Why most people fail at eliminating their debt.

So why do most people fail at eliminating their debt?

In order to figure that out, we should take a look at what you need to do to actually eliminate the debt. And then ask why it doesn’t happen.

So what does it take to eliminate debt?

2 things I can think of right away are 1) stop creating new debt and 2) have a realistic plan to pay off the debt. So let’s take a look at these two for now.

Stop creating new debt.

You need to stop adding new debt.

Sounds good. But it often doesn’t happen until someone is in the position of not having any credit left to use to incur more debt. Americans are called consumers for a reason. We spend. The last several years offered credit that was often too easy to get and use, anywhere and anytime. Add to that credit card minimum payments that were created to take 30 years or more pay off and confusing statements leading to late payments that earned the credit card companies millions in charges and fees. You can see why everyone was offering easy credit. They made a fortune off of it.

Likewise home owners were offered ways to access their equity and spend that too. Look at how many people refinanced their homes and “paid off” their credit cards (they really just moved the debt onto their mortgage) and then eventually used up their credit cards again until they were maxed out or close to it. Or they got a HELOC (home equity line of credit) that was essentially a big credit card tied to your mortgage allowing you to use your available credit (the equity in your home). How many big RV’s, boats, and new cars showed up in your neighborhood during that time?

Habits are a big part of what got them into trouble. Spending is a habit that is hard to kick. But if you want to really get out of debt and maybe even get your retirement on track (most people are way behind on this) you need to make changes. You would be surprised at how much a small change can accomplish over time.

You need to change your spending habits and start using more cash and less credit if you want to get ahead of your debt. That’s easier said than done. You know that and I know that. Think about all of the New Year’s resolutions that have started off well and then petered out in days or weeks.

Changing your financial habits. Easier said than done.

Interest changes everything. Don't think you'll just be paying a little more than your current balances.

If you really want to pay off your debt you have to pay more out each month than you owe. And that is very difficult for most people to do in today’s economy. We’re in some difficult times right now. Many people have lost income, lost significant portions of their retirement funds, and could be worried about their jobs in today’s rising unemployment. So how do you start paying off your debt when you feel like you don’t have any extra money to pay it down with? Fortunately you can start getting ahead with a small amount of extra money, even a dollar makes a difference.

You need a plan that you can and will follow that will accomplish your goals.

Here is what I believe is the single most important aspect of changing your future. You need a plan and the means to follow it. Without a plan to act as a road map to help you eliminate debt, how do you expect to accomplish it? A strategy requires tactics, or actionable steps. Those actionable steps need to be taken if you want to see results.

The first step is to perform an analysis on your debts. You need to know how much debt you really have, and what it costs you every month. You may know how much you owe on your debts, but do you know how much money it will take to pay it off since you are paying interest every month? An example is a 30 mortgage where you can still owe 75% of what you borrowed 15 years into the loan. Credit cards are much worse since you are paying compounded interest unlike the simple interest mortgage.

You also need to determine the most effective way to pay it down and where your money is best spent. Most people tend to make over payments, when they do make them, based on emotional decisions and continue to waste money in their attempts to improve their financial situation. While any overpayment can be a good thing, wouldn’t you want to get the most bang for your buck on every dollar you send out to pay off debt?

You need to be prepared to follow the plan you create month in and month out, year in and year out. It takes time to get ahead of your debt and over come it. And it takes discipline.

So why do so many people fail at eliminating their debt?

They continue to create debt and never develop a plan that they can reasonably follow year in and year out to accomplish their financial goals. Getting out of debt is not as easy as it sounds. If it was, we wouldn’t have the economic problems we read about, hear, and see on tv.

Do you have a solid and realistic plan to eliminate your debt that you will absolutely be able to follow for several years? Not many people do. And when they do have a plan, it’s a matter of time before most people get too busy to keep it going. I’ve had financial planners tell me that most of their clients follow their advice for about 3 months and then fall off the cliff.

How do we improve our chances of success in eliminating debt and getting back on the path

A small change can put your future back on track.

to better cash flow, improved savings, and larger retirement contributions (which takes better cash flow) ?

Use a program that gives you a plan with achievable goals and where the plan is followed for you. That’s what we do. Our program has been helping others just like you for over a decade. Here is what makes our plan so successful.

• We analyze the debt and lay out a plan to eliminate the debt showing you how much you could save, when you could be completely out of debt, and how much more you could accumulate for retirement or other investments.
• We show you how much it will take each month to accomplish these realistic and achievable goals.
• We even do the work for you through our Payment Administration service that pays the debts in the program for you according to our analysis which saves you thousands in interest and years of payments.
• But first we give you your own personalized analysis of your debts for free. No cost, no obligation. We want you to know how much you could save, when you could be debt free, and how different your future could be.

If you would like your own personalized, free analysis, please visit our home page at FromDebtToHope.com to learn more or fill in the form at the top right corner of this page. No cost. No obligation. You have nothing to lose and everything to gain.

Ask for your free Financial Compass analysis today.

Related posts:

1. When should you eliminate your mortgage?
2. Credit Card Crunch is here…
3. The difference between the Financial Compass and Debt Settlement programs.