inside: Stop repeating the same ol' cycle of debt and become an overcomer once and for all. 4 simple and powerful hacks to change your mindset about debt once and for all.
Earlier this year a client came to me for help with financial planning. She has a lot of great things going for her. She is healthy, has a great job and engaged to a man she beamed about when she spoke.
She also has six figures of student loan debt that cast a very dark shadow over all this joy. She knew she wasn’t alone and that going to school was required for her job.
The thought of bringing this debt into a marriage brought up extreme anxiety and guilt. Even so, she asked, “but it is good debt, right”? I told her there was no such thing.
What is “good” and “bad” debt two of the most common questions I hear from clients, journalists, friends and family.
Debt is an obligation to pay for something in return for something received. Labeling it as good or bad does not change it in anyway.
Stop repeating the same ol' cycle of debt and become an overcomer once and for all. 4 simple and powerful hacks to change your mindset about debt once and for all. #debtpayoff #debtsnowball #getoutofdebt #howtopayoffdebt
It also doesn’t make the person with debt any better or worse than their neighbor. Instead of assigning feelings to your debt I believe the best thing you can do is keep your emotions out of it.
Stop repeating the same ol' cycle of debt and shift your mindset with these 4 powerful hacks
Here are some tips on how to begin that process.
Just the Facts
Debt is a circumstance or a fact. For example, one person could say “I racked up $10,000 of credit card debt because I was reckless in my 20s”.
Another person could say “I only have $10,000 left in credit card debt and see the light at the end of the tunnel!”
One feels significantly worse about the situation but what is the fact? The only fact in either situation is that each person has $10,000 in credit card debt.
They just have different thoughts about the same fact.
Spend some time collecting the facts about your financial situation.
- Write down exactly what you owe, the interest rates, the due dates, the terms of the loan etc. Once you can see the facts in front of you it will be easier to develop a plan.
Yes, you may “hate” one debt but try to look at each of them objectively. Sticking to the facts is all you need to do during this process.
- Another important fact is knowing how much money you have available to pay down your debt with.
All these facts change so it is important to reevaluate them on a regular basis and when any major changes to your finances occur.
Change is Hard, But Worth It
Once you know the facts it is tempting to jump into action.
Let me warn you, this may cause history to repeat itself. Our brain resists change. So far, all the actions you have taken have kept you alive.
You also create routines and habits to make things easier on your brain. This isn’t limited to breathing or brushing your teeth.
For example, if you got a credit card and went shopping that sent a message to your brain.
You got something you wanted that you might not have been able to afford. This feels great!
It is like a straight shot of dopamine that you were able to get much faster than saving up the money you needed and paying for the item with cash.
Your brain loves this feeling and will seek out more of it.
It feels good to spend money.
So good in fact that retailers are constantly finding ways to make it more pleasant.
Paying cash hurts and your brain doesn’t like it.
Swiping a card or buying with 1 click on the other hand feels great. Once you develop a pattern that spending money feels good your brain will help you find ways to justify it.
That behavior that makes you sad (spending money) will also seem like the cure. Rinse…repeat…
Address your Thoughts
One way to make changes that stick is to address the thoughts and emotions your current situation has created.
Yes, it is tempting to jump into action by throwing all your savings towards your “bad” debt but that will not help you stay out of debt in the future.
Remember, your brain knows that spending is a quick path to happiness!
You need to activate the cerebral cortex (aka the human part of your brain) to create a plan.
This part works carefully and slowly which makes it capable of amazing things. Thanks to our powerful brains we can create and execute plans to get us out of any amount of debt.
Stop repeating the same ol' cycle of debt and shift your mindset with these 4 hacks
If you read through stories about people paying off large amounts of debt (check here for inspiration) you will notice a pattern. The new thoughts that each person had were strong enough to outweigh the guilt, shame and old routines that weren’t working.
These people didn’t win the lottery or have some other stroke of luck that changed their situation. They changed their mindset and did the hard work and were rewarded in the end.
It’s Your Turn
If you are ready to stop feeling like there is a weight on your shoulders, choose to change your thoughts today.
Grab a journal and start paying close attention to every thought that crosses your mind.
For example, say you plan to pay $50 extra dollars towards your debt but one month you take that and spend it on take out.
Instead of declaring you are a failure what I want you to do is pause and think about why it happened.
- Write down what went on that day?
- Who did you talk to or not talk to?
- Did you forget to eat earlier or not have the items you needed on hand to cook the meal you planned?
All these questions will help you realize why you spent the money elsewhere and correct that from happening again so you can stay on track.
You didn’t fail, you learned.
Making changes in your life should come from a place of love – not of hate or shame.
You can’t hate yourself healthy, rich or happy.
My client couldn’t start a healthy marriage hating herself for having debt. That would just attract more feelings of guilt and shame into her marriage.
She might start looking for ways to fault her husband for things to try and level the playing field.
Instead, she reached out for help developing a plan.
Overcoming debt with 4 incredible (and simple) mindset shifts you need to make today
She did this from a place of self-awareness and hope. Money can be redirected in different places to pay off the debt.
The real work comes from helping her know that she is not her debt.
She is just a person that has debt and now she has a plan to pay it off while she starts a new chapter in her beautiful life.
Misty Lynch, Certified Financial Planner and blogger. I live outside Boston, MA with my husband 6 year old son, 4 year old daughter, Rottweiler and a goldfish. My life is busy and fun, but I struggle with finances some days just like everyone else. (Yes, even as a CFP®!). Every day I fight old spending habits and the belief that money can fix things. I’m also making a conscious effort to give back to my community, help small businesses, and be a good example for my children when it comes to money. I didn’t spend any money on clothes shoes or bags in 2018 and want to help others find ways to do more with what they have and find peace with their money.