Fighting the overwhelming feeling of immense debt seems like a daunting task that’s impossible to accomplish.

I know, it’s stressful, and intimidating, and it can feel hopeless at times. However, I’m here to tell you that there is hope, there is a solution, and it’s far simpler than you may realize.

In this article, we’ll break down three straightforward yet effective strategies to help you manage and overcome your (bad) debt. Remember, this is not an overnight solution; it’s about taking small but meaningful steps toward achieving your financial goals.

Step 1: Honesty is the Best Policy

First things first, let’s talk about the “lying” or rather “self-denial” problem. Admittedly, the realization and acceptance of our financial situation can be daunting, especially when you’re faced with staggering debt.

Address the Elephant in the Room

The desire to bury your head in the sand, look the other way, or outright lie about the scale of your financial woes is common. This denial can stem from shame or fear, but it also feeds the cycle of the problem. It’s challenging to find a solution when you refuse to admit what the issue is.

Admit to Yourself

Start by accepting your situation. It’s fine not to broadcast your financial status to the world, but at least be honest with yourself. If you’re drowning in a debt of over $200,000 or even $5,000, acknowledge that. This acceptance is the first step towards resolving your financial problems.

This is key; acceptance does not mean that you are okay with this amount of debt, but it does mean that you’ve accepted where you are in your journey. That you realize you have to start somewhere and admitting this to yourself is the starting point.

Understand your Exact Debt

Have you ever heard of the phrase, blind navigation? Well, that’s exactly what you’re doing if you don’t understand the exact magnitude of your debt. 

If you don’t understand where you are, how can you plan the journey to where you need to be, financially speaking? I mean this applies to all areas of life as well. Who knew that money could trickle through to other areas of your life… (insert laughing face emoji?)

Regardless of how scary the reality of your debt may be, facing up to it within your personal space is the first major step toward tackling it.

Step 2: Protecting Your Non-Negotiables

We have our guilty pleasures, the little luxuries we can’t imagine our lives without, despite being on tight budgets. This can be getting your hair done, nails, eyelashes, or ordering takeout because you HAVE to have fried chicken at least once a week… Okay, maybe that fried chicken part is just me, but hey, we all have our guilty pleasure and needs. Don’t judge. 

Think of them as “personal rewards” or motivations that make life more pleasant, even in a monetarily challenging situation. There is money, and there is also a life to live. If you have the discipline to cut everything out, more power to you.

And with the middle-class families I’ve worked with, I know it’s a tad hard to do when you have little ones that you’re trying to provide for or offering yourself a little bit of self-care. 

These non-negotiables can be a motivating element of your journey to financial freedom. It’s the fuel that keeps your engines going, as long as you’re not spending all of your rent money on food. 

Identifying Your Non-Negotiables

The term “non-negotiables” means the aspects of your budget that you’re unwilling to cut despite the financial circumstances. 

These could be your monthly gym membership, getting your coffee fix at Starbucks, a Netflix subscription, or, like me, the occasional McDonald’s takeaway. 

Which item on your expenses list can you not live without? Recognize it. Own it. Then as Ramit Sethi says, ruthlessly cut out all the rest.

Balancing Non-Negotiables with Financial Goals

Recognizing a non-negotiable element doesn’t warrant a ticket to overspend uncontrollably. Remember, the goal here is to manage debts smartly. 

We’re human, and cutting out every pleasure for the sake of saving might lead to eventual frustration and, let’s be real, most definitely derail our financial plans.

Make sure to balance these pleasures with your financial goals, don’t let them become stumbling blocks.

Step 3: Formulating a Realistic Debt Management Plan

Imagine trying to hit a target with your eyes closed; that’s what you’re doing if you’re trying to manage your debt without an actual plan.

The Importance of a Plan

Objectives without a strategy may not see the light of day. When you’re in the raging waters of debt, a plan serves as your compass, guiding you step by step towards the shore of financial freedom. It’s like adding rocks to help elevate you each step of the way.

Building an Actionable Plan

Creating a debt management plan should be more than just vague statements like “I’ll spend less”. Start by accepting that every dollar counts.

If you’ve always put aside a big zero in your savings or towards your debt repayment, then placing a dollar aside consistently can start to build positive financial habits.

For instance, saving an extra dollar every day which will leave you with $365 by the end of the year. It may not seem like much, but you’re cultivating a saving habit, and when you expend less or earn more in the future, you can level up your savings. Don’t aim for mastery when you’re literally learning the name of the game.

The Snowball Effect and Consistency

The beauty of this approach is the ‘snowball effect.’ When it comes to managing debts, every penny helps. You begin with saving ‘dollar 1’, then gradually that becomes ‘dollar 5’, ‘dollar 10’… before you know it, you’re saving ‘dollar 100’ each month. And it often times will take longer than you’d like to actually build up a consistent habit but…. 

The crucial thing is consistency. The goal is not just to save an arbitrary amount, but to develop a habit of saving that snowballs into greater financial responsibility and, eventually, independence. 

It’s a simple but powerful behavioral change that can make a world of difference in your journey towards overcoming debt. Small consistent habits is what wins you the money game. 

Craft Your Unique Financial Path

Every individual’s financial situation is unique, and influenced by various factors like income, expenses, personal goals, and other life circumstances. Personal finance is just that—personal. A one-size-fits-all approach? Pretty much useless.

When it comes to overcoming debt, it’s essential to create a custom plan that suits the needs of your family. It should factor in your financial reality, goals, personal motivators (non-negotiables), and a clear picture of your debt.

The journey may be long, and debt may feel overwhelming, but remember, you’re taking active steps towards a brighter financial future for your family.

As you embrace these simple yet significant strategies, you’re investing time and effort into your financial health, which will surely pay off in the long run (if you stay consistent). Don’t measure your progress by the financial standards of others or even the industry standard.

Your path is unique to you, just like mine is to me. The goal is not merely financial independence; it’s about building a life where your finances serve you, not the other way around.

Remember, while it’s not realistic to hope to get rich overnight, it’s possible to reduce your debt substantially and gradually build wealth. Celebrate all the wins, no matter how small.

Always keep in mind that the first step towards overcoming debt is deciding to take the journey and then taking that first step. You’ve got this!