Hide the Debts
Enron Corporation managed to look good on paper until the truth came out about inflated earnings and hidden debt, which led to their collapse in 2001.
Most of us tend to ignore our debt. We just accept it as part of life. We assume we will always have enough income to pay our debt. Until we don’t.
Then, panic sets in and we scramble to live and hide from our debt obligations.
Are you an Enron? Do you hide your debt in hope that no one will notice?
Be Responsible
Make debt a pain in your side. Make it an embarrassment. After all, debt is an unpaid bill, an obligation you have put off paying.
Debt is a sign that you are living beyond your means.
If you doubt that, ask yourself if you can add at least half of your normal payment amount to each payment and still be able to cover your other monthly expenses.
If the answer is no, you need to make some changes!
Taking an honest look at your debt is being responsible. And that means taking some uncomfortable steps to correct a bad situation. You got yourself into this mess so you must work your way out of it!
Assess Your Options
My comments come from experience. I lived like an Enron for a while. Then, I sought to make changes. Hopefully, you will too!
A good company will take uncomfortable actions to correct financial shortfalls. They will freeze spending and raises, etc.
Do you know where you can cut back to avoid a second job to better your financial position?
This is your personal business. Be responsible and know what you need to do.
Half the battle in financial management is knowing what comes in and what goes out and the net difference.
That is why companies hire accountants, to know their income and expenses and their assets and liabilities.
Do you look at your financial statements? Do you have a financial statement? Most people do not. But that should not make you feel better because they are not being responsible.
You can start by listing your debts and payment requirements. Then, define your income and monthly expenses. Track for three months to get a good average.
Ask yourself if that results in a plus or minus difference? Your bank account should prove that out.
Review to see if and where you can reduce spending. Otherwise, you will have to increase your income.
Change Your Mindset for Money
For most people, their financial position relates to their view of money and how it fits into their lives.
Does your spending center around what you deserve or what you have earned?
If you spend according to what you earn, then you live within your means. You spend based on what you can afford to pay now.
If you spend according to what you feel you deserve, you will spend ahead of your earnings and incur debt. Debt is your unpaid purchases.
If you want your financial situation to change, you must change your mindset for money!
Be Open with Yourself
You will never change until you see the need to change. That was my first step to making money improvements.
Hiding from your debt is easy, until it must be faced due to default. Then, anxiety sets in.
Facing your reality with truth will set your mind free to address possible solutions.
Yes, this takes courage. Yes, this is hard to do.
Ignoring your problem only compounds the situation.
You need the facts to find a solution.
Do you want to be an Enron? If not, start your list today!
Be open with yourself and start working on improvements. Your family will thank you!
Take Measures into Your Mind
I worked in accounting. I know that accounting is very boring for most people. But “the devil is in the details.”
You can avoid adding up receipts and live according to basic measurements, based on changes in account balances. However, when the balances go in the wrong direction, you must review the details to understand why.
Slow your spending long enough to make balance improvements. Over time, you will get a sense of how you “waste” your money and how to “add” to your “assets”.
Know your debt. Know how much interest you pay each month, each year. Set a goal to reduce those amounts each month, each year.
Know your savings and investments. Set a goal to add to each and track the effect of time. Time creates compounding.
Add Income to Reduce Spending
A second job or a better-paying job will help you pay off debt faster. And it will help you feel better about your financial situation.
However, most of us tend to spend according to what we make. Stop that!
Use the added income to reduce debt and the anxiety that comes with that.
Budget to cover your needs and put off what you think you deserve. Add to your savings to reduce anxiety related to emergencies and potential unemployment.
Reduced spending now has a purpose, less debt and more assets! Better health!
Track your measurements until they make you smile! Your first smile will be when your assets total more than your debt. Your smile will get much bigger as your debt disappears and your assets multiply!
What? No Enron?
Take comfort with being uncomfortable. It is for a good reason. You set a timetable to make changes, and you make progress!
Enron hid their debt from their family of investors. Are you hiding your debt from your family?
Your debt situation hurts everyone your income supports. Be honest with yourself and your family.
Make changes to build a better mindset for money. There are long-term benefits to come from short-term discomfort and sacrifices.
Take measurements. Track improvements. Set goals to generate hope.
Search for improvements and you will find them.
Avoid Enron thinking! Build a better mindset for money!