When we are faced with a difficult situation, sometimes we may not be mentally ready to accept a few wise words of advice. As the saying goes, “Misery loves company,” and very often we secretly prefer to receive sympathetic gestures than to take positive action to eliminate our challenges.

I have found this reality to be very evident with persons who are suffering from money problems. Having experienced many of my own financial crises over the years, I completely understand this ‘woe-is-me’ mindset which tends to trap a person in a state of helplessness and negativity.

Of all the money predicaments that you can encounter, chronic indebtedness is perhaps the most challenging. There is nothing as depressing and defeating as facing unpaid bills, past-due notices and demand letters, and worrying about the legal consequences of your inability to pay.

Breaking bad debt

However, as this week’s snippet of Jamaican wisdom notes, “Poun’ a fret can’t pay ounce a debt.” In other words, no amount of fretting about your money problems can pay even a small amount of your obligations. Worrying will only cause you to get sick, which in turn will cost you more money.

If you’re one of the many thousands of Jamaicans who are reeling under the burden of debt, what can you do about it? First, put an end to your pity party, as the proverb advises, and try to think positively. Next, you need to resolve that you will do whatever it takes to fix the problem.

The solution to indebtedness is not easy, because it requires a drastic change in attitude towards managing your money. Many people take on debt because they are totally clueless about where their money goes and they don’t know how much income they need to earn to pay their bills.

Achieving money awareness

Despite the havoc that debt has wreaked, you need to set the right foundation to rebuild your life. This starts with creating a detailed budget which can allow you to determine all the expenses that you will incur over a year, and work out a target amount that you need to earn to manage your bills.

The budget won’t necessarily help you to find the money to pay your expenses, but it will bring the awareness that you need to prevent money mistakes in the future. You can download a spending spreadsheet at financiallysmart.org, which will provide all the steps for making a proper budget.

You also need to think back and try to understand why you got into debt in the first place. Before you can apply the right solution to fix the problem you need to address the reasons why you are borrowing. Knowing your vulnerable areas will help you to avoid these pitfalls in the future.

Fixing a debt crutch

If you borrowed money to plug the holes in your budget, you must recognise that debt has made your problem worse. As we discussed last week, you can only fix a budget shortfall by cutting back or earning more. Ask yourself: “How would I deal with these bills if no one would lend me any money?”

To reduce your indebtedness, you need to find as much money as possible to make a significant dent in your loan balances. Cut back on discretionary spending and as painful as this might be you will have to sell a few of those valuables.

Once you commit to cease borrowing for budget support, then debt consolidation may be a viable option. A consolidated loan may reduce your interest rate and lower your monthly repayments. Even if you extend the life of your loan, it should not be so burdensome to pay every month.

Overcoming debt addiction

If you are not convinced about the futility of borrowing to finance your lifestyle, then consolidating your debt will not work. Before long, you will start swiping the credit card that you had paid off, or you will crawl right back to the lending agencies to bail you out of your money problems again.

When you have become reliant on borrowing as a way of life, you may actually believe that it is impossible to live without debt. You find ways of justifying your need to borrow, and it may be very difficult for anyone to advise you otherwise. At this stage, you are suffering from debt addiction.

If you are a debt addict, you must resolve to quit borrowing forever. Whittle down your expenses to the bare minimum, and channel most of your earnings into loan repayments. You may need to take drastic steps such as selling your house or car, or deferring college to get rid of your indebtedness.

The process of reducing debt permanently is not a simple one, and you can research additional strategies at financiallysmartadvice.com. While it may take many years for you to finally exorcise the debt demon, if you hold firm to the vision of living a debt-free life, you will eventually overcome.

Cherryl is a money coach, business mentor, and founder of Financially S.M.A.R.T. Services. Her upcoming book, “The 3 Ms of Money” will reveal all the secrets she learned about financial success. Get more advice on money and business matters at www.financiallysmartadvice.com and www.entrepreneursinjamaica.com. Email comments to cherryl@financiallysmartonline.com.