debt consolidation

Escape Mechanisms

by mike on March 7, 2010

Especially these days, you may find yourself in a financial mess.  It could be the result of a layoff, a major financial event (a car totaled, new furnace, etc), or  just a lack of planning.  Either way, human nature is to stick your head in the sand.  It is much easier to avoid what is in front of you and  use an escape mechanism instead.  Let’s take a look at some of these escape mechanisms and why they are dangerous and why they will only make the situation worse.

1.     Avoiding reality. This is the most common, especially when you own your own business.  If you have a business, you have dumped your time, money, sweat, heart, soul, hopes, and dreams into it in order to make it successful.  It may never have been successful or something changed and it is no longer successful.  Either way, there is an emotional attachment unseen by any other force because all that has been poured into it.  This will cause you to hold onto it long after it should have been let go.  Usually, there is a false hope that some sort of miracle will happen and the business will be saved.  This is especially true of us guys.  Many people have done extremely stupid things to try and prop up a failing business.  At some point, you must face reality and realize that taking care of your family is the most important thing.  Going deeper and deeper into debt while hoping things will turn around is not a good plan.

2.     Little white lies. This is the most dangerous of the escape mechanisms.  It usually accompanies the first one: avoiding reality.  Not only do you avoid reality yourself, you start telling little lies to your loved ones to hide the situation.  “Sure we can afford that”, “once we get this one customer, the business is going to be doing great”, “everything is fine”, “I’m sure I’ll get a raise soon”.  All of these little white lies are an avoidance of admitting to your spouse that something is wrong.  Usually it comes from being afraid that your spouse will be upset and disappointed with you.  The problem is that the ruse cannot last forever.  Something is going to give at some point.  Once that happens, then there is a much worse problem on your hands.  Your spouse can no longer trust you and the hurt and resentment can run very deep.  Do yourself a favor and always be on a plan together so that everyone is on the same page and in the open about the situation.

3.     Spend more money.
Some people when facing a collapse buy something huge to make themselves feel better: a boat, a car, or go on a nice vacation.  It can be seen as one last thing to enjoy before the house falls in.  The attitude of “well, we’re going down anyway we might as well do something fun” will not help the situation.  It will make it worse and if you are looking at bankruptcy, there can be repercussions if the court believes you did something to avoid standing good for your debts.      Another escape could be just to pull up and move away to “start over”.  It won’t solve anything as your financial problems will just follow you.  Not only that, you won’t have faced the issues that got you into the mess in the first place.  Fixing the root of the problem is the key to getting back on your feet.

4.     Debt consolidation loan.  I won’t even get into all the reasons this is a bad idea.  I could write a whole article about that.  Oh wait, I did: refer to “A CONsolidation Loan Story” for the reasons why they are a bad idea.  Click on the link below for the past articles section to find it.

Facing up to the financial reality you are in is obviously the best way to handle your situation.  That is much easier said than done.  You must set human emotions of guilt and embarrassment aside.  One of the most powerful tools in your arsenal is control.  You can only gain control over the situation if you truly examine where you are at and where you want to go.  Once you have hope and control, you can start righting the ship and be on your way to financial success.  Unity and harmony in your marriage will soon follow.


A CONsolidation Loan Story

February 27, 2010

The most asked question I get from clients and potential clients is about debt consolidation loans.  Many people see it as a way to solve their debt problems.  After all, why pay 15 different payments at high interest when we can consolidate them into a consolidation loan as a second mortgage which will reduce the […]

Read the full article →