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Post: Outside the Box: You work hard to pay off debt. Here’s the secret to keep you from backsliding as the economy slows

Credit-card debt has surged 13% this past year — the largest increase in 20 years. If you find yourself with a growing amount of debt, you need to get yourself back on solid footing before it snowballs out of control.

As I’ve learned from coaching thousands of people on how to shed credit-card debt and stay debt-free, the answer is more than cutting up the credit card.  

This mixture of mindset and behavior changes along with some crucial financial steps will get you there.  

Change how you talk about money

  To truly know your “money self,” pay attention to what you say and hear about it on the job, at home, while out with friends. There is often a tendency to focus on the negative. Change your language if you want to change your money attitudes, which is the first step in improving money’s place in our lives.  

Start by using positive language around money today. Begin saying “I choose not to” buy this item or “That is not a financial priority.” This demonstrates that you are making conscious choices.  

On the other hand, saying “I cannot afford” something shifts responsibility away from you. You become the victim of something beyond your control, implying you have nothing to do with it.   

For example, if you decide to buy a more expensive house with a larger mortgage and maintenance cost, you may not have as much to spend on vacations, clothes, or a big-screen television. It does not mean that you cannot afford the big-screen television — it simply means that you have spent your money elsewhere. Your decision reflects what is important to you.

Mindset is a powerful influence, and the language you use can support that shift. Use positive words to support that change. Telling yourself “I am saving a little bit each month” shifts your perspective as you build savings no matter how little your savings account is increasing.

Making the effort to use language that demonstrates ownership and responsibility around money is what is important. Positive language changes our attitude around money when heard often enough.

Negative reinforcement about the state of your finances, even if it is self-talk, affects self-esteem. Stop beating yourself up with negative language like “I will never get out of debt,” and “I am a financial failure.” There is a psychological cost to debt, and studies have found links with depression and suicide.

You are not a victim to your financial circumstances.

Modify your behavior slowly

Do not even consider any debt consolidation plan or home-equity loan until you have stopped creating new credit-card debt.

While that pile of debt may disappear, people typically are right back up to their previous balance, even if it’s five figures, within a mere six months if they pay off their credit-card debt in one lump sum. That’s because there hasn’t been an accompanying change in behavior. Invest your time in behavior change instead.

Like changes involving food, slow and steady wins the race in forming new money habits. Start by reviewing what’s on your credit card bill each month. People often find recurring expenses for services they do not even use anymore or worse, something they never signed up for! Take the time to get them off your credit card.

Are there other automatic payments for services that you use that you can forgo until you pay off your debt? Each $10 you cut also reduces interest charges and gets you to the pay-off point sooner.

Choose to live without charging anything for a month while you create a sustainable plan for your financial life.

A credit-card hiatus will help you build a new habit of thinking before you swipe, click, or tap. Keep using that new language around financial decisions to make this easier.

As you cut back on spending, be honest with friends. Meet for drinks instead of dinner or coffee instead of drinks. If what you value is time with your friends, they will understand and may even be happier with alternative, creative plans.

Plan now for the holidays. Talk to family with a request to “simplify the holidays.” Suggest about each person giving one gift to only one person instead of giving gifts to all or everyone contribute food for the meal. If you take the lead, you may be surprised at who else feels relieved and grateful.

Create a spending plan

Once you begin to change your language and to limit your credit-card use, it’s time to face your numbers and create some new lifelong habits.

On the financial side:

  • Always pay the minimum on your credit-card debt. Otherwise you will pay more in penalties and fees.

  • Until you create a spending plan that will allow you to live within your means and see the bigger picture, only pay the minimum. (Yes, you read that right.) Sitting with the uncomfortableness of knowing your total debt will help reinforce why you need to make changes to your behavior and language. Debt takes a while to get into. It will take a while to return it to zero. Remember, a quick fix isn’t a lasting fix.

  • Create a plan that allows you to cover your expenses with your income. Your net income – not your salary – is what matters. Write down every expense you incur throughout the year, not just the monthly ones. The physical act of doing this rather than just reading a summary of the past year of spending makes you more conscious of your spending as your brain processes the information better. Visually seeing the difference will help you understand why there is a budding debt issue.

  • Be sure to allow for something you consider a treat – dinner out once a week, a movie a month or something else you enjoy. If you build in money for fun, you are more apt to stick to your spending plan and to keep using positive language.

For a powerful reminder of how the combination of new language, new behavior and a novel approach toward spending can improve your finances, I offer one of my favorite examples, a client who told me she “never would get out of debt. I tried.” 

I asked her to try one more time. I challenged her to two simple tasks each week: first, create a way to save money, and second, have fun with just $10 each week.

By the end of six weeks, she appeared in my office energized and smiling. “I have been trying so many new things! Saved money by going to the library rather than buying a new book. Then I treated a friend to coffee, which was fun.” She continued the list of new behaviors that fit in her cash flow plan, from an afternoon matinee to canceling two movie subscriptions.

I asked about paying off her debt. She smiled, “I am paying the minimum and totally living on my income. I have already saved $150!”

She ended up paying off her debts with the year and then staying out of debt.

Research shows it can take as little as 18 days to create a habit, though for some people it takes weeks longer. The key is not to give up if you make one slip. Just put yourself back on track without negative language or resorting to old behavior.

Consider other resources for support: Debtors Anonymous, books, podcasts, and therapy, which insurance may cover, will remind you that you are not alone and there is a way out. My favorite book is “How To Get Out of Debt, Stay Out of Debt and Live Prosperously Forever” by Jerrold Mundis; the most recent edition was published in 2012.

Feeling that this slower approach will never get you out of debt? Consider this: If money fixed money problems, then lottery winners never would go broke. However, many of them do. More importantly, when interviewed five years later, many wish they had never won.

Debt is not just a numbers game. Start changing your behavior, language and create cash flow plan now. The long-term effects will be felt for years to come.

CD Moriarty is a certified financial planner, a columnist for MarketWatch and a personal-finance speaker. She blogs at MoneyPeace.

Learn how to shake up your financial routine at MarketWatch’s Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. Join Carrie Schwab, president of the Charles Schwab Foundation.

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