eliminate your debt like a pro
Inside Secrets From Money Coach Steve Rhode
by
Steve Rhode
SMASHWORDS EDITION
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PUBLISHED BY:
Steve Rhode on Smashwords
Eliminate your debt like a pro
Inside secrets from money coach Steve Rhode
Copyright © 2003 by Steve Rhode
All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise) without the prior written permission of both the copyright owner and the above publisher of this book.
This book is intended to provide accurate information to educate you about the financial issues many people encounter. This book is not intended to be a substitute for legal, investment, or financial planning advice. If you need legal or financial planning advice, you should consult with a lawyer, investment advisor, financial planner, or other professional in your state.
Smashwords Edition License Notes
This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person you share it with. If you are reading this book and did not purchase it, or it was not purchased for your use only, then you should return to Smashwords.com and purchase your own copy. Thank you for respecting the author’s work.
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Eliminate Your Debt Like A Pro
Inside Secrets From Money Coach Steve Rhode
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Dedication
This book is dedicated to the memory of my best friend, Joe Alvarez.
Joe passed away without notice or warning and left a hole in the hearts of many – a hole that will forever be empty. Just ten minutes before Joe died, he had his picture was taken with some friends. He was smiling. He looked great. He was happy. You truly never know when your last breath will be drawn.
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Acknowledgements
It’s not difficult to make a difference in this life. All it takes is hard work, dedication, a good attitude and passion for what you do. I’m proud to say that the people who assist me in assembling my words, organizing them and making them visually appealing are without a doubt the best friends and the best team I could ever imagine working with.
First, I owe the completion of this book to my editor, Andrew Randall. Without Andrew’s encouragement and advice, this text would not be completed today.
Second, my good friend and trusted advisor, Nancy Judy, has been instrumental in making sure that the finished product was as nearly perfect as possible. She is amazingly talented at finding the little fix or final tweak to make the work just that much better.
Thirdly, the text made it to our mutual friend, robin goldberg, for final design and layout. As you can see, robin has skillfully assembled the book to make it interesting and easy for you to read.
Finally, this book would never had been possible if it hadn’t been for the thousands of people who have shared their hearts, dreams, fears and goals with me. Through hugs and tears we have managed to forge new lives together full of peace and happiness.
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Table of Contents
Foreword
Introduction
Chapter 1:
It Is What It Is
Chapter 2:
The Finer Points of Getting Out of Debt and The Dictionary of What You Need to Know
Chapter 3:
Real People, Real Problems
Chapter 4:
How to Start Doing What You Need to do to Get Out of Debt
Chapter 5:
Putting it All Into Action With Plan A
Chapter 6:
You Don’t Have to Go It Alone — Seek Assistance
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Foreword
Some people believe that only the wicked or the lazy experience money problems. Baloney. Bad things really do happen to good people. So, first things first. If you think that you, or someone you know, deserves the problems they are having, now is the time to let go of that negative, judgmental idea. You, or your friend, just tripped over some of life’s hurdles instead of gliding gracefully over them. No matter. By picking up this book, you’ve just given yourself an experienced coach and someone to put a Band-Aid on those scraped knees.
For years I’ve been helping good people find great solutions to difficult money troubles and, in every case, there was an easy, surefire, super fantastic, guaranteed solution to overcome the financial problem, no matter how difficult it appeared to be. Unfortunately, many people insist on tackling their money troubles alone. Without the right knowledge, experience and tools this can be like trying to defuse a landmine and if you’ve never done that before, it can lead to an unintended outcome that isn’t pretty.
There really isn’t much good information out there about the reality of financial problems. Trying to tackle them alone, without professional assistance, can lead to disastrous and unpleasant results. I’ve been forced to stand on the sidelines and watch people struggle alone with financial problems many times. It’s not pretty. It’s like standing at the side of the track waiting for a train wreck to happen that I knew could have been avoided.
This book is written to help you avoid going off the rails and guide you toward your solution. If you can follow the right path, you can start enjoying life again.
This book is full of all the honest, hard-learned facts that everyone, including the family pet, needs to know when tackling financial difficulties. It’s the stuff that you wish someone had told you before you learned the lessons the hard way.
Are you ready to do whatever it takes to get your life back in order? If you are, then let’s go. No matter how hard things may be now and over the course of the next few months, I promise that if you follow me, you will be enjoying life again much sooner than you ever imagined. Let’s do it!
Your money coach,
Steve Rhode
P.S. Don’t forget the most important thing: Getting out of debt takes teamwork. You are not on your own. This is an interactive plan. Whenever you get stuck or don’t understand something or just feel that you can’t deal with the pressure anymore, visit my site at http://GetOutOfDebt.org for help. I’m always standing by to help you if you need to talk about your situation, develop a plan or if you just need a kick in the butt to get moving.
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Introduction
Here are two statements that people around me get sick of hearing all the time:
* Money problems are not about the money.
* Money problems are solved with lifestyle changes.
What do I mean by these statements?
Let’s look at the first one: Money problems are not about the money. Now you think I’m talking out of my butt, right? You think that if you could just win the lottery, all your problems would be over. I’m sorry to burst your bubble, but there are thousands of lottery winners all across the world who thought the same thing and who are now struggling with exactly the same money problems that you are, only on a much larger scale!
You’ve heard all those stories about rock stars and movie stars who made millions and are now broke and working the door at Wal-Mart. Like many people, you probably thought, “How could M.C. Hammer be broke? He made a fortune with those curious, but compelling, baggy pants.” Poor old Hammer. After his first album sold well, he started to build his multi-million dollar dream home, but the costs spiraled out of control and he couldn’t keep up the payments on the house and cars and all the other fancy stuff that he got on credit, he soon found out that the banks could take it all— and they did.
There are a whole host of reasons why you got into debt in the first place. Time and space don’t allow me to go over all those issues here. If you are interested and want to delve into your psyche and get all introspective, I suggest you read my books “The Path to Happiness and Wealth” and “The Beach Misses You.” You can download my books from http://GetOutOfDebt.org. But trust me on this; people get into debt subconsciously and for, what feels like good reasons at the time.
Whether it’s a fear of abandonment, loss of love, shame, lack of self-esteem, codependency, depression, mania, compulsion, enabling, addiction or whatever else, the reasons behind what drove you to where you are today are significantly more important than the amount of debt you’ve got right now.
Why? Because if you don’t figure out how and why you got to where you are right now — and resolve those issues — you’ll find yourself sabotaging your progress and wind up right back where you started, even if you win the lottery or that song you’re working on goes platinum.
What about that second statement: Money problems are solved with lifestyle changes? Lifestyle changes, huh? Makes you a little twitchy, doesn’t it? Nobody wants to change the way they live, at least not when it means giving up some of the things you have become accustomed to. But just because you live in a beautiful house, drive a hot car, wear stylish clothes and smell great, doesn’t mean you can really afford that lifestyle. Most people who drift into financial trouble over time have simply, subconsciously lived a lifestyle they could not afford using borrowed money. At some point, you’ve got to pay it back.
Lifestyle changes are among the most difficult to make. Our home, car, clothes and other material things define who we are, or so the constant bombardment from advertisers and the media tells us. Our “stuff” indicates to the outside world our status or class and shows people how successful we are, right? Changing or eliminating some of those outward signs is like admitting defeat or failure for most people. Here is my sage advice on this subject: GET OVER IT!
Your life will never be what it can be — money troubles or not — until you realize that you are not what you own. What do you think people are going to remember about you when you die? Your Mercedes? Your Armani suit? Of course not. Sure, having nice things is nice, but that’s about it. It really is true what they say: Money can’t buy happiness. (See http://GetOutOfDebt.org for more information on this.) Are you happy right now, because of all the “stuff” you’ve accumulated over the years?
What really matters if the kind of person you are, how you relate to others and how you live your life. Truly understanding and living by this principle will enrich your life beyond all the billions sitting in Bill Gates’ bank account. And if I still haven’t convinced you to let go of the importance you place on all your possessions, remember this: Many of the very people you are trying to impress with those fancy baubles are struggling with the same issues you are. You would be amazed at how many of your friends, neighbors and co-workers are struggling to maintain a façade of success because they are afraid of what others, including you, will think of them if they don’t.
The people I have helped over the years come from all walks of life. Some are actors, investment advisors, billion dollar fund traders, known personalities, business owners, bank presidents, CFOs of big companies, physicians, surgeons, lawyers and even financial planners.
I know it may sound a bit odd, but my heart really goes out to those folks of above-average income who suddenly hit the wall, because the more you have, the farther you have to fall and have more emotional baggage to deal with. Just because someone lived a “good” life or had a lot of money, doesn’t mean they don’t need a hand or a hug, a friend or a trusted advisor when things go wrong.
You must be reading this because the proverbial poop has hit, or is about to hit, your fan. Either that, or someone you know is struggling with financial problems. Do not be afraid. There is help, hope, practical advice and good old common sense buried in these pages and at http://GetOutOfDebt.org.
What you are about to read is the distillation of experience gained since 1990 when I got my graduate degree in hard knocks and also years of working with thousands of people, helping them find solutions and options to get their lives back on track. Trust me. I know what I’m doing, because I’ve been exactly where you are right now.
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Chapter 1: It Is What It Is
Let’s accept the fact that sometimes life is unfair and sometimes we create situations that lead us to be victims. In many cases, the financial troubles that seemingly arrive on your doorstep could have been spotted on the horizon years ago, but you just didn’t notice.
There are some universal stages of debt that everyone goes through. How you pass through them is completely up to you. What’s most important is getting to the stage where you are ready to take action to resolve your problems. I can help you speed up the process and get to that stage where you can find the determination to take control.
The Seven Stages of Debt
(Modified from the Five Stages of Death and Dying by Dr. Elisabeth Kubler-Ross)
1. DENIAL begins a long time before the financial problem rears its ugly head and gets in your face. Denial distorts reality like a street drug. It’s addictive. As an impartial observer, I’ve seen bad situations brewing time after time. But the person about to land in the sticky stuff often says the same thing, “It won’t happen to me.” Whatever you are in denial about will wind up smacking you in the face like a cinder block on a rope. Even if you don’t know what that’s like from experience, I think you can imagine what kind of a mark it will leave.
Here are some things people have actually said to me:
* “I know I can’t pay my mortgage, but they won’t take my house.”
* “I refuse to take my child out of private school just to pay my bills.”
* “I didn’t know they’d sue me if I didn’t pay them back.”
* “It’s not worth my time to get out of bed for a $12 an hour job.”
* “How did I know a collector would call me? It’s not like anyone ever reads the fine print.”
* “My creditors suck because they keep calling me for payments. I’ll pay them when I’m good and ready.”
Yeah, I know they sound funny. But the people involved weren’t laughing, and I’m guessing you’re not laughing at your situation, either. My job is to get you through these initial stages as fast as possible and get you to where you want to be. Here’s all you need to know about denial. If you think you’ve got money troubles, you do. Period. Denial will just slow you up and, if you are having problems with money, time is your enemy. You have to take action as quickly as possible. The more time you spend in denial, the further you will circle down the bowl and, unless you can get past denial, you may actually go down the drain.
2. ANGER is an emotional waste of time and energy in most situations, especially when it comes to money troubles. Remember what I said before? Your situation just is what it is. You can be angry all you want, but things will get better faster if you can turn that anger into a fire in your solution development furnace.
Okay, so you want to get angry. Let’s get it out of the way.
Creditors — These are the folks you promised to repay when you took their money. You even signed terms and conditions that stated what would happen if you defaulted. You can be mad at your creditors all you want, but that’s not going to change the price of eggs in China, nor is it going to get you out of this mess.
Yourself — So you’re mad at yourself. At least that’s fair. After all, you’re the one that got you into this mess. So let’s have a quick pity party and then go for a walk and talk some sense into you. You think you’re a failure? So what? Everybody, I mean everybody, fails at some point in their lives at something. It’s part of life. Failures are great learning tools. They teach you what not to do. But unless you’ve developed a time machine, you aren’t going to be able to go back and change anything, so the best you can do is learn from the lesson and leave the anger in the past. If you screwed up, you screwed up. No need to beat yourself up over it.
Others — The “others” category is broad, vast and deep. “Others” falls into the same group as “Them” or “They.” There is no “They” and I still haven’t met “Them,” but they sure do get the blame for a lot of the world’s ills. If you are angry with others, stop it.
Yes, it’s possible that situations and experiences in your past led you to make some of the decisions that have gotten you where you are today. But no matter what those situations and experiences were, you always had a choice, every step of the way. Probably many choices. You made the ones that got you here. Stop casting blame all around town. This is your life. At some point you’ve got to take responsibility and stop blaming others. Without personal responsibility, you’ve got no way to fix this so that you can get on with the life you always wanted.
External Events — There is no need to cast emotional blame on external events like a slow economy, accident, divorce, illness, relationship issues, etc. There is a never ending set of circumstances and events which can lead you to financial problems. Unless you can control them, sometimes you are just caught off guard. Life is just what it is.
3. DEPRESSION — There is no question that money troubles aren’t fun. They typically lead to some kind of loss and that makes us sad and/or depressed. The loss can be anything from cutting out the cleaning lady to having to sell your home and moving to a cheaper area. There is no doubt that some of the things you might go through may be difficult, but rather than stew over them, let’s put them into perspective.
If you had your choice of either dealing with what you are going through right now or getting poked in the eye with a sharp stick, which would you do? It’s a no-brainer, right?
I remember one day, I was talking with a lady who was paralyzed with inaction, even though her mortgage company was about to foreclose on her home. She was so bitter about the situation, she was blaming a cast of characters and refused to see a way out. In fact, she had waited so long that it was pretty darn likely that her house was going to be sold at auction that week. She said that foreclosure was the worst thing to happen to her. I asked her, if she had a choice, would she rather lose her home to foreclosure or be set on fire? She laughed. That put it into perspective for her.
The lesson to be learned here is that no matter how bad the situation feels, it can always be worse. Even when it’s bad, there are still things to be thankful for. Try as hard as you can to look up and find the rainbow rather than stare down the well. That’s not just some “New Age” nonsense. Medical studies have shown that people who think positively live longer, have fewer health problems, experience less stress and, consequently, get the things done that they need to get done.
It may be hard to believe sometimes, but mood is a choice, just like most other things in life. Don’t believe me? Try this exercise. What kind of mood are you in right now? If you are feeling pretty good, think about the worst thing that ever happened to you. Close your eyes and put yourself back into that situation and live through it again in your mind. I bet that brought you down pretty quickly. Now try the reverse. If you are feeling down, angry or depressed, think about some of the good things in your life. Maybe you have a wonderful wife or husband. Perhaps you have great kids. Everyone has things to feel thankful for, even if it’s just the fact that you’re not on fire right now. Again, close your eyes and focus on those good things. If any bad thoughts creep in, push them out of your mind and go back to the good stuff. If necessary, pretend that you’re happy. Laugh out loud. Jump up and sing your favorite song at the top of your voice. Do whatever you would do if you were in a great mood. If you give this an honest try, you’ll find that pretty soon you start to feel better. Everyone feels down from time to time, but with practice, you can take control of your emotions and not let those down times run your life. Besides, as long as you think only sad thoughts, you’re going to be sad.
Here is the easiest advice to give but the hardest advice to follow: Suck it up and let’s move on toward a solution. Bad things happen to good people. Life is unfair and sometimes cruel. It is what it is. Heard that before?
4. BARGAINING — Typically, this is the stage when your higher power is brought into the mix.
“God, I promise I’ll make all the rest of the payments on time if you can help me get out of this jam.”
“God, if you can just bring my credit card payment current somehow, I promise I’ll go to church every Sunday/be nice to my kids/work really hard for the rest of my life/never buy a $500 pair of shoes again.”
I know all about this stage. In 1990, I filed bankruptcy. It was not the happiest time of my life, but out of that mess came my passion for helping other people find solutions to their financial problems.
When I was going through my troubles I searched all around and couldn’t find the kind of help I needed. Sure, there were a lot of companies out there who said they could help with debt, but all they do is collect your money and distribute it to your creditors. That might help a few people who just don’t have the discipline to make their payments on time, but if you’re in a real financial jam, like I was, you need a lot more advice and assistance. Unfortunately, it just wasn’t out there.
So, in 1994, when the opportunity arose, I co-founded http://myvesta.org, a national nonprofit organization that has now helped millions get their financial lives back on track by providing in-depth counseling and coaching. Strange how life works. My biggest failure turned into my greatest success. I would not be able to help as effectively unless I had lived through that situation. (Visit http://GetOutOfDebt.org if you want to read the whole bankruptcy story.)
You can bargain with God (or the Devil) all you want, but you might as well go outside and look for a four-leaf clover or throw some coins in a fountain. Bargaining is nothing more than wishing and wishing is okay, so long as it’s not your only plan.
5. ACCEPTANCE — You made it. Congratulations. I’ve been waiting for you. This is my favorite stage, even though the next two are where you start putting the pieces back together. I love the acceptance stage. It is so full of peace and leads people down the right path. Until now, you’ve been like a long-distance runner going round and round in circles, lost. Once you reach acceptance, you are turned in the right direction and now, instead of being tired and going nowhere, every step you take is in the right direction toward your new life, whatever that may be.
Once people reach acceptance, they know that what I said before is a fundamental law: Life just is what it is.
If you got your hours cut and you are not bringing home what you used to, it just is what it is.
If you bought a home that was too expensive and now you are struggling to afford the payment, it just is what it is.
If you’ve been unconsciously feasting at the all-you-can-eat buffet of debt for the past few years and now it’s caught up with you, guess what? It just is what it is.
Once you reach the acceptance stage, you are like a fertile field ready for me to sow the seeds of your brighter future. Up until this stage you are going to deal with some uncomfortable moments. Life just isn’t going to be much fun. It will be cloudy and uncertain. But when you reach acceptance, the clouds will part and a new day will dawn.
Acceptance does not mean that you aren’t going to suffer loss or pain. In fact, you probably will. But the good news is that if you can see your situation with clarity, you will understand that whatever loss you are going to experience will be temporary. Don’t let loss bury your hope for a better future. Although I’ve talked a lot about what you may have to give up right now (and we’ll talk some more about it later), it doesn’t mean that you’re going to have to live the rest of your life living off beans and water. It’s like being sent to your room. As much as I hated it as a kid, it passed, and I was soon outside place and each day is a step closer to a repaired and better life, if you let it happen.
6. RESURRECTION — Some time will pass, maybe months or years, but slowly you will notice that you are starting to rebuild your financial life. If you are careful, you will be able to start saving money and buy a few luxuries again. If you lost your last home to foreclosure, you’ll be able to buy another. If your last car was repossessed, after you take care of that situation, you’ll be able to get another. (After my bankruptcy I drove a $500 used Postal jeep until I could save enough money to buy a better vehicle. That jeep was an accident waiting to happen. I held my breath every time I turned a sharp corner, praying the darn death trap wouldn’t overturn!)
Gradually, you will start to see that what I’m telling you is absolutely true. Now, you might not have as much stuff as you used to – you might not have the three-car garage and beautiful home on ten acres – but you’ll have what life wants you to have.
This stage is just like coming back from the dead. Your financial life was pronounced DOA, but now – “CLEAR!” – you’ve zapped it with a defibrillator and there’s a pulse again. Sure, it may be a faint pulse, but its regular and getting stronger every day. Let’s learn from whatever mistakes we made and move forward — smarter and sharper.
7. REBIRTH — Your life will have changed noticeably once you reach this stage. The experience of surviving your financial problems will have made you a stronger person; a different person; a better person. I firmly believe you can lead multiple lives within the one that exists between the time you were born and the time you die. We grow, evolve, learn and change. We grow apart, grow together and just plain grow old. Your life can be so much more than the struggles you are going through right now. You didn’t get into debt overnight and it’s probably going to take some time to be reborn, but trust me, you’ll be a better person for it, if you want to be.
The past does not have to predict the future. You don’t have to be saddled with your old mistakes. Others might not, but guess what? It’s as simple as being forgiven. I forgive you. Life just is what it is. If you need a hug, I’ll give you one.
What others might not see, or reward you for, is that when you were faced with your money troubles, you did everything you could, gave it your best shot and survived. That’s pretty darn amazing. You will truly be a silent hero. But I’ve got a special place for you in my heart and, if you send me your picture and story of survival, I’ll frame it and hang it in my Debt Survivors Hall of Fame.
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Chapter 2: The Finer Points of Getting Out of Debt and The Dictionary of What You Need to Know
There are some basic rules and philosophies that you should be familiar with in order to break free from money problems. Most people skip all of the steps and immediately jump right in to fear, panic and surrender. I assure you that’s not going to work well for you, so I’ve put together a list of things you need to know in order to deal with your current situation.
A is for “Action”
Ancient Chinese wisdom states that the longest journey starts with a single step and getting out of debt is nothing more than a series of small steps. Some days you’ll feel better than others in dealing with things. Some days you’ll be emotionally prepared to fight the good fight, but other days you’ll be fed up and not want to deal with it at all. However, one key to getting out of debt is to be prepared to show up and take action every day. Even if you don’t make a decision each day, you’ve got to be mentally prepared to do so. Even if you’re not going to develop a master plan today, you’ve got to be ready to if you have to.
Taking action is critical to a successful outcome. Taking action means having the ability to make a decision, put one foot in front of the other and move toward a solution. Before you can fight, you’ve got to show up in the ring.
Having said that, my years of experience helping others and my own personal experience have taught me that this can sometimes feel like an impossible task. Some days it’s just tough to get out of bed and deal with yet another day of misery. The best advice I can give you is that you can lean on me when times get tough. I’ll get you going again. Visit me at http://GetOutOfDebt.org for a pep talk and a kick in the rear, if you need one.
A is also for “Attitude”
The biggest hurdle you will have to overcome is making sure that you try very hard to maintain a positive attitude throughout the struggle of getting out of debt. If you give up hope and feel that the struggle is not worth the pain, then you will not succeed.
A positive attitude is critical to a good outcome. Remember what I said earlier: You’ve always got to remind yourself that no matter how bad you may feel the situation is right now, it could always be worse.
Hating life and other people for the situation you are in will simply distract you from your main objective: being debt free.
With the wrong attitude, everything will seem impossibly hard. Every task and piece of information will feel like the end of the world and you will be in a constant struggle to keep fighting. Giving up and throwing in the towel will feel like the only option. (See “Throwing In The Towel” in the coming pages.)
With the right attitude, everything will seem natural and you will be much better prepared to roll with the punches, a long forgotten skill. You’ll be flexible and creative in your solutions. With the right attitude, you will have a much better chance of
B is for “Bankruptcy”
Although you may be desperately trying to avoid bankruptcy (and I don’t blame you), it is a valid tool for dealing with insurmountable debt. Remember, bankruptcy wasn’t invented solely for your benefit. It is not good for the economy to have thousands of people struggling to make ends meet every day, so a law was passed enabling people with no other option to clear the decks and start again.
It may not be in the front of your mind, but keep it tucked away at the back. More on this later.
C IS FOR “COOPERATION”
The first goal in resolving your problem is to find common ground upon which you can start to build a solution. Let’s say the bank’s going to foreclose on your mortgage. Most people seem to, understandably, handle foreclosure badly. Many of the foreclosed homes I’ve been through are strewn junk. It’s not uncommon to even find walls punched out. One home I went through looked like the occupants had a destruction party and then walked out the door, leaving kids’ toys, wedding albums and stuff you’d think they would value.
If you’ve reached the Acceptance stage, you’ll find life to be easier and kinder if you can find a way to cooperate with the situation rather than constantly pushing against it. In the foreclosure example above, how much different would the entire process have been if the occupants had accepted their situation early and made plans to move before they were evicted?
Just because life throws you a curve, it does not give you a free pass to be mean and destructive to everyone and everything around you. If you’re getting foreclosed on, be appreciative for the times you spent in the home. Be thankful for having had the opportunity to live there, clean it up, move out and be a gracious guest. After all, it really wasn’t your house, anyway. The reality is that you pledged the home to the lender in case you defaulted on the loan. It’s not your house until you don’t have a mortgage. Until then, it’s collateral that you happen to live in.
C is also for “Communication”
Stop talking and learn to listen. As the old saying goes, you’ve got two ears and one mouth and you should use them in that proportion. The ability to communicate will become crucial in working out a satisfactory solution.
Definition: Communication doesn’t mean you talk, then the other person talks, then you talk some more and so on. It means understanding what the other person means by their words and getting across what you mean with yours. There is no room in good communication for reacting emotionally and lashing out.
All the people I have personally coached, counseled and helped have struggled with communication. They either had problems communicating with their spouse, children or creditors. At some point in the chain, communications broke down. Yes, I know you are under considerable stress right now and you want to get your point across. Be patient. You’ll get your chance. Listen to what everyone else is saying first. You may learn something that will help your situation. It’s one thing to look like a fool, but it’s quite another to open your mouth and confirm it.
There’s an old sales technique that’s particularly effective and demonstrates how you can use good communication skills to your advantage without saying a word. It’s called the “silent close.”
Typically, when a salesperson has wrapped up his pitch and quoted a price, the customer responds with, “Wow! That much. I didn’t realize it was that expensive.” Whoever opens their mouth next determines who’s going to win this age-old form of haggling. If the salesman doesn’t have the courage of his convictions, then he will respond with the offer of some sort of discount. But if he keeps quiet, the customer is likely to break the uncomfortable silence by accepting the original price. Try it. It works in all sorts of situations. You’ll be amazed how many people will cave in and give you what you want without you having to say a word.
C is also for “Control”
There are very few things you can control in life. You can’t control when the sun rises, if you will have an accident on the way to work, if your heart will beat a minute from now or the actions of others.
You will get very frustrated very quickly if you are desperately trying to control your creditors. You can’t do it. Creditors are behemoth corporations that are guided by anonymous policies and procedures. The person on the phone is bound by those rules and has little, if any, leeway to veer from them.
What you can control is how you deal with the fluidity of life. You can control how you react to the situation and what you do to move forward. You can control the actions you take and the plan you make. However, even the best plans may change on the fly. I don’t worry about failing, I worry about not trying. Rather than being stressed and upset because your plan to get out of debt is not working out like you wanted, take control and develop a new plan. That’s just the way life works.
If you go by 7-11 and spill your Slurpee on your shoes, it’s on your shoes. Clean it up, regroup and figure out what your next move is. You’ll either decide a Slurpee is not in your immediate future or you’ll get another one. Being upset about what just happened isn’t going to change the fact that your shoes just got Slurpified.
The same philosophy needs to be applied to your debt situation, because what you can control is the path you decide to walk to resolve your problem. Just because the path is taking twists and turns, it does not mean that you should give up and quit. It means you should adapt and modify your plan. (See Flexibility.)
Let’s say you develop the most fair and equitable repayment plan in the world to pay off your creditors. You present the plan to your six creditors and five agree but one does not. You can’t control the fact that one of them isn’t playing ball. What you can control is what you do next. You can either find a solution that will work for that sixth creditor and then go back to the other five and start all over again, or you can say to yourself that you just don’t have any more fight left in you, that you truly gave it your best shot and you might decide to file bankruptcy. You can control what you do next, but not what others will do or how they will react.
C is for “Credit”
If you are living through financial troubles right now, you probably swore the “No Credit” oath. It goes something like this: “I promise to never use credit again in the future. I hate credit. Credit ruined my life.”
It wasn’t credit that left you in the rut you are in now, it was the way you used it. No matter how badly you feel you want to avoid credit in the future, your aversion today is probably more about avoiding how you are feeling at this moment, rather than about the actual use of credit.
If you are a living, breathing adult in the United States today, credit was, and is, going to be a part of your life. Running from credit will lead to lower credit scores in the future, less access to credit when you need it to buy a home or car, and higher insurance premiums. The reality is that more and more, day by day, your credit score defines what kind of person you are.
Who knows, maybe at some point in our lives, our concert seats will be dependent on our credit scores. “Let’s see, Mr. Smith. Your credit score is 801. You get the floor seats. Is third row okay?”
So when you become credit averse and swear off credit completely, you do yourself in. While you might be thinking like a good, smart, shrewd consumer, you are not thinking like a creditor. After all, it’s the creditors who lend us the money for our homes, not the frugal consumer.
By no means am I saying that you should run away with your credit cards and cheat on your fiscal life. Not at all. What I’m saying is that you need to stay in the game. You need to maintain your oldest credit card account and use it from time to time. This will boost your score, since you will have a longer credit history. You can also only have a couple of cards open and keep the balances below 30 percent of their limits. This will also help. You can be a good steward of credit, rather than becoming intoxicated with its alluring scent.
D is for “Debt Collectors
If debt collectors are calling you, you don’t have to be mean to them. (See Cooperation.) Simply tell them the truth about your situation. It just is what it is. If you can’t afford to make a payment right now, you can’t make a payment. Look, they aren’t going to get on a plane, fly to the nearest airport, rent a car and drive to your front door. Your creditors might sue you and do other legal things, but nobody is going to break down the front door with a battering ram and take all your old used stuff.
The collector who is calling right now has spent the day getting ditched, hung up on, cursed at and insulted by other, less kind souls. Don’t expect anything in return, but you have a chance to brighten someone’s day. Be kind, open and honest with the collector on the other end of the phone. You’ve got little else to offer him or her right now, so you might as well give what you can – common courtesy. After all, it’s not the collector’s fault that you can’t pay your bills.
Count on the fact that most collectors will be nasty. Being a collector isn’t loads of fun and they work under enormous pressure to collect as much as they can as quickly as they can. Most people respond readily to pain or pleasure and I’ve yet to see a collector invite anyone out to dinner to discuss the situation over dessert.
Of course, not all collectors are jerks and, if you give them half a chance, a good collector will attempt to find a way to resolve the situation that can work for all parties. Here’s a gotcha though – collectors are not reviewing your overall situation and they are trying to get the best deal they can for the people they are working for.
A lot of people do a horrible job with this aspect of money problems. They consistently make promises to collectors when they call, rather than making promises as part of an overall plan. Before you know it, you are overpromised, overcommitted and there aren’t any crumbs left for the collectors who call later. That’s when things blow up. You’ve got to try to create a fair and equitable plan for all creditors after taking care of your basic needs, like food, shelter, transportation, utilities, etc. We’ll talk more about that later.
Often the last collectors to call are those with the most power and leverage like the mortgage company, car lender, IRS and student loan folks. They don’t need to rush in because if you don’t pay your mortgage, they’ll take your house. If you don’t pay your car payment, you will be visited by the repo guy. If you don’t pay your taxes, the IRS has all the power they need to do whatever they want. If you don’t pay your student loans you can find your wages quickly garnished, a 40% collection fee added to what you owe and your tax refund checks confiscated. No need to scream when you’ve got a big stick.
When I went through my financial struggles I became very friendly with some of the collectors. I even stayed in touch with some of them for years afterwards. I found them to be a great source of help and information as I began my work assisting others.
D is also for “Determination”
If you want to get out of debt, then you are going to have to muster more determination than you have ever had. It is a fact of life that getting out of debt is much harder than getting into it in the first place.
Over the years, I’ve worked with thousands of people who have said they wanted to get out of debt, but when push came to shove, they didn’t have the strength inside to fight the good fight. I’ve always been surprised by the number of ministers, pastors, priests, etc. who I’ve worked with who are quick to abandon their religious beliefs about repaying debts when the road got rough. (Yes, debt can strike even men and women of the cloth.) Now, I’m not judging those people, I’m just making the point that deciding to do what’s right can take, to quote an old John Wayne movie, “True Grit.”
Let me assure you that getting out of debt will be a rough road filled with sudden unmarked twists and turns and, almost certainly, a pothole or two along the way. Be ready for it.
I’m a pilot and, when I first started flying, I was surprised by how rough it can be to fly a small plane. Who knew? It looks kind of easy from the ground, doesn’t it? One day, I took off from Hartford, Connecticut and nearly got the stuffing beaten out of me as I climbed over the nearby hills on the departure route. The skies were clear and there was no warning that any turbulence existed. So what were my choices? Do you really think I would have said that the struggle to keep the plane aloft wasn’t worth the effort? Heck, no. I fought like hell through the rough air and climbed to a smoother altitude. Sure, it scared the you-know-what out of me, but you do what you have to do. At times like that you have to reduce your wants down to the most basic level. For me, at that moment, I couldn’t care less if the cockpit became messy or my drink spilled on my pants. Nope. My goal at that moment was to not lose altitude and hit the hills, so I did my best to keep the wings as level as I could.
The exact same principle applies when you are getting out of debt. You will be cruising along on your debt-free plan and all of a sudden, WHAM, you’ll hit some unexpected turbulence. Just hold on through it and then regroup. Be flexible (more about flexibility in a bit) and reduce your wants down to the basic elements. For example, a creditor throws you a curve, what do you do? Regroup and simplify. That might mean that, for today, you take a bunch of deep breaths, eliminate stress and take a brain break for a few hours. The more you can avoid panic, the more processing power your brain can use to develop a plan on how to deal with the unexpected event.
D is also for “DISSAVINGS”
When things started to go downhill fast for your financial life it was predictable, had you been paying attention. If you are in denial about your situation, it won’t take long before your outgoings will be more than your income. It is an economic fact that when our income is cut suddenly, we don’t cut our spending as fast. The time between the income cut and reducing our spending to fall into line with the new income creates a period when whatever assets we had are significantly reduced as we draw on them to make up the shortfall. This drawing down on savings has been dubbed the theory of “dissavings.”
Time after time I have worked with people who lived according to this theory. Rather than tackle the situation head on, they borrow from retirement accounts, home equity, family or credit cards to maintain their old lifestyle. They have a huge period of dissavings. If you do this, you will be putting your debt into turbo mode. It will accelerate super fast.
The good news about this theory is that it also works in reverse. When your income is increased, your expenses will not increase at the same rate. During that time, you will be able to save and have extra money. This is why, once you get on an effective debt recovery plan, your life will be so much better and easier.
E is for “Effort”
Nobody ever got out of debt without some effort. One of the biggest reasons why people have a bad outcome when they are trying to get out of debt is simply lack of effort.
It is true that some people experience a horrible outcome when they try to get out of debt. They hate the results of the efforts to help them. They are bitter, angry and all around grumpy. However, if there were a mirror you could hold in front of them, it would show them the absolutely miserable level of effort they invested in a successful outcome. Overcoming money troubles is nothing but hard work. Between the emotional turmoil, negotiations with disagreeable creditors and life changes that need to be made, you need extra effort.
Effort begins with doing things when you said you would do them, calling people when you said you would call, sending information when you said it would be sent, etc. Effort is tough and sometimes unpleasant, but you must make an effort to achieve a good outcome, otherwise you’ll hate the results and be unhappy.
F is for “Fear”
Aren’t there an unlimited number of things to be afraid of? Fear robs us of our intelligence and cool, calm approach to tackling problems. Unlike panic (found in the P’s), fear is an insidious, persistent and strange friend that often leaves us abandoned by the side of a less-traveled road, feeling lost and alone. Fear leaves us standing still when the rest of the world is racing past. Fear is a good friend of depression and is waiting to introduce you.
The problem with fear is that it clouds our judgment. It makes us focus on the next ten minutes and not the next ten months. Quite simply, fear makes us think of doing stupid things. Panic, on the other hand, seduces us to actually follow through on those ideas.
Often we feel afraid because we fear our “security” is threatened. When we feel the bedrock of our lives is in question, jeopardy or danger, the fear inside of us makes our whole world feel like it is made of Jell-O. It constantly feels like at any given moment, our existence is going to slide off the wobbly gelatinous mass and plummet into the bottom of the bowl. The reality is that security is an illusion; a superstition; a comforting idea.
If you really took stock of how immensely unsafe our existence is day to day; if you thought about how tomorrow could actually be your last day in this life, you would realize that the things you are afraid of right now are probably insignificant compared to the bigger picture.
For example, on the scale of life I would be less worried about facing financial problems than I would be about something terrible, traumatic or tragic happening to my wife and daughter, whom I adore. In the grand scheme of things, while financial problems might alter my life, they won’t end my life or the lives of my loved ones.
Fear is often neutralized by faith. You don’t have to be a religious zealot to be faithful, you just need a belief in a higher power. It’s amazing how quiet fear can become when offset with a little prayer and meditation.
F is also for “Flexibility”
A real gem of a technique to beat debt at its own game is to be flexible. Far too often people have a path all mapped out in their head that they think is going to eliminate their money problems. But life doesn’t work in a linear fashion. Life is not a straight path; it’s full of twists, turns, unexpected drops, nooks and crannies. I guess life is like an English muffin. Anyway, while our internal fears and apprehension make us desperately seek what appears to be the simplest route, they also lead us to make mistakes that will impact our lives deeply.
To escape the grip of problem debt you need to be malleable, truly adaptable. Accept the fact right now that when you look back at this time in your life, the path you will ultimately follow will be very different from the path you initially envisioned.
Being flexible also means that you will need to be open to new ideas. For example, the knee-jerk reaction most people have when they get into money trouble is to get a loan to pay off the debts. Here is a fact of life: You can’t borrow your way out of debt. Getting another loan may be a good tool to use as part of a larger master plan, but if you originally found yourself in financial trouble because you were self-medicating with subconscious spending, another loan may simply be the final nail in your financial coffin.
G is for “Gambling”
I bet you didn’t expect to see this here (I couldn’t resist). Gambling is one of those last-ditch efforts that people engage in to save them from the cliff of debt. As the financial pressure increases, it is not uncommon for people to find God and the lottery on the same day.
Gambling can be a lot of fun as entertainment, but the odds are horrible that you will be able to place a small bet and win big enough to get out of the financial jam you are in. If you want to play the lottery, fine. But remember, your odds of winning are not increased by any significant amount if you buy ten tickets instead of one, so don’t waste your money.
The other problem with gambling is when it is the cause of your debt. A few years ago, a man who had lost a lot of money gambling could not bear the thought of telling his family of his weakness and losses, so he went home and killed them.
The house odds are never in your favor for you to gamble your way out of debt. Why do you think so many huge multinational corporations have built casinos in Las Vegas? So they can lose money to people like you? Just take a look at the profits they make and you will see who are the only winners in “Lost Wages.” Don’t try it. Don’t do it.
If your debt is the result of gambling, please seek professional help for your problem or at the very least attend a local Gamblers Anonymous meeting. It’s free and they can introduce you to a support group that will be very understanding about your situation. People from all walks of life attend GA meetings. Don’t be afraid. Just go.
G is also for “Garnish”
I’m not talking here about decorating food with small colorful or savory items. (Bam!) I’m talking about someone else taking a chunk of your paycheck before you ever get your hands on it.
When someone garnishes your wages, usually your employer is involved. They are ordered to withhold funds, which are then sent to someone else before you ever see them, such as a creditor who has sued you in court and won a judgment against you to enforce payment.
By the time you reach a point of getting your wages garnished, you’ve had your head in the sand for quite some time. I can’t think of a single case where someone woke up one day and discovered, to their surprise, that their wages were garnished.
Garnishment takes time and there is plenty of notice. Of course, if you don’t do anything about your financial problems, they can turn to lawsuits and garnishments. The big lesson here is to avoid garnishments, come up with a plan, take action and try to resolve your troubles as early as possible.
H is for “Help”
I can tell if someone is going to struggle with problem debt or have a good outcome within the first 30 seconds of talking to him or her. The key is how much help people are willing to seek and accept.
Money troubles are not much different from dealing with a bad fuel injector in your car or removing an appendix. You get the point?
There are plenty of things you can try to tackle on your own, but it doesn’t mean you should. Take bankruptcy, for example. I always prefer to see people go to a qualified bankruptcy attorney rather than trying to do it themselves, in the same way that I’d rather see someone go to the dentist for a filling or to a surgeon to have their appendix removed.
Don’t try to wander around in unfamiliar waters. You might drown. Get a guide to show you the way.
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(Pages 1-32 show above.)