Do you have the energy to fight debt? Part 2

May 292008

In part one of we spoke about the way your thoughts can drain your mental energy leaving you in no fit state to tackle your debts. The tiredness associated with tackling your debts is primarily a mental tiredness. As mentioned in part one this mental tiredness is related to the mental clutter in your life. Clear the mental clutter and you will free up mental capacity and mental energy to allow you to focus on your debts. It’s not just your thoughts that can drain you though. Your environment plays a big part also.

Is your home clean and clutter free?

I don’t mean to pry but is your home clean? The reason I ask is that you are less likely to want to sit down and do some work on your finances if your environment is messy and its stressing you out. Don’t get me wrong – I’m not a cleaning fascist. I’m just making the point that a clean and clutter free environment will help clear your thinking. I’ll give you an example. If I don’t clean the kitchen and put away the dishes from the night before then the next morning I get a little stressed. Here in front of me is work that I should have done yesterday. I am reminded that I have been lazy and that I have a pile of work today and next thing you know I have the whole Chicken Little complex that the sky is going to fall.

If your home is cluttered your thoughts will be cluttered and if your thoughts are cluttered you are going to suffer from inertia. Then it’s back to square one. Check out this link for information on how to declutter your home. Discover organisation

Sorting through the paperwork

In theory this section deserves an article by itself but I want to make a few key points here.

Part of the problem with tackling your debts is the lack of a clear picture as to your income and expenses. To begin with most people don’t know where to locate the paperwork that relates to their finances. A lot of it gets lost in the clutter of their homes – some gets thrown out in the thrash, some just disappears.

As a very simple action that is easy to implement I suggest you get a big cardboard box. In this cardboard box place absolutely every piece of paperwork that even remotely relates to your finances. So into the box goes bills, bank statements, credit card statements, till receipts, credit card receipts, letters from banks, credit card offers, loan offers. Do this for a month but don’t bother looking at the contents of the box for that time. Just continue on as you would normally do, paying the usual bills that you would pay.

Make sure to give yourself a month. This is important for a number of reasons. First off you will need a months worth of financial information to help you form a budget and get a clearer understanding of where you are financially. Secondly you will need at least a month to help you move mentally from a place of resistance and inertia to a place of action. You will need to build up the mental strength to tackling the contents of the box. Especially because you will probably not like what you find in the box.

Virtuous circle

To give yourself the best chance of finding the energy to tackle your debts you need to create a virtuous circle. A virtuous circle is the opposite of a vicious circle. With a virtuous circle each positive action reinforces the existing positives and in turn creates more positives. Compound interest is an example of a virtuous circle. You can earn interest on the interest that you have already earned.  Even Einstein had a lot to say about compound interest calling it “the most powerful force in the universe”. A virtuous circle can be a very powerful thing. If you manage to get even the smallest virtuous circle going in your life then the effects it has will be profound. How to complete the loop of your virtuous circle? Well that is entirely up to you.

Do you have the energy to fight debt? Part 1

May 282008

When I read personal finance books I generally feel like the life is being sucked out of me. I am hit by a wave of tiredness. Part of the reason why has to do with the fact that most Personal Finance books are dull. They are full of facts and figures and they can be well written but they make what is already an unappealing subject even more unappealing. The thing is I actually like personal finance and I enjoy reading about new ideas in relation to personal finance. But if I am honest most of these books put me to sleep.

If these books put me to sleep I can only imagine what they are doing to people with no interest in personal finance. People in debt may have been recommended to buy a certain book as a quick solution to their debt problems. However it is likely that some of them will become even more frustrated and depressed if they are faced with a book that is boring.

It’s not just the personal finance books that cause people to go into a trance. The whole field of personal finance is almost like a dirty word to most people. There seems to be an inbuilt resistance to tackling financial problems – particularly debt problems. Most people just don’t want to know, sure they’d like to have all their financial problems solved but when push comes to shove they are not really bothered.

You come home after a long hard day at work, you’re tired and hungry. The last thing you want to do is sit down and go through the process of creating a budget or sorting your bills. I know I’ve been there. In fact it can get even worse because when you know that you should be doing work on your personal finances you start to feel guilty. But no matter how guilty you feel you still can’t overcome the inertia that has you sitting in front of the TV all night.

The weekends aren’t much better. You wake up on Saturday morning full of confidence. You assure yourself that this weekend you will tackle your finances. By noon on Saturday you still haven’t done anything but you are still confident – there’s plenty of weekend left. By six on Saturday you decide to enjoy your evening and you will sort your finances tomorrow. Sunday is not much better. It passes by so fast that you don’t even have time to think. Its eight o’clock before you realize that you forgot to look at your finances. Ok you say to yourself I’ll do it one night during the week. Unfortunately that one night during the week never happens. Your finances remain the same.

Now the scenario above is a bit general but it outlines nicely the way most of us manage to push looking at our finances as far away as possible. I’ve always had a problem with looking at my finances. Ironic I know but true. I often wondered why this was. The reason I came up with is that I was tired and the thoughts of looking at my finances made me even more tired. For me looking at my finances was too much like work.

Do you feel the same? Do you feel that looking at your finances is too much like hard work? Well you’re right it is like work and it’s certainly not easy. So how do you overcome that inertia?

Clear the mental clutter

Before you can tackle your finances you need to tackle the mental clutter. The feelings of tiredness and dread come primarily from the one hundred and one thoughts going through your mind at any one time.

The simplest way to tackle this mental clutter is to write a list. On this list write down all your thoughts – however random. In fact the more random the better. You will feel immense relief once you get these thoughts down on paper. You are in effect verbalizing your problems, hopes, fears, dreams and worries. This allows you to then think about your thoughts in a more structured and logically fashion. Do this for a week – everyday after you get home from work. You will be surprised at difference it will make. After the week is up you will probably notice a pattern to your thoughts. This pattern should then be used as the basis for an action list.

I know the dreaded ‘A’ word – action. But trust me you’ll enjoy this. Ok so you have your list of thoughts and you have highlighted the recurring thoughts. Now what I want you to do is to write down three fun and enjoyable actions that you can take that will help you solve your problems or resolve a particular situation that you are thinking about. For example if you are stressed at work – you could invite a close friend at work for a coffee or a beer and you could have a good rant about the situation. You could take your companies logo and put it on a dart board and fire darts at it for an hour or so. The list is endless but the emphasis has to be on fun fun fun. You have to take actions that will allow you to let off steam and enjoy yourself.

So what has this go to do with my debt and personal finance? Well the aim is to tackle the problem of your inaction in a roundabout way. For most people the thoughts of diving head first into their financial problems can be too much. It was financial neglect that caused the problem in the first place and this is not going to be solved overnight. The goal here is to clear your mental clutter and get the cogs of action turning in your brain. You’re more likely to take action if it seems appealing so the key here is to make it appealing.

I mentioned it in previous articles but one technique that I find really useful is NLP or Neuro Linguistic Programming. A bit like brain surgery without the actually surgery. Here is a link to an ebook that comes highly recommended. Success with NLP

In Part 2 of this article I discuss the impact of environment and how it can slow you down mentally and impeded your progress.

Debt and Clutter – one solution for both

Feb 092008

If debt has taken hold of your life and you just can’t seem to see a way out then it might be time for drastic action.

Do you feel stressed when you get home and are confronted by clutter? Do feel like the walls are coming in on you? The thing is you probably have too much stuff. Things like too much clothes, too many shoes, too many magazines and too many gadgets.

I have often found myself wanting to scream from the top of my voice, “Why do we need all this stuff?” I don’t know where the line between buying something we actually need and just buying something for the sake of it began to blur. It’s almost like we sleep walk into buying stuff that is completely unnecessary. Help!!!! I’m actually getting a little stressed even thinking about it. How often have you gone to the ATM, taken out $50 gone to buy some essentials and then realising that you have about $7 when you get home? When you try to piece together where the money went you realise that you spent most of it on unnecessary items such as magazines or lottery tickets.

The feeling of regret this brings when you realise that the enjoyment and value that these items bring are very short lived. Sometimes they actually bring negative value for example soda will eventually rot your teeth so in the long run you will pay a lot more in dental costs than the initial cost of the can of soda.

Clutter on a grand scale

An old friend from college recently got in touch with me. It was great to hear from him. The one thing I remember most about him was that he was a pack rat and a very messy individual. I would dread going around to his apartment because I would have to fight with the half eaten pizzas and beer bottles for a place on his sofa. He also had lots of stuff – things like lava lamps and dozens of magazines scattered about randomly. I passed it off as the typical student lifestyle – one from which my own was not too far removed.

Anyway a lot had happened to him in the last couple of years. One major event was that there was a fire in his house about two years ago. He lost almost everything he owned.

My heart went out to him as he explained what had happened. Anything that did survive the fire was too badly smoked damaged to keep. While he had insurance the amount he received for the lost items was nowhere near what he paid from them. He would find it very difficult to replace all the lost stuff. But then he said something that stunned me and when I think about it makes perfect sense.

He said that there was one huge positive from all of this.

All the stuff that he lost was just that – stuff! old magazines, books, DVDs, computer games etc.  He had been meaning to throw out all the stuff for years and in one fell swoop had it done for him. He said that he felt an immense sense of freedom. Yes initially he said he was devastated from having lost so much of his stuff and indeed there were personal items of sentimental value that he lost but when he stepped back on got perspective on the situation he found that.

I’m lucky to be alive and able to create new photos with my friends and family.

I’m free of all the clutter in my home life that was like an oppressive weight around my neck.

Is that attitude too much like Pollyanna’s? I don’t think so. Ok it’s true that the fire was a traumatic experience and thankfully no one was injured but every cloud has a silver lining. My friend had been set free from all his clutter.

You see the problem was that the clutter was not only messing up his home it also came with a lot of emotional baggage. My friend told me that he would look around his house and he would get very stressed as he did not have the motivation or focus to clear out the clutter. The clutter was effectively crowding him out of his home!

Two years later and he is a changed man. He vowed not to let clutter take over his life again and he is winning the battle. His clean minimalist house almost puts me to shame. He explained to me that he now feels about 100 times freer than he did when he had all that clutter.

So how does all this help you with your debt situation?

Now I’m not for one minute suggesting that you go all Backdraft on your stuff and burn your house down. The 10 years in prison would make the whole process very expensive and lord knows we are in enough debt already without having to pay our debt to society with jail time. Ok so arson is ruled out. What next? Simple really…eBay!

My advice is that you sell everything in your life that is not an absolute necessity. Everything. You need to be ruthless.

The biggest problem is not the physical act of taking photos and putting them on eBay then sending the item to the buyer. No the biggest problem that you are going to have is to overcome the emotional attachment that you have to this stuff. It will take time but once you commit to it you have to see it through because now you are presented with a great opportunity to solve two problems at once.

Two problems solved in one go:

Problem one: The mayhem that you call home.By decluttering and selling all the excess clutter that you do not need you are creating a clean and clear living space for you and your family. No longer will you have to worry about what you friends will think when you invite them over for coffee.

Have you ever seen those house makeover shows that show the before and after pictures of someone’s house? From what I see the biggest problem in most of these houses is the clutter. Sure the décor could do with updating but the majority of them seem to be so cluttered. The solution is obvious really – get rid of the clutter.

Problem two: That debt burden that is weighing you down.

So having read about clutter you may be asking what on earth has this got to do with my debt and how will it help me solve it? Well the benefit of clearing out the clutter is that you will get a much needed cash injection from the sale of your items on eBay. Ok this will take time but its going to take you time to pay off your debts anyway and this is a piece of very simple action that you can take to help you tackle your debts.

When you sell an item on eBay the chances are that you are not going to get what you paid for it. Do not let this logic stop you from selling your clutter. The way you have to think about it is ‘How much is it costing me to keep this item?’ The costs of keeping an item come in a number of varied ways but the primary one is emotional. Each day when you return home from work you are constantly reminded what you have spent your money on and that you are in debt. So I say clear it all out.

Why eBay? It doesn’t have to be eBay. It can be any marketplace where you feel that you will get a fair price for your clutter. I use eBay as an example because it is one of the biggest marketplaces in the world.

Strip your home life down to the bare essentials, cut away the excess. Sure it’s going to be tough emotionally because like your debts this clutter has taken time to build up. Above all else and even if you take no action after reading this article I want you to see the causal relationship between the clutter in your house and the debts that you owe. The chances are you incurred a significant part of your debt by buying things that at the time you thought you needed but in retrospect they were not needed at all.

Like paying off your debts, clearing out the clutter will take time. Give it time. Give it as long as it takes. You want to build a better brighter future for you and your family? Then act now.

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