Episode 1025: Why So Many People Get Out of Debt Over and Over

[00:00:00] Scott Maderer: Thanks for joining me on episode 1025 of the inspired stewardship podcast.

[00:00:07] Ruth Gotain: Dr. Ruth Gotain. I challenge you to invest in yourself, invest in others, develop your influence and impact the world by using your time, your talent and your treasures to live out your calling. Having the ability to improve consistently over time is key.

[00:00:22] And one way to be inspired to do that is to listen to. The inspired stewardship podcast with my friend, Scott.

[00:00:38] Scott Maderer: but I've seen people also go back into debt because they don't really understand the fundamentals. They're really all tied together because it's about understanding yourself, understanding your mindset, understanding your habits, your values, and then setting your life up in a way that works. Not just to get out of it.

[00:00:57] But works to keep you [00:01:00] there. If that's what you want to achieve. Welcome and thank you for joining us on the inspired stewardship podcasts. If you truly desire to become the person who God wants you to be, then you must learn to use your time, your talent and your treasures for your true calling and the inspired stewardship podcast.

[00:01:20] We'll learn to invest in yourself, invest in others and develop your influence so that you can impact the world.

[00:01:34] And today's episode about investing in others through stewarding your treasures. I talk with you about why getting out of debt as a goal seems powerful, but it doesn't always stick. And I share three reasons that I've seen people go back into debt after working really hard to get out. And I also talk about what you can do to avoid this.

[00:01:55] As we talk about stewarding your treasures. Wouldn't it be great. If you could support [00:02:00] this podcast and do it without costing yourself an extra dime, it turns out you can't. All you have to do is use inspired stewardship.com/amazon. When you're ready to make a purchase via Amazon and a small commission, we'll come back to support the show.

[00:02:17] If you enjoy the show, when you're ready to buy from Amazon, just use inspired stewardship.com/amazon. I've talked before about how you should have a really deep, big passionate why for doing. And oftentimes people come in and for instance, getting out of debt, which is a goal like we've talked about before, not really a why, not really something that is an emotional driver.

[00:02:43] Doesn't really stick. I've worked with many clients over the years who have come to me for coaching and they'll mention we've gotten out of debt before. We've. The plan before, and we've gotten out of debt and we know mechanically what to do, [00:03:00] but this is our second or third or fourth or fifth time that we've gone back into debt.

[00:03:07] And now we're having to do it all over again. We did all of this work. We made all of this effort. We did all of these sacrifices and then we just have to do it all over again because we go right back into. I've seen it happen with all sorts of people from all different walks of life, making all different incomes.

[00:03:30] It's not necessarily an income thing. In fact, I've seen the opposite too. I've seen just as many people who working with me or working on their own have managed to get out of debt and stay that. In fact, some of the clients that come to me are debt free. That's not even part of the coaching we're doing, but there are still things that they want to do to grow in the way that they handle money.

[00:03:59] And so [00:04:00] working with a coach is still valuable. Now there's a few. Different reasons that I've seen people get into debt and then go back into it after getting out. There's actually a lot of reasons, but I wanted to talk about three of the biggest mistakes that I've seen people make. The first one is they don't really change the behavior that got them into debt in the first place.

[00:04:29] They go into some sort of crash diet mode where they sacrifice everything, but they don't really address the fundamental behaviors. They simply make deep sacrifices and managed to pay off even sometimes a very large amount of debt, but they don't think about what are the underlying behaviors that we used to do that got us into debt in the first place.

[00:04:53] And what do we need to do? To change our behavior to change our mindset, to change our [00:05:00] activities so that when we do get out of debt, we don't have to keep doing what we're doing now. And yet we won't go back into debt. I've seen people get a second job or even a third job just to pay off their debt. But then they get rid of those jobs.

[00:05:14] The income goes back down and they go right back into debt again, because they never really learned to live. On what they make. They never really learned to address the fundamental behaviors. Oftentimes I see this in folks that managed to pay off their loans quickly, especially when they manage to do it without what I would call real sacrifice.

[00:05:38] Perhaps they get a gift or an inheritance or something else, some other kind of windfall that lets them pay off their debt without actually looking at their underlying habits. And because of that, They end up going back into debt. And again, don't misunderstand me. I'm not saying don't use a windfall to jumpstart your [00:06:00] activity and maybe even get out of debt quicker.

[00:06:01] I'm simply saying if that's all you do, oftentimes you'll go back into debt. The second one, they don't address the idea of having some sort of adequate emergency fund or saving. They pay off their debt, but they decide that having an emergency fund isn't a big priority or they take the emergency fund that perhaps they have.

[00:06:25] But because now they're out of debt, they no longer keep a focus on keeping some cash reserves. And so pretty soon that emergency fund gets spent on a new couch or a new shed or a vacation or a trip or something else that they want. And now before they know it, their emergency fund has whittled away.

[00:06:45] And then when a large emergency comes along, debt seems to be the only way out because they don't have any savings. They end up using either a home equity [00:07:00] loan or credit cards or something else, or. Even worse, they've set themselves up where they believe that they don't really need an emergency fund.

[00:07:10] They can use credit cards or the home equity loan, or other things as a way of financing an emergency. And because of that, they've set themselves up from day one to go back into debt. The third. The mindset changes. I've had people that have decided that debt is something they want to avoid, but then their mindset shifts and they don't really mind going into debt anymore.

[00:07:44] Maybe it's because they don't really understand the process. They don't learn how to use credit and debt responsibly. Maybe it's because they have underlying behavioral issues that they haven't really addressed or mindset issues. Maybe it's because [00:08:00] debt just starts seeming reasonable and that they become confident that they can manage it, but they haven't really set up the systems and processes to let them do it.

[00:08:10] And again, I'm not being dogmatic about this and saying you can't use credit or credit cards. Or loans or anything else I'm simply saying, if you are going to use those things, you better understand how they work and have things set up in a way where either, whether things go well, whether things go badly, either way things go, you're still going to be okay.

[00:08:35] And most. I don't understand the process of finances well, enough to be sure that no matter what I'm okay, whether it works out or whether it doesn't, they don't really have a financial plan that stable enough to recover. If things go wrong with the debt. And because of that, they start playing around with debt and go [00:09:00] back in.

[00:09:01] Again, I have clients that are completely debt-free that still use credit and credit cards and other kinds of vehicles. So debt by itself is not the same thing here. Credit, you can have good credit without having a bunch of debt. I've seen people also go back into debt because they don't really understand the fundamentals.

[00:09:24] They're really all tied together because it's about understanding yourself, understanding your mindset, understanding your habits, your values, and then setting your life up in a way that works. Not just to get out of debt, but works to keep you there. If that's what you want to achieve, I've seen people succeed.

[00:09:45] I've seen people not succeed with it, but the truth is what makes the difference is whether or not you've actually done the hard work to make real change are. If you've just looked at getting out of debt as a goal that you check off [00:10:00] on a list and then forget about it and end up going right back where you started from.

[00:10:06] Thanks for listening.

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