Get Out of Debt Guy

When it Comes to Getting Out of Debt, People Make Really Bad Choices

Posted May 13, 2013

All day, almost every single day, I help people with good debt advice so they can find good solutions for their bad debt troubles.

Without a doubt one of the most frustrating parts of providing all that help is being a spectator of the mess known as getting out of debt.

I've helped people in a lot of different countries over the years since I first started in 1994. In all that time there is one common observation, people are just flat out stupid when it comes to getting out of debt.

Now I say that in the most loving way. I genuinely love people and I'm one of the most compassionate people in the world. I'm not trying to be mean. I'm just just calling it like it is.

So how do I come to this conclusion? Simple.

When people reach that hidden terror and panic about their debt they universally do one thing, they call a stranger, a salesperson, and ask them what they should do. For some reason all logic and commonsense flies right out the window and they take the word of a total stranger trying to make a sale over introspective thought about what is really best for their situation.

So what is the sales person going to do, you got it, they are going to push their widget they claim can make the debt go away. Sale made. Quota met.

In a perfect world the person in trouble would evaluate all of their options. They would contact a local bankruptcy attorney, talk to a credit counseling agency, speak to a debt settlement company and explore a debt consolidation loan. Yes, unsecured debt consolidation loans do still exist. I should know, I even help fund them.

People should educate themselves about all the options to dealing with debt, even those they would not emotionally consider, and make the best educated decision that is right for them and their goals.

People should not take anything Dave Ramsey, Suze Orman, or even myself say at face value. They should contemplate the advice, check it and verify. I love it when people get invested in their path out of debt and learn as much as they can about it. Knowledge is truth and truth is power.

I get pissed of when people become cultish and follow the big names without any independent thought. I want you to learn and think. more importantly I want to you learn and share what you learn to help others. We can all work together and do so much good. Want to help? Join our local debt support group.

Getting out of debt and learning the realities of debt relief is a perfect opportunity for you to pay what you learn forward. I always say there is no sense wasting a perfectly good financial mistake. Learn from it and share what you learn, but only if you investigate what's really best instead of assuming. Only if you really become as smart as you can about this stuff.

Debt is really just a simple math problem wrapped in emotion.

All the outside people who provide some type of debt relief product are just naturally biased they have the right answer. They don't. In fact when I finish writing this I'm off to write about two non-profit credit counseling agencies that say almost the opposite thing about bankruptcy, yet they both push their debt management plan as the best solution. Both just going for the sale.

When facing a problem debt situation people stop thinking about how their decisions are going to impact their future, they just think about today and making the panic go away quickly.

If I took you by the hand and brought you over to where I sit and let you evaluate the situations people find themselves in with detached logic, you'd be amazed at what I see.

Over the guilt of how they think people will judge them, people will launch into five year repayment programs and sacrifice their ability to save for retirement which costs them millions in retirement. Is that logical or just plain stupid?

How about the person that can't be honest with themselves about the real reason they are in debt and just react to the numbers without ever changing the underlying situation that created the debt? Does that really change anything for the future?

How about the person that can't make ends meet and is emotionally afraid of bankruptcy so they drain their savings and 401(k) or IRA just to make months more of payments. Would you say that's a smart thing to do?

Sometimes people are their own worst enemy.

I wish it wasn't so.

Steve Rhode
WRAL Get Out of Debt Guy

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  • jcsmom May 15, 2013

    I agree, Steve. I am work for a local financial institution and I see the same thing every day. Folks don't want to fix the underlying problem that got them in debt, they just want to move their debt around for the lowest monthly payment. I may grant a consolidation loan to them to payoff their debt and give them one payment over 2,3, or 4 years. Sounds great, but if they go right back out there and max out their cards again, they are in much worse shape very quickly. You did not get into debt over night. It is going to take time and sacrifice to overcome it.

About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.