One of the problems with money is that there never seems to be enough of it to buy all the things we want in life. However, the lack of funds doesn’t necessarily stop some of us from getting the things we desire. Thanks to our culture of credit, there are many sources from which we can borrow – bank loans, credit cards, payroll advances, and informal money lenders.

I can still recall my first loan transaction. After graduating from university, I wanted to buy my own television so that I could determine what I wanted to watch instead of depending on my parents’ viewing preferences. Even though I didn’t have any money to buy one, my mother had saved up enough money in my credit union account over the years to allow me access to a loan.

Thinking back on that experience in which I had to fill out forms, get proof of income and find a suitable guarantor, I remember that it made me feel important, as if I was doing a very grown-up transaction. It also felt great knowing that I could get what I wanted even though I didn’t have any money!

Debt spiraling to new heights

That initial loan of a few thousand dollars eventually grew throughout the years into a debt of a few hundred thousand dollars. Whenever I needed something new for my home, or wanted some money to travel, or was short of money to deal with basic bills, I would simply seek to borrow some more money.

I moved my loan from one institution to the next, ostensibly in an effort to get a better financing deal. However, instead of trying to reduce the balance, I usually ended up borrowing a little bit more to take care of some new expense. I had been through various banks, credit unions and financial institutions, not to save and build wealth, but to satisfy my insatiable appetite for borrowing.

As a former shopping aficionado, I remember the thrill I would get when I discovered some new trinket that would fit perfectly in a certain spot in my home, or when I found a new gadget that would make my life so much easier. Shopping without worrying that I would run out of money was so liberating, and that was what made credit cards so appealing.

Living in a fool’s paradise

Financial guru, Suze Orman, helped me to understand that my financial fantasy land was really a fool’s paradise. After reading her book 9 Steps to Financial Freedom, I finally realised that my dependence on debt to make ends meet and buy things that I couldn’t afford was in fact costing me plenty from all the interest I had to pay on my loans.

I had never considered the interest cost of my debt habit; it never occurred to me how much money I had figuratively flushed down the toilet over the years. Deciding to follow Orman’s debt discovery plan, I was determined to find out just how much I had lost. I had kept most of my old credit card statements and bank receipts and decided to calculate the interest I had paid on my loans.

I became increasingly distressed as I worked out how much of my hard-earned money I had given to the various lending institutions in the past. When I added up all the interest payments, the total amount could have bought me a car or given me a significant deposit towards a house. “What a waste,” I thought, filled with regrets about my previously casual attitude toward debt.

Going on a debt diet

After realising that I had been sabotaging myself by borrowing to finance my lifestyle, I decided to finally put an end to my self-destructive debt habit. I had to find a way to escape from the financial prison that I had created. Fortunately, there was a lot of easily accessible information about getting rid of debt on the internet and the television, and in magazines and books.

I was insatiable in my search for solutions; the resources that I unearthed are too numerous to mention. I reviewed dozens of approaches towards debt reduction and absorbed all the tips and tactics until I developed my own strategy for debt elimination. I learned how to assess my debt, consolidate loans wherever possible, and prioritise and fast-track the loan payments.

Many years later, I discovered a book called The Total Money Makeover by Dave Ramsey. The NY Times bestseller explained in great detail the system that I had pieced together and used successfully to eliminate my debt. Ramsey’s debt snowball technique of paying of the smallest loans first has been tried, tested and proven by thousands of formerly debt-challenged persons.

The good news is that however dismal your money situation might be now, you can always find help to fix your problems through relevant books, CDs and websites. Next week we will continue to look at other resources that can assist you in your journey towards financial freedom.

Copyright © 2011 Cherryl Hanson Simpson. No reproduction without written consent.

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Originally published in The Daily Observer,  January 20, 2011

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl