Make no mistake, debt is a drug. It finds you no matter your income level, your living arrangements, or the state you live in. It is a silent and addictive drug that ruins families and destroys lives. Just how bad is it?
How Much Do We Earn?
The median household income in the United States is approximately $61,937. That seems to be a respectable number, until you realize that it is household income, and often, household income is dual income earners.
Where are We Spending Our Money?
Types and Totals of Debt Nationwide
Mortgage – $9.71 Trillion
Auto Loans – $1.35 Trillion
Student Loans – $1.54 Trillion
Credit Cards – $0.89 Trillion
Other – $.037 Trillion
Average US Mortgage Debt – $202,284
Average US New Car Debt – $32,480
Average Student Loan Debt – $32,731
Average Credit Card Debt – $6,000
Why is Debt so Addictive?
Debt is addictive because of our ability to be instantly gratified by purchasing nearly anything we want now, while delaying payment to a later date, or spreading it out over many years. Addictive drugs work the same way, as our brain chemistry is changed when drugs are used on a regular basis. Some drugs only require one or two instances before the body becomes addicted. Addicted drug users are compelled to continue using drugs, due to the negative physical and mental effects. We continue to go into debt for many of the same reasons.
Due to the addictive nature of debt, it is easy to wander into debt, but it can take years to purposefully climb out of debt. If debt is so addictive and so painful for so many of the people involved, why do we not have rehabilitation efforts to prevent debtors from going back down the addiction road?
The Two Keys to Debt Rehabilitation
There are two important and key ways to prevent going back into the debt addiction. Budgeting and consistency.
Budgeting is the single most important thing you can do to prevent and reverse bad financial decisions. A budget is a physical representation of your financial life and allows you to see every penny coming in and every penny going out. It is the plan you use going forward that will keep you from falling back into bad habits.
Consistency is nearly just as important as having a budget. While 100% of us can create a budget, only a small fraction will stick with it. Budgeting is more than a piece of paper with numbers on it, it is a plan that requires sticking with it and not straying from the plan and commitment. Just like rehab from drug addiction, budgeting requires discipline and one or more people to lean on for support.
Even though debt mimics drug addiction in many ways, it is never too late to start creating a budget and creating a plan to get-out-of-debt. Debt is not a life sentence or a lifetime of servitude. It is an obstacle that can be overcome with some planning and commitment to putting it in your past.