Approach Consumer Debt as a Symptom Rather than a Problem

Debt as symptom

“I’ve got a debt problem.”

This is something that many of us have heard — and probably have even said. I remember when I used to refer to my own “debt problem.” After awhile, though, I realized that debt wasn’t my problem at all.

No, consumer debt isn’t the problem. It is only a symptom of the problem.

Debt is an Indication of a Larger Money Management Problem

When you are loaded down with high-interest consumer debt, from credit card spending or other types of spending, it’s an indication that you have a larger money management problem. In this case, debt is a side effect of your true financial problem, which is that you are spending more than your income.

Instead of trying to solve your debt problem, you need to look to the underlying cause of debt. Are you spending too much money on things that you don’t need? Do you make purchases on impulse rather than waiting until you have saved up (or budgeted) for them? Has your lack of an emergency fund led to an inability to meet with unexpected expenses?

Take a step back and honestly evaluate your financial habits. In many cases, the problem has to do with money management and the debt is just a symptom of that. Once you see what behaviors are resulting in debt, you can begin making changes.

Change Your Behaviors

At the same time you begin a plan to get out of debt, you need to also recognize any problematic financial behaviors and change them. If you are spending too much on things that don’t matter, prioritize your spending and cut out the things you don’t care about.

If you want to be able to do more things, but you don’t have the money, find a side gig for extra income rather than pulling out the credit card. There’s nothing wrong with acknowledging what you want from life, and then figuring out how to get it. But you need to figure out how to get it without going into debt if you want to achieve financial freedom.

Make an effort to change the habits that are at the root of your financial problems. Once you change the way you relate to money, and stop the money management mistakes that result in debt, you are ready to begin a debt paydown program in earnest.

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Stay Out of Debt

Changing your behaviors is so important because you will need to stay out of debt once you pay off your obligations. Sometimes it can be hard to keep making progress, and instead people find themselves right back in debt within three or four years after first becoming debt free.

Often, this relapse comes about because nothing about the way they managed their money changed. If you treat debt as a problem, once you eliminate it, you will go back to the same practices that resulted in debt in the first place. If you recognize your money management issues as the problem, you will change the outcome.

By tackling the problem of poor money habits, you change the way you deal with money on a more permanent basis. After your debt is gone (the symptom subsides once you cure the underlying disease), it stays gone because now you are engaged in healthy financial practices.

Bottom Line

As hard as it is to pay down debt, it’s even harder to change your financial habits. However, if you want to pay off your debt, and avoid going into more debt in the future, you need to assess and change your behaviors. Make lasting changes to the way you handle money, and you can ensure that debt never troubles you again.

Image credit: Images_of_Money

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  • Seems a bit absolutist in its treatment of debt. Not all debt is bad. I am very happy with my student loan and mortgage debt right now. It’s all at 4% or less, and I’m paying it off at a reasonable rate. This debt allowed me to earn multiple degrees which led to a great job which led to my ability to qualify for a mortgage that allows me to live in a nice house in a safe neighborhood for my family. I would not be where I am today without access to these financial instruments. Furthermore, with the rates one can get today and the tax advantages, I would be comfortable paying the minimum on these debts and investing the excess capital because the cost of that capital is actually lower than the dividends on many stable Fortune 500 companies.

    Other forms of consumer debt like credit cards, installment loans of payday loans are of course another story.

    • Christian Losciale

      I think Miranda was focusing on the latter debts you mentioned. Long-term debts are one thing, and often due to an investment (e.g. education or a home). But certainly people who have spending problems need to change their habits.

      -Christian L. @ Smart Military Money

    • I would agree with you and with Christian’s comment. Miranda’s post is about consumer debt – referring to debt that has accumulated from consumer spending (mostly via credit cards or perhaps auto loans). You’re absolutely right that student loan debt and mortgage debt can be “good debt” and help you achieve goals and new opportunities that would not otherwise be attainable. It sounds like you have a very good way of thinking about this topic. If you want to write a guest post about this for our blog, let me know!