We seek to live whole lives in recovery and wellness, but it is so easy to find parts of our lives that get compartmentalized or ceded away from recovery principles. Personal finance is one of those areas where the wisdom and tools of recovery could help, but many people get overwhelmed, and doubly so when debts are part of the picture.
Debt has become a new norm in American life. Think about how credit cards have become a part of everyday life. Fewer than half of consumers pay their credit card balance off in full each month, and the average debt load that is carried month after month is over $15,000 (at the typical 18% interest rate, that’s over $200 of interest paid every month).
Even more pressure comes from student loan debt, which now has surpassed total credit card debt, with an average of $33,000 owed and an effective default rate of 31% (one-third of all borrowers running 90 days late or more, according to a Federal Reserve study this year). From medical debt to car loans, Americans are stressed, and many report a sense of powerlessness over their finances, especially with debt.
Debtors Anonymous (D.A) has a “15 Questions” self-assessment about compulsive debting. In our experience at LSS Financial Counseling, serving over 10,000 people with budget and debt counseling each year, from all income levels, it seems like these first four questions on the D.A. list could apply to almost everyone we see:
1. Are your debts making your home life unhappy?
2. Does the pressure of your debts distract you from your daily work?
3. Are your debts affecting your reputation?
4. Do your debts cause you to think less of yourself?
Debt shame and debt pride
Denial and avoidance are easy ruts to fall into, but have predictable consequences, whether you are talking about addiction, violence, or just plain debt problems. Trying to wait out debt is like trying to wait out lions – better to deal now with the lion cub than later with the full-grown lion! Sometimes an animal metaphor can help us understand problems that seem too complex. Think of each debt as a snake – no wonder multiple debts seem extra paralyzing – it feels like a bucket full of snakes!
Here’s the good news — honesty and courage are like mongooses that can eat up the snakes of debt shame. Taking responsibility to conquer your debt can be liberating, once you have a plan. One of the key messages that financial counselors give clients is: “It doesn’t matter where you are now; what matters is which way are you headed?”
One tool to cultivate is a positive, realistic attitude. People in recovery often experience the power of “one day at a time” living, and by facing your debts and chipping away at them, you are moving in the right direction of pride and responsibility. One friend of mine shared that “I’ll never forget the day I paid up the last of my back taxes. When I got that letter, I wanted to frame it!”
There are also specific tools, such as a debt management plan (DMP) to consolidate debts into one monthly payment at much lower interest rates, available at all nonprofit members of the National Foundation for Credit Counseling (NFCC). LSS is one local member of NFCC and offers free budget and debt counseling, and lowfee DMPs. LSS recently held the 2014 Financial Advocacy Awards, and the winner of the “Debt Repayment Hero” award was a Minnesota couple who repaid over $93,000 in credit card debt – one month at a time!
Many 12-step programs emphasize conquering our fears – doing things even when we are afraid – and the positive path it puts us on when we do the best we can. One friend calls this concept “Character-building over comfort.” Instead of cowering and hiding from what we see as a humongous storm cloud of debt (where do I even begin?”), just begin. One of our clients at LSS reminded us of the African proverb that “the only way to eat an elephant is one bite at a time.”
“The Promises” found in the Big Book of AA has inspiring reminders of the sense of hope that comes with applying recovery principles to any aspect of our lives. My favorite: “We are going to find a new freedom and a new happiness. We will not regret the past nor wish to shut the door on it …. Fear of people and of economic insecurity will leave us.”
Each person’s financial situation is unique. But you don’t have to go it alone. Applying the wisdom and tools of recovery will move you from the worry to the peace of mind path.
Darryl Dahlheimer is program director at LSS Financial Counseling, with in-person help at eight offices in MN, and nationwide by phone counseling and online. LSS serves all people, of all incomes. For appointments, call 1-888-577-2227 or visit www.ConquerYourDebt.org
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