How Awareness Gets You Out of Debt

To get out of debt, you must know the Debt Awareness Levels. So, let’s learn them.

Once you know your actual Debt Awareness level, you can begin working to get yourself out of debt. I’ve walked plenty of students through this process in my private coaching program – it can work for you, too.

Let’s get started…

Debt Awareness Level 1: You are in debt and in denial

At Level 1, you make statements like “I’m really not in debt” and “I’m only in debt temporarily” and “I’m in debt only because of xxx” and “I’ll be out of debt any time I choose” and “As soon as I get my job back, I’ll be out of debt”. These are all self-delusions. People are either in debt their whole life or they have savings and no debt all their life.

Debt Awareness Level 2: You are in debt and you know you are, but you do not know many details

At Level 2, you have admitted that you are in debt, but you are unsure of the details. You do not know exactly how much you owe on your mortgage, or on your car loan, or on any of the department store cards, or on your credit cards, etc. You do not know the interest rates. You do not know the repayment options. You have excuses like “well, my balances change every day so there is really no way to know”.

Debt Awareness Level 3: You are in debt and you have all the details

You have all details, in one place, neatly printed on paper, likely on a computerized spreadsheet so that it is easily and neatly updated. You have the name of every debt, the balance as of the first day of every month, the interest rate, the repayment options, etc. By the way, if you are in this elite group, you represent less than 10% of all those who are in debt. Bravo.

Debt Awareness Level 4: You are in debt and you have all the details and your debt is dropping monthly

You know your numbers. You track your numbers monthly. You are wise with your expenses. You spend LESS than you earn. Your debt is decreasing. You are in a super-elite group of about 2% of all those who are in debt.

So how about you? What level is your Debt Awareness – and if it’s not Level 4, what are you going to do about it? Share your thoughts in the comment section below!