Ask Yourself Why You Got Into Debt In The First Place To Stay Out Of It

Much of personal finance has a lot to do with your mindset and behaviour, and that goes for getting out of debt, too. So it's important to understand why you got into in the first place. Woman with credit cards and calculator image from Shutterstock

Over at Business Insider, Certified Financial Planner John Gajkowski says that people often make a plan for getting out of debt without really tackling the behaviour part of the process. Without digging into the source of the problem, you leave yourself vulnerable to repeating the mistake. He suggests asking why you incurred the debt in the first place. He tells Business Insider:

Was it a one-off type of thing? Was it a medical expense you weren't ready for? Or was it your lifestyle? If you have a $60,000 lifestyle and a job that only produces $50,000 in income, you're always going to be in debt, so you either have to modify your lifestyle or change careers to earn the money for the lifestyle you want to create. A lot of people never come to that realisation...Debt management is like weight management. It's a lifelong thing. It's an ongoing process.

Once you recognise the habits that got you into debt, you can focus on developing better habits and not repeating you old ones. For more detail, head to the full post below.

The most important step to take to get out of debt is something most people don't consider [Business Insider]


Comments

    The way I look at it, if I have to take out a loan for something (with exception to a house or car), then I can't afford it.

    Why make an exception for a car?

      I guess it depends on what you want. If you're fine with a couple grand car, then that's fine. But if you want a newer car that you'll have to replace less often, then you'll want to spend more, which usually means a loan.

      I just recently bought a newish car for my now ex (we were together at the time), but in my name. Had she left me before I bought it, I'd never have bought it, because I personally am fine with a couple grand car. I hardly drive anyway, I mostly cycle.

      Last edited 07/04/16 10:46 am

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