Many years ago I wrote my original Seven Stages of Debt, as modified from the Five Stages of Death and Dying by Dr. Elisabeth Kubler-Ross.
Both experiencing the emotional loss of a loved one and the emotional loss of your financial life are similar in some distinct ways. However, the emotional stages of debt also have two additional components that a mortal death does not. And these stages are almost magical as they can lead to a new and better life for you.
When I was going through my financial troubles I distinctly remember passing through all the stages below. And in helping thousands and thousands of people over the years to deal with their financial issues I’ve clearly witnessed them passing though these same stages as well.
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But people don’t pass through these stages in necessarily an orderly fashion, they may jump back and forth but in the end the healthiest way to deal with any debt problem is to acknowledge each stage of debt and be aware of how you are emotionally feeling at the moment. It will help you to understand how your emotional state at the moment may be clouding your judgment about how to deal with your debt.
If you are living with financial problems right now I challenge you to identify what stage you are in right now.
The Seven Stages of Debt
Denial begins a long time before the financial problem rears its ugly head and gets in your face. Denial distorts reality like a street drug. It’s addictive. As an impartial observer, I’ve seen bad situations brewing time after time. But the person about to land in the sticky stuff often says the same thing, “It won’t happen to me.”
Whatever you are in denial about will wind up smacking you in the face like a cinder block on a rope. Even if you don’t know what that’s like from experience, I think you can imagine what kind of a mark it will leave.
Here are some things people have actually said to me while in the denial stage:
“I know I can’t pay my mortgage, but they won’t take my house.”
“I refuse to take my child out of private school just to pay my bills.”
“I didn’t know they’d sue me if I didn’t pay them back.”
“It’s not worth my time to get out of bed for a $12 an hour job.”
“How did I know a collector would call me? It’s not like anyone ever reads the fine print.”
“My creditors suck because they keep calling me for payments. I’ll pay them when I’m good and ready.”
Yeah, I know they sound funny. But the people involved weren’t laughing, and I’m guessing you’re not laughing at your situation, either.
My role as the Get Out of Debt Guy is to get you through these initial stages as fast as possible and get you to where you want to be. Here’s all you need to know about denial.
If you think you’ve got money troubles, you do. Period.
Denial will just slow you up and, if you are having problems with money, time is your enemy. You have to take action as quickly as possible. The more time you spend in denial, the further you will circle down the bowl and, unless you can get past denial, you may actually go down the drain.
Anger is an emotional waste of time and energy in most situations, especially when it comes to money troubles. Remember what I said before? Your situation just is what it is. You can be angry all you want, but things will get better faster if you can turn that anger into a fire inside of you that creates intense motivation to properly deal with the underlying situation and take positive action to repair the situation.
Okay, so you want to get angry. Let’s get it out of the way.
Creditors — These are the folks you promised to repay when you took their money. You even signed terms and conditions that stated what would happen if you defaulted. You can be mad at your creditors all you want, but that’s not going to change the price of eggs in China, nor is it going to get you out of this mess.
Yourself — So you’re mad at yourself. At least that’s fair. After all, you’re the one that got you into this mess and probably through no fault of your own. So let’s have a quick pity party and then go for a walk and talk some sense into you. You think you’re a failure? So what? Everybody, I mean everybody, fails at some point in their lives at something. I certainly have. It’s part of life. Failures are great learning tools.
They teach you what not to do. But unless you’ve developed a time machine, you aren’t going to be able to go back and change anything, so the best you can do is learn from the lesson and leave the anger in the past. If you screwed up, you screwed up. No need to beat yourself up over it. There’s no sense wasting a perfectly good mistake. Learn from it and let’s move forward.
Others — The “others” category is broad, vast and deep. “Others” falls into the same group as “Them” or “They.” There is no “They” and I still haven’t met “Them,” but they sure do get the blame for a lot of the world’s ills. If you are angry with others, stop it and forgive them. It’s not helping anything.
Yes, it’s possible that situations and experiences in your past led you to make some of the decisions that have gotten you where you are today. But no matter what those situations and experiences were, you always had a choice, every step of the way. Probably many choices.
And for whatever reason you made the ones that got you here. Stop casting blame all around town. This is your life. At some point you’ve got to take responsibility and stop blaming others. Without personal responsibility, you’ve got no way to fix this so that you can get on with the life you always wanted.
External Events — There is no need to cast emotional blame on external events like a slow economy, accident, divorce, illness, relationship issues, etc. There is a never ending set of circumstances and events which can lead you to financial problems. Unless you can control them, sometimes you are just caught off guard. Life is just what it is.
There is no question that money troubles aren’t fun. They typically lead to some kind of loss and that makes us sad and/or depressed. The loss can be anything from cutting out the cleaning service to having to sell your home and moving to a cheaper area. There is no doubt that some of the things you might go through may be difficult, but rather than stew over them, let’s put them into perspective.
If you had your choice of either dealing with what you are going through right now or getting poked in the eye with a sharp stick, which would you do? It’s a no-brainer, right?
I remember one day, I was talking with a lady who was paralyzed with inaction, even though her mortgage company was about to foreclose on her home. She was so bitter about the situation, she was blaming a cast of characters and refused to see a way out.
In fact, she had waited so long that it was pretty darn likely that her house was going to be sold at auction that week. She said that foreclosure was the worst thing to happen to her. I asked her, if she had a choice, would she rather lose her home to foreclosure or be set on fire? She laughed. That put it into perspective for her.
The lesson to be learned here is that no matter how bad the situation feels, it can always be worse. Even when it’s bad, there are still things to be thankful for. Try as hard as you can to look up and find the rainbow rather than stare down the well. That’s not just some “New Age” nonsense. Medical studies have shown that people who think positively live longer, have fewer health problems, experience less stress and, consequently, get the things done that they need to get done.
It may be hard to believe sometimes, but mood is a choice, just like most other things in life. Don’t believe me? Try this exercise. What kind of mood are you in right now? If you are feeling pretty good, think about the worst thing that ever happened to you. Close your eyes and put yourself back into that situation and live through it again in your mind. I bet that brought you down pretty quickly. Now try the reverse. If you are feeling down, angry or depressed, think about some of the good things in your life.
Maybe you have a wonderful wife or husband. Perhaps you have great kids. Everyone has things to feel thankful for, even if it’s just the fact that you’re not on fire right now. Again, close your eyes and focus on those good things. If any bad thoughts creep in, push them out of your mind and go back to the good stuff. If necessary, pretend that you’re happy. Laugh out loud. Jump up and sing your favorite song at the top of your voice. Do whatever you would do if you were in a great mood.
If you give this an honest try, you’ll find that pretty soon you start to feel better. Everyone feels down from time to time, but with practice, you can take control of your emotions and not let those down times run your life. Besides, as long as you think only sad thoughts, you’re going to be sad.
For some depression is rooted in an out of balance brain chemistry. No matter how hard you try to lift yourself up you may just need to talk to a psychiatrist or or doctor about medications to help you slip the cycle of depression. I’ve watched the miracle of recovery from depression in ones I love after they worked with a medical professional and were prescribed specific medications. It took a while to tune the dosage but the results were lifesaving for them.
Here is the easiest advice to give but the hardest advice to follow: Suck it up or take action and get medical help and let’s move on toward a solution. Bad things happen to good people. Life is unfair and sometimes cruel. It is what it is. Heard that before?
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