The 5 Toughest Things About Getting Out Of Debt

There’s a cosmic rule about debt: getting into it is easy, getting out of it is not! Everyone recommends getting out of debt, and while it’s easy to agree with that recommendation, putting it into action is something entirely different. Here are the five toughest things about getting out of debt, but they are obstacles that need to be overcome before you‘ll be able to be successful.

1. Overcoming the force of habit.

If you’ve been carrying a significant amount of debt for several years, debt has become a travel companion – an old friend. Like a habit, it’s something you’re used to having around. Anything we are comfortable with will be difficult for us to separate ourselves from.

You have to stop seeing debt, or the state of being in debt, as being normal in any way. You need to start seeing it as the obstacle that it truly is. Only when you recognize it as a problem, will you be able to take action against it.

If you can resolve that in your mind, the next step is to put your credit cards away, and learn to pay either by cash, check or debit card. By not actually using the credit cards, you’ll be removing both the temptation and the ability to spend more than you have or earn.

2. Learning to spend less.

When you use debt frequently you can to buy what you want, rather than what you really need. If you’ve been doing that for a number of years you probably see a lot of wants as necessities, and that has to change. By putting away your credit cards, your debt situation will correct itself almost automatically. But that isn’t to say that it will be easy.

Spending less money is a lot like having your allowance taken away. It doesn’t feel good especially at the beginning when the only feeling that you have is one of self-denial. Let’s be honest, the benefits of less spending, and ultimately less debt, all occur later in the process when debt levels begin to fall and there’s more room in the budget for everything else. Until that time, it’s painful.

But it’s also necessary. There is no scheme that you can come up with that will allow you to get out of debt without learning to spend less money. You can cut your spending either by a certain dollar amount, or by a percentage of your income. That difference should be used either to build up savings or to pay down debt, but never for spending.

3. Getting rid of some expenses.

Debt isn’t always caused by uncontrolled spending. Just as often, it’s driven by high expenses. There may be no way for you to get out of debt without cutting some big expenses. This can include a house or a car with high monthly payments. It can also include a second home, boat, or recreational vehicle that’s eating up entirely too much of your budget.

These are large structural expenses in your budget that eat up a disproportionate amount of your income. Until you get rid of some of those expenses – and the assets that are causing them – it may be impossible for you to get out of debt.

4. Putting money into savings.

Credit can often be a substitute for savings. You don’t need to have savings because any money that you need for any purpose or emergency can be from credit lines. If you’re in this pattern, you’ll need to reverse it completely in order to point yourself in the right direction. If you’ve been doing this for a long time, making a shift be tough.

You’ll have to make saving money a priority, and that will involve a lot of self-denial. Instead of spending money, you’ll be putting money into savings. Once again, there will be no immediate benefit from doing that. It can take several months or even a couple of years to have enough money saved just a cover emergencies. While you’re saving that money, it will be all obligation and no benefit. But it’s a transition you will have to make in order to get out of debt.

5. Not having enough income.

It’s probably possible to live on any income level no matter how low it is. But that’s not possible if you have a lot of debt. In order to get out of debt, you’ll probably have to take a number of actions that will include increasing your income.

That could mean becoming more focused on your career in a way that will increase your income in the long run. It could just as easily mean that you have to look for additional income sources beyond your primary occupation. That can mean starting your own business as a secondary income, or getting a part-time job.

Both activities will cut into your free time, and that won’t feel good. But in addition to increasing your income, those ventures will serve another important purpose. The time you spend earning additional income will leave you with less time to be out spending money. We don’t think of this much, but boredom is often a reason why we spend money. A second income source will be a double win, as you’ll be earning extra income and denying yourself the time to spend it.

It will be tough to get out of debt, but the path will lead to a life not only of less debt, but more income and savings . . . and ultimately less stress and more free time. But nothing worth while is ever easy.

Do you feel like you can overcome these obstacles? Leave a comment and explain how!

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.

All posts by Kevin Mercadante