Sunday, September 23, 2012

Are You Addicted to Debt

Are you addicted to debt? I used to be.  I was a shopaholic. I could not go into a store without buying something - a pack of gum, candy, candles, a pair of socks, I had to buy something.  After some years I later realized I was trying to fill a void.  It can be difficult to realize that you are addicted to debt; many people ignore the signs or are in denial.  You have to identify the root cause of the problem which usually stems from childhood or a traumatic experience.   Once you admit you have a problem and examine the cause, and then you can begin eliminating the bad behavior. 

It is easy for Americans to get in debt because America was founded on debt.  During the American Revolutionary War debt grew to $75,463,476.52 by January 1, 1791. The American debt reached $1 billion in 1863. Between 1980 and 1990 the debt reached approximately $780 billion.  Debt surrounds us.  According to the Federal Reserve, the total household debt at the end of 2010 was approximately $13.4 trillion - which meant consumers owed almost as much debt as the federal government.  According to John Ulzheimer of, more credit cards are issued in this country than another country, approximately 700 million.

People get into debt to fill a void in their life such as living paycheck to paycheck, loneliness, anger, poverty, overweight, sadness, depression, etc.  There are many kinds of debt addiction:  shopaholics, emotional spenders, compulsive spenders, gambling addiction, and more.  However, psychologists will disagree and state that being in debt is not an addiction.  I use the term “debt addiction” to highlight the problem with debt.  

If you constantly accumulate debt because you decide you won’t pay the bill, you don’t care about accumulating debt or you accumulate debt because of a negative situation that occurred such as getting laid off, being sick, or losing a loved one, you may be addicted to debt. Those addicted to debt don’t care about the consequences of their purchases, they are only concerned with the temporary instant gratification they feel when making a purchase.  Here are some signs that you are addicted to debt:

  1. Do you go shopping with money already set aside to pay a bill?
  2. Do you buy an item even if it is not in your size or buy items on sale that you will never use?
  3. Is your home filled with unused items you purchased or items that still have the tags on them?
  4. Do you pay your bills with a credit card, constantly pay late charges or spend extra money that could be used to pay a debt to buy something else?
  5. Do you rationalize your poor spending habits by saying things like "I work hard I deserve it", " I can buy whatever I want", "I just had to have it", "I don't have to answer to you", "I want it now", or "I can buy it with my credit card"?
  6. Do you buy items based on how you feel?
  7. Do you transfer credit card balances?
  8. Do you have a negative balance on your savings or checking account?
  9. Do you live paycheck to paycheck?
  10. Do you buy more than you need (home, car, clothes, boat, appliances)?
  11. Do you have multiple credit cards which are all maxed out?
  12. Do you take out payday loans or cash advances to pay your bills?
If you are addicted to debt here are some tips to help you.

1.  Being honest and admit there is a problem.
  1. Speak to family and friends so they can offer moral support.
  2. Contact a professional.
  3. Surround yourself with at least 3 people who are in a better financial situation.
  4. Pay your bills first.
  5. Get a receipt each time you make a purchase and keep it.
  6. Track spending.  Take all of your receipts from your credit card purchases and reconcile the receipts daily, weekly or monthly to see how you are spending your money.   
  7. Avoid shopping when you are emotional. 
  8. Go to the bank and take out the amount of cash you need for the week.  Once you spend that amount don’t get out any more money or use your credit card unless it is an emergency.

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