Healing the wounds of Debt.
In our blog today, we talk about “healing the wounds of debt”. Many of us are struggling with debt and wondering how we got it. Some of us don’t even remember the freedom of not owing anyone. We discuss how your relationship with money resembles the relationship your parents had with money and the relationship their parents had with money. I share how spending habits are deeply rooted into your subconscious and changing them requires time and patience. Being financially healthy and fit is not just about fixing your budget, but changing your entire perspective – the way you see and understand money. Often we spend our monies without being mindful of how we are spending the mind. This blog helps us to be mindful so that we are always aware of where we are directing our money to.
What is debt?
Academically, “Debt is something, usually money, borrowed by one party from another and is used by many businesses and individuals to make large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.”
Unfortunately the academic definition of debt is very romanticized, we don’t get the real picture of what debt really is. The issue of debt is quite deep, it goes on for generations, for most black families, they inherit the legacy of debt and pass it on to the next generation. Each time bigger than the previous generation. We are a generation who were produced by people who were forced into slavery, there is a part of us that still has slavery that we need to heal from. The belief system passed onto us were the belief system that was forced onto our great-great parents and at the time they had no voice or power to stand up for themselves and question certain things.
The most common forms of debt are loans, including mortgages, car loans, personal loans, and credit card debt. Under the terms of a loan, the borrower is required to repay the balance of the loan by a certain date, typically several years in the future. The terms of the loan also stipulate the amount of interest that the borrower is required to pay per year, expressed as a percentage of the loan amount. Interest is used to ensure that the lender is compensated for taking on the risk of the loan while also encouraging the borrower to repay the loan quickly to limit his total interest expense.
Good & Bad Debt
One thing we lack is teaching people about perception and understanding that we are individuals with different needs that satisfy us or take us forward. Growing up we are taught that buying a house is a good example of what good debt it. So then one finds themselves in a situation whereby you purchase a big house that you don’t really need because maybe you only have one child, the rest of the house is turned into storage space, and you cannot rent it out to get some kind of income from it. So again it goes back to perception and those beliefs, which often are misguided.
If something does not give you peace when you go to bed at night, for me that is bad Debt. We need to work on our individual perceptions, who you are as an individual, what you want and how you define fulfilment without selling your soul to the monster we call Debt. If it’s Debt you get into for recognition, or just to keep up appearances and try to fit in, my advice is that don’t go into that kind of debt. Stay away from it. Remember that at the end of the day, you have to carry that debt and not the people you are trying to “please”, so that people will say you have “made” it.
In summary it’s really about looking at your life and your goals and asking yourself if what you are doing is bringing you closer to what you may define as success for yourself, is it really drawing you closer to your goals or are you just surviving?
Why do we find ourselves in repetitive cycles of Debt?
What causes one to put themselves in debt in the first place? The subconscious mind controls 80% -90% of our outcomes but often we are not aware of that because we are never taught about such things. There are psychological reasons behind debt, for example:
Most of us carry childhood experiences that unfortunately have a negative impact on our lives. They inform our decision making and perception on certain things. Because are poorly informed, the decisions we make are detrimental to us if we do not take the time to seek help and heal.
Underlying factors that may cause childhood wounds.
- Lack/little of financial education
I speak for the majority of people out there when I say that most of us do not have the understanding of financial management. You were lucky if you grew up in a family that spoke about money. I mean how could you speak of money knowing very well your conditions showed lack of money lol. How do you as an adult make sound financial decisions if you don’t have that knowledge, you cannot do better than what you don’t know right?
- Growing up in a very financially strict home
A person coming from this kind of background, is very compensating. You find yourself buying everything you were deprived of when you were growing up because you were told there’s no money to waste every time you asked for something.
This is a scenario where we find ourselves in debt out of our own doing. Despite the knowledge of what our income is versus how much we spend, we just can’t seem to avoid the temptation to go and look for every “Sale” signage out there. Your mind will always tell you that you are “investing” in yourself, after all you work hard, and you deserve to spoil yourself a little, yeah right!
Come month end, because you have given in to every store advert that says you have so much buying “power”, you can spend, but what you are actually spending is someone else’s money, and when the time comes for you to pay back, there’s an interest.
The fear of money
People in this category find themselves wanting to spend their money as soon as it appears. It is very common with new graduates. This behaviour continues for months and the mind ends up registering it as something that’s normal to do. This money phobia comes from negative experiences one may have had before.
How to get out of Debt
Getting out of debt requires that you desire it and start to identify your problem areas as far as your spending habits are concerned.
- Seek help, don’t try to get out of debt on your own. Find someone you can be accountable to, the journey requires commitment and discipline.
- The best thing you can do for yourself is to learn to pay what you owe, at the agreed time. Don’t postpone it, always ensure that you meet your instalment obligations on time because it reduces your interest.
- Understand who and how much you owe.
- Create a spending budget every month. Know what you are spending on and how much.
- Minimize your spending habits