – you make some good points. I think that owning up to your debt is an important part. I feel like a lot of people start out with only a little debt, and then they slowly brush it under the rug when other things come up. It feels better to ignore it until it gets too late!

    On my own repayment journey I know that thinking “it gets better” has been important in keeping myself motivated.

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