ASK THE COACH
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Responsibility Is Doorway Out of Debt
By Dr. Ray Angelini
The Saratogian
August 8, 2002
Dear Dr. Ray,
My business is in a great deal of debt, and I am at the point where I need to take some drastic steps to turn things around. I am strongly considering consolidating and refinancing my debt, but I'm not sure this is the best option. What would you recommend?
— J.D. in Ballston
Dear J.D.,
Vince Lombardi, the great football coach, once said, "Just because you're doing something wrong, doing it more intensely won't help."
When things are going wrong, it is important to back off and reflect on how you might want to do things differently. Often, when the going gets rough, we charge full steam ahead and continue to go in the wrong direction, even more intensely!
You need to discover what the real underlying problem is. Obviously, if you are in debt, you are spending more than you are earning. Consolidating and refinancing your debt won't necessarily change this pattern. In fact, it may very well enable it to continue.
In very simple terms, you must figure out how to either earn more or spend less. Without addressing the underlying cause of your indebtedness, you are very likely to find yourself in this position again sometime down the road.
I'm sure you have received your share of solicitations from credit card companies. The basic message is: Consolidate your loans at a lower interest rate so that you can afford to buy more things, usually ones that are significantly more expensive! It is the desire for more that is at the heart of the problem. Buying more simply serves to compound the problem.
What you really need to address to truly solve the problem is the belief that more is better. In reality, especially when it comes to debt, more is often worse.
Richard Carlson, in his book Don't Sweat the Small Stuff About Money, likens being in debt to being in a deep hole. In your struggle to get out, you wind up digging an even deeper hole. In order to truly resolve this problem, you must take responsibility for your part in your company's indebtedness.
One of my favorite sayings is, "Insanity is doing the same thing and expecting different results." If you refinance your debt, but ignore your own contribution to your company's debt, the same essential problem will arise again.
Real change in any situation occurs only when we understand our own contributions to the problems and begin taking constructive steps to change the situation. Blaming others for our difficulties is a trap and a cop-out. Once you recognize your role in your company's debt problems and take active steps to address them, you will undoubtedly feel happier and less stressed. So, be wise and start filling the hole rather than digging a deeper one.
