Let’s Be Honest

The other day, a group of friends and I found ourselves pondering why some people make it out of debt, while others don’t (yes, thanks to the recession, we actually sit around and discuss this stuff).

Together we came up with a theory. We decided there’s a misconception about what it takes to get out of debt. Some people will tell you discipline is the most important tool in the process. Or persistence. Maybe patience. But you know what we think it is? Honesty.

Honesty is Step #1. Because if you aren’t honest with yourself about your financial situation, how can you improve it? And if you hide it from others, how can they help?

We all suffer from a little financial denial. I fess up—I’ve hidden quite a few purchases from my boyfriend in my day.  I’d yank the tags off, throw away the bag and receipt, and then casually start wearing the item as if I’d owned it forever. “Hey, what’s that you’re wearing?” he’d ask when I’d debut a new skirt or sweater. “Oh, this old thing?” would be my reply. “I guess I haven’t worn it in a while.” My friends, to their credit, confess to shredding credit card statements and erasing telling messages from the answering machine.

It’s a double form of denial. We’re denying the truth to other people while we deny to ourselves that we have a problem. And it’s not until we confront our behavior that we can overcome our debt burdens. It takes an open mind to critically pore over a credit card statement or take out a pen and start mapping out everyday spending—and places to cut back.

Financial honesty is never more crucial than when you’re faced with foreclosure. Thousands of homes could have been saved last year if homeowners just acted faster. But instead of taking action, they lived in denial of the bills they couldn’t pay, denial of the foreclosure notice in the mail, and denial of the step that could save them—bankruptcy.

There are a lot of myths about Chapter 13 bankruptcy—many fear it will damage their credit or reputation—so people just don’t consider it an option. Unfortunately, it’s often the only option. Bankruptcy is the only guaranteed way to stop foreclosure. Not only that, but it offers legal protection, a lowered payment plan, and it immediately makes you current with your creditors. Ultimately, it’s a fresh start all around.

Find out more about why you should get over your bankruptcy fear in our free Financial Toolkit, an arsenal of advice to help you turn over a new leaf this year. Or drop into our online library to check out a few videos on foreclosure and bankruptcy: DebtStoppers can stop your foreclosure today!, Will personal bankruptcy ruin my credit? and Is personal bankruptcy just an easy way out?

For a full look at your finances, fill out our free debt evaluation form. We’ll tell you the honest truth. And then we’ll show you the answers.

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