So much of what is written about personal finance is written by people who are getting- or have gotten- themselves out of debt. They’re the golden children of good finances, some even living debt-free lives. But how much relevance does that have to the rest of us, a lot of whom are struggling to make the minimum repayments let alone get debt free?
Recent research from a debt charity in the UK, mentioned in the Telegraph, suggested that the average person in debt has to work until 4pm on Wednesday to cover their unsecured debts. In other words, income derived from three out of the five days of their working week is spent on debt repayment. I don’t have to be good at breaking down numbers to know that doesn’t leave much over for anything else. And that with such a limited supply of funds for living expenses or emergencies, even with that high level of repayment, getting out of debt can become harder and harder to achieve.
Rising Costs Of Living
In Australia, the picture is slightly different. Reports released this week, as mentioned in the Sydney Morning Herald, has consumer spending at the lowest point for 20 years as Australians continue to pour everything into repaying debt, post-GFC. While that’s a good sign, rising costs of living also compound the difficulty people can have in paying back debt. And I personally don’t find the holier-than-thou approach to be particularly helpful- paying back debt is as hard as it comes. You’re already putting in a huge amount of your income, which leaves you with no financial fat to bolster you should anything go wrong. When it does- as huge as losing a job or as trivial as a month of birthdays- you’re likely to put it on your card or take out a personal loan. It’s incredibly easy to do, and even more difficult to stall. But there are some ways to keep your head above water.
Dealing With Debt
According to therapist and well-being coach, Dan Roberts, the crucial aspect of dealing with debt when it comes to your own sanity is to actually deal with it. Debt is one aspect of life that can easily cause someone to freeze. The issue becomes so large- or the amount becomes so large- it seems impossible to approach, so it is just ignored. The key is to start somewhere. That might sound trite, but action is the healthiest thing you can do. Feeling helpless in the face of a debt problem is going to be the thing to bring you down lowest. There are lots of simple steps you can take. Add up your debt. Talk to your creditors and arrange an affordable repayment scheme that you can sustain. Look at debt consolidation, or getting all your credit cards amounts onto the one card. Choose a plan- paying off the highest interest first, smallest amount first, any plan that makes sense to you- and start. It might seem impossible, but a small emergency fund will also be key in keeping you free of the debt spiral should anything unexpected happen. As hard as it is, taking action will immediately make you feel better about your debt and leave you much more capable to cope with it, no matter how small the action may seem to begin with.