The Right Ingredients for Overcoming Debt

June 06, 2012

Although there are some that say the recession is behind us, there are still others that are continuing to deal with its effects. I recently had an opportunity to speak with a gentleman who finds himself behind the 8 ball when it comes to debt. This is not the first time I’ve received a call like this, nor will it be the last, but what makes this particular call stand out is the way this person has decided to approach the situation. His attitude and determination should be a lesson to us all. Here is his story:

Henry (not his real name) is perhaps a lot like you and me. He’s married, has a 17-year old son, and takes pride in his ability to take care of his family. He saves for retirement, pays his bills on time, and maintains an excellent credit score. Over the course of the last several years and through a series of bad decisions, he now finds himself with a mountain of debt–$79,000 worth to be more precise. Henry is starting to feel the weight of this debt, and realizes that he cannot continue to service it much longer. He is compelled to pay back what he has borrowed and with a contrite heart and a humble attitude, is reaching out for help.

When I asked Henry if the debt was a result of an event, such as a job loss, or something that had occurred over time, he confessed that it was his fault. Like in many households, he took responsibility for handling the finances as a husband and father. When the spending continued to exceed the income, he would tell his wife and son that things were under control, too embarrassed to admit the truth of the situation. Finally, the reality of the situation could no longer be kept a secret, and eventually he had to come clean with his family. Graciously, his wife agreed to stand by him, and together they began to make necessary sacrifices to try and keep their household financially and emotionally above water.

I told Henry that it was going to be a very long, hard road and that if he really wanted to overcome this, it would require patience and persistence. He explained to me how important it was for him to do this as a way of saving face with his son. He was ashamed of how he mishandled the household finances, and he didn’t want his son to see him as a failure in this way. That’s what prompted the call to his employee assistance program (EAP). He knew what he wanted to do, but he needed to know what steps to take to achieve it.

I explained to Henry how he had already taken the first step by reaching out for help, but he will have to follow through on the rest of the steps if he is going to succeed. For now, he needs to gather together all of his information on his income, expenses, and debt, so that we can begin working on a plan to repay his debt. He and his wife will have to decide which expenses must stay and which ones must go. Eventually, Henry will have to reach out to his creditors to see if he can negotiate a lower interest rate or possibly even consolidate. There is a lot of work to do, but I am certain Henry will get it done.

The rest of the story is yet to be written, but I am already seeing the following signs of success:

#1 – Taking ownership of the situation

Henry could come up with any number of excuses as to why things are the way they are, but clearly he acknowledges his own contribution to the circumstances. Sometimes our circumstances are the result of unforeseeable events, but even then we must take ownership of what we did, or did not do, to be prepared for emergencies or unexpected things.

#2 – Finding the motivation

Henry is doing this as much for his wife and son as for himself. Knowing that overcoming financial obstacles will be tough, we need to find something to motivate us to make the necessary changes and sacrifices that are often required. Maybe for you it’s attaining a lifetime goal or creating a legacy. Whatever it is, use it to remind you of why you’re willing to do what it takes to get it done.

#3 – Reaching out for help

Henry realized that this problem was more than he could handle on his own, so he swallowed his pride and he reached out, first to his employer, and then to his EAP. It may be difficult admitting you need help (especially if you’re a man), but the right kind of help may not only help you accomplish a goal, but enable you to reach other goals or even perhaps teach others how to reach their goals. The best help is not having someone else do it for you but having someone provide you the guidance that allows you to do it yourself.

#4 – Having the right attitude

Before I hung up the phone, I asked Henry if he was prepared to do what needed to be done, and his response was simply “whatever it takes.” Having the right attitude, along with the right guidance and motivation, will increase your likelihood of success by leaps and bounds.

I imagine that Henry’s story is not unique, but his attitude is refreshing. Sometimes I get calls like these where the caller is looking for a quick fix to the problem. Maybe they think I’m going to lend them money or tell them how they can settle their debts without severe consequences. In reality, many problems can only be fixed through hard work (if only getting out of debt were as easy as getting into it).