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Are you ready for some tough love?

You are the cause of all your debt problems. You are solely responsible.

For some, this is a bitter pill to swallow. It doesn’t feel good. Facing this truth can be uncomfortable, but until you see the cause of your financial problems looking back at you in the mirror, you may never get out of your vicious cycle of debt.

Taking responsibility is difficult: It means you have to give up the victim role. But it is the only way you can empower yourself, take charge of your life, and permanently solve your financial difficulties.

When you are a victim to debt, you give away all your power to solve it: After all, it is someone else’s fault. It is outside of your control. There is nothing you can do about it.

However, when you own responsibility you take back your power. The fact that you caused your debt means you have the power to cure it and never let it happen again, and that is a good thing.

But It’s Not My Fault

The surprising reality is it doesn’t matter whether you are truly a victim to your debt or not — the result is the same.

Maybe you lost your job because of an economic turndown, or you ran into unexpected medical expenses, or a sudden and desperate family problem came up. These are all very common paths to debt and they all imply the debt was not your fault. After all, the circumstances that caused it were beyond your control. How could it possibly be your fault?

The sad truth is misfortune is one of the leading causes of debt because it happens so frequently, and that is the key point. Misfortunes are not unexpected: they happen frequently. While it might be true that the unfortunate circumstances were beyond your control, the fact that they resulted in debt is fully within your control and 100% your responsibility.

Owning responsibility can be uncomfortable. However, the goal is to get out of debt and self responsibility is the most practical and efficient path to achieving that goal. This is about practical solutions — not about feeling good. Being a victim to your debt only keeps you stuck in the pattern: self-responsibility is what opens the door to freedom.

When you take responsibility, you recognize how the seemingly unpredictable circumstances of your life are actually predictable when viewed over your lifetime. The chance of any one financial calamity occurring in any one year is small, but over your lifetime you should absolutely expect and plan to experience one (or more) of these setbacks. You must plan for them with proper insurance and an emergency fund to carry you through those inevitable difficult times or debt will be the result.

In other words, the probabilities are extremely high that you will experience at least one job loss, unexpected illness, devastating lawsuit, horrific medical expense, divorce, identity theft, or other financial emergency in your lifetime. If you don’t plan accordingly it can throw you into sudden “unexpected” debt and wipe out a lifetime of financial progress — even though it is totally expected.

That’s why you are responsible. Even though you may be a victim of the specific event, you are fully responsible for improper planning given that nearly all lives are touched by one or more of these events at some point. That means the financial outcome is your responsibility even if the actual event that caused it is not.

The Wealthy Alternative

Risk management planning is the wealthy alternative to unexpected debt.

Financially successful people know that bad things happen to good people and manage those risks with appropriate insurance and reserve funds. The rule is simple — always insure those losses you can’t afford to take. For example:

  • Adequate life insurance to provide replacement income if the primary breadwinner passes.
  • Disability insurance to protect against major injury causing loss of income.
  • Fire insurance to protect against the destruction of your home and possessions.
  • Liability insurance to protect against a devastating lawsuit that could wipe out an entire lifetime of savings with just a single mistake.
  • Health insurance to protect against the high cost of getting sick.
  • Emergency reserves to help pay unexpected expenses when the car suddenly dies, you’re temporarily laid off, or serious illness strikes.

When you plan for unpredictable (but inevitable) adversity then you are prepared so that the inconvenience of a temporary setback doesn’t result in financial calamity. Proper insurance and emergency reserves are a normal and necessary budget item similar to food and utilities. If you don’t think you can afford insurance, then look for ways to reduce your spending so that you can. It’s not optional because eventual debt is the likely alternative.

The truth is nobody looks forward to adversity. But when you are prepared the consequences are temporary and manageable. When you don’t prepare the financial results can be devastating resulting in (not so) unexpected debt.

This story is an Op/Ed contribution to Credit.com and does not represent the views of the company or its affiliates.

Image: Michael Blann

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