When it comes to debt, the problem faced by people today are the same as they were for people centuries ago, and it can all be distilled to one common denominator, says personal finance blogger Steve Rhode.
Between the fear of failure and being intimidated about reaching out for help, people often end up suffering their debt problems in silence. Even those who do want to seek help can have trouble finding independent advice - most debt relief groups are sales organizations, including the nonprofit ones.
As a result, Steve says, people universally make horrible financial decisions when dealing with problem debt - trashing their future retirements, making promises they can't keep, and setting themselves up for continued financial failure because they are unwilling to truly deal with the underlying problems and take the actions necessary to have a better future.
"The reality is people with no experience in dealing with creditors and debt try to solve their own situation in secret without getting real advice," he adds. "That's like giving yourself a root canal because you are ashamed of a bad tooth."
The founder of the Get out of Debt Guy blog wants to help those drowning in debt by offering practical and honest advice for free. Here, he shares about the universal themes of debt he's uncovered on his travels around the world and offers advice on starting the journey to financial independence.
Tell us about your site, Get out of Debt Guy...when and why did you start it?
After living through financial problems myself in 1990, I thought there had to be a better way to deal with financial problems other than feel like the biggest loser in the world, live in stress and fear, and just be scared. The experience made me become very introspective and inquisitive.
Why are you so passionate about helping others get out of debt...for free?
Life has been good to me, and I want others to be able to find happiness as well. I am able to help people for free simply because of the ads on the site. They provide me with some income. The best part of the ads is I have no input in them. I am totally hands off, and they are handled by Google. I just focus on research, writing and answering reader questions.
How do you help readers work through their debt problems?
Since I no longer work with individuals and just focus on helping people with advice through the website so I can help as many people as possible, I think the best way to help people is to get them to the honest advice, information and details so they can try to make better and more informed decisions about how to deal with their debt.
Most people need to start here.
What are the biggest headlines in debt relief these days?
From my side of the fence, the biggest headline is "What's the Next Scam in Debt Relief." I write about a lot of dubious companies or help educate people about what to avoid or what questions to ask to not get ripped off.
Being in debt just tees you up to get scammed. Many people respond to some advertisement about a magic solution for mortgage, credit card or student loan debt. They pick up the phone and talk to a salesperson who pitches the consumer their widget. The salesperson is typically a commissioned salesperson who wants to close the sale, not provide the best independent advice.
And desperate people make horrible decisions when it comes to getting out of debt. I've watched more people toss their financial future down the toilet because they believed a salesperson over what I had to say. And guess what, I was right and they learned the lesson the hard way.
BTW, I have so many free guides people can use.
But I get it, the promise of a magic wand is much more attractive than really dealing with the issue. It's human nature. I gave up a long time ago being shocked when people got ripped off. When you see it every day, it's no longer shocking.
In your travels around the world, what are the most common threads you've found from people when it comes to getting into debt and getting out of it?
- Getting into debt is more fun than getting out.
- Debt sucks.
- Denial leads people really deep into a black pit of bad debt.
- Emotion is not math. Just because someone feels some emotion because of their debt does not make that reality.
- Making really bad decisions today, like cashing out retirement accounts to pay off debt, is easy because people want the pain to go away instantly.
What are best practices you offer your readers for beginning their journey out of debt? What are the basic rules of thumb that everyone should follow?
- Debt doesn't kill people. People kill themselves over debt. Needlessly.
- If you want to get out of debt, spend less than you make.
- To free up income, either make more, spend less or a bit of both.
- Don't cut out all the fun things in life. Leave room to live while you are getting out of debt.
- Budgets suck. They are a page of lies and a wish list on how you would like to spend your money. Instead, stop, take a deep breath and track your spending for 30 days to see where your money really goes, and then using that data you can make some educated decisions where to make changes.
- You are not your debt. Debt is math; you still have life value even if you are mathematically buried in debt. Don't confuse the two.
When do you think it's smart for those in debt to enlist professional help address their debt? What types of agencies or organizations do you recommend working with?
I can count on my hand the number of truly gifted independent debt coaches out there. There just are not many of us. Why? Because people make so much more money selling things than providing advice. Most groups, including the nonprofit groups, are all trying to sell their widget to make money.
I don't fault the salespeople. But consumers don't seem to understand the person on the phone is not a financial advisor - they are a salesperson. You would no more make a decision about what car to buy from talking to the first car salesperson you speak with, yet people do when it comes to getting out of debt.
Finally, for someone who is feeling completely hopeless about ever climbing out of debt, what words of wisdom or encouragement can you offer?
Debt is a math problem. Don't let it define you and rob you of a better financial future. Dealing with debt begins at understanding what the underlying cause was and fix that problem.
I think my book The Path to Happiness and Wealth might resonate with you. You can download it for free here.