The Debt Cycle

Reaching adulthood involves becoming financially responsible for oneself.  If adequate training and practice has occurred, an individual moves into adult life with the concepts of work, earning a salary and paying bills.  If training has been inadequate or the individual has an impulsive behavior pattern, the concepts get a bit twisted, and the result can be overwhelming debt.

Causes of Debt

The following are typical causes of excess personal debt:

1. Inability to defer gratification.  Society bombards individuals with the trappings of the good life.  New cars, beautiful homes, the latest technology, fashionable clothes, luxury dining and vacations are all touted as being indicative of the individual who knows how to “live.”  It is difficult to admit to oneself and to others that you cannot afford these things, and so credit is used to buy, buy, buy.
2. Failure to establish a budget.  It is incredible how many people go from payday to payday without thought to how and where the money is spent.  When they run out, credit is used to “make it” until the next payday.  The result is debt that rarely gets paid off, and minimum payments become a fact of life forever.
3. Sometimes, circumstances put otherwise responsible people into debt, usually major health problems or loss of career late in life.  In these instances, credit sometimes has to be used just for necessities.

Breaking the Cycle

There are some very basic steps which must be taken when someone falls into categories 1 or 2 listed above.

1. Get some budget and debt counseling.  There are a number of non-profit organizations that will assist debtors with establishing a livable budget and developing a plan for eliminating debt in an organized, progressive manner.  Debt consolidation may be an option, but it should be considered carefully and only used when the credit cards are cut up and the accounts closed.
2. Establish your own plan for eliminating the debt.  This will involve not only setting a strict budget but, as well, a progressive plan for paying off the current debt.  Begin with the smallest debt and pour as much on it as possible until it is gone.  Go on to the next, adding all of the money used to pay off the first debt to the regular payment on this one.  Progress through each debt in this manner and commit to no more debt until everything is paid off.  This plan is not fun and may take a few years, but the rewards will be nightly sleep and no more stress in personal lives.
3. Consider a second part-time job.  While this is not always possible, if one has the energy and the additional few hours a day or on weekends, the entire amount from this additional job can be used directly toward debt elimination.  

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