What to do when you are drowning in debt

I have been in every financial situation you can name. I have been so broke and so poor that I had to borrow money just to breathe. Negative balance, upside down, no visible way out. At one point I was earning good money and the bills were still enormous, and between business trouble and my own decisions I ended up carrying debt I could not handle. I was drowning in it, so when I talk about this subject, I know exactly how it feels.

I went through bankruptcy, and it was one of the most horrible and embarrassing experiences of my life. I promised myself I would never let that happen again. And keeping that promise did not start with a lucky break or a bigger paycheck. It started when I sat down and studied the subject of money itself. What is this thing, actually?

What money actually is

Money is an idea based on trust. Take the US dollar, one of the most powerful currencies in the world. When somebody hands you a hundred dollars, you accept it because you are confident somebody else will accept it from you tomorrow at about the same value. That shared confidence is the whole basic concept, and the same goes for the euro and every other currency out there.

Here is my way of looking at it. Go to any sporting event and there is a scoreboard. The ball goes through the hoop, the runner crosses the line, and points go up. Money is just a scoreboard for how competent you are. If you earn a lot of it honestly, you are not a thief, you are not a drug dealer, you are not some unethical scum. You did something real for real people, and the score says so.

Beyond that, it is simply a tool of exchange. Read about the barter days: you had to show up with two chickens under your arm to trade for a saddle. Money made that easy. It is like an electron moving through an energy system. It lets you say to another person, I want what you have, take what I have.

Confront the thing

Now the problem. The average person on the face of the earth has almost no confrontation with money. They want it, they usually have very little of it, and they do not look at it. When I say confront, I mean exactly that: face the thing and look at it. Put a camera in front of people and plenty of them freeze up. They cannot face it. Money works the same way, and with money, confronting means facing the numbers.

What numbers? Money comes into your world every week. Money leaves your world every week. And there is a final result: either more went out than came in, or more came in than went out. There is a record of what is happening, and there is a clean, simple way to lay it out so you can easily see what came in and easily see what went out. Most people never look at it once.

Inspect the trap

I can hear the objection already. Yeah, but I get the same money every week, I spend all of it, and there is never anything left over. What exactly am I supposed to confront? Exactly. Exactly that. What you just described is called a trap, and you are caught in it. If you want to get out of a trap, you had better start by inspecting your trap.

So inspect it. Where does your money come from? Maybe that part is simple: a job, a paycheck once a week or once a month. But money flows like a river, from one point to another, passing right in front of you, and a river is not just water. It is made of elements. Your cash flow has elements too, this bill, that payment, this habit, and you need every one of them where you can see it.

Your most powerful weapon

Do you know what I believe is the most powerful thing a human being possesses? You have it, I have it, every person has it. We can look at something and disagree with it. We can see a condition and say: this is unacceptable, I will not allow this to continue. And the moment you say that, the next step arrives on its own. You realize you have to do something about it, and you use your reason to do something intelligent to change the situation you have been disagreeing with.

That is why it is so crucial that your financial data reaches you in a form you can easily take in. Easily see it, think with it, plan with it, predict with it. Can you predict tonight what is going to happen to your money? Can you sit down and plan how you are going to end up with more money than bills? Do you have a way to track whether you are winning or losing, week after week?

Every one of those things raises your financial quality of life. And I will tell you, it is truly beautiful to watch what happens to people when they finally confront the thing, inspect the trap, and climb out of it. I did it. You can too.