SMS 172 – Debt is the Symptom not the Problem

In life debt can be either a temporary situation or a permanent situation, and how you view debt will determine your perspective. If debt is the problem you will spend your lifetime trying to solve it, if you treat it as a symptom you will peel back the layers and find the cause.

You have to be willing to accept the lifestyle your income delivers, everything else is just a hobby. The real challenge is when income and lifestyle are not aligned is to access the temporary vs permeance of the situation. The risk of getting this wrong can be the difference between success and failure.

When you focus on debt as the problem your solution always appears to be deprivation which we all know is unsustainable.

The five why method is a very effective tool in getting past the symptoms and find the cause:

  1. Why is my credit card maxed out – we had no money to fix the furnace
  2. Why did we have not money to fix the furnace – we had no savings
  3. Why did we have no savings – all of our income is needed for our monthly expenses
  4. Why is all of our income need for our monthly expenses – car payments are 40% of total expenses
  5. Why are our car payments 40% of our total expenses – because I need to drive a $65k truck

Side note: the car you can afford can be paid for in 3 years or less and does not exceed 50% of your household income.

The transition of not seeing the symptoms:

  1. Debt symptoms happen gradually
  2. You are in denial that anything has gone wrong
  3. You believe your situation is temporary
  4. You never had a disaster plan
  5. Your ego becomes your enemy

Problems that look like symptoms (these require lifestyle changes):

  1. Lifestyle inflation
  2. Car poor
  3. House poor
  4. Job loss
  5. Divorce
  6. Illness
  7. Death

The problem with solving symptoms:

  1. All solutions are temporary
  2. You never get to the root cause
  3. You never get ahead financially – you keep trying to solving the same problem
  4. Symptoms don’t have solutions – you can’t fix wanting a car you can’t afford
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