A Mindset Change That Can Help You Get Out of Debt
Getting out of debt isn’t easy, and while there are plenty of practical tips that can help , the psychological toll is a huge, often overlooked, obstacle. When you feel completely powerless against debt, it only complicates the process. While it takes money to get the job done, changing your mindset will go a long way toward financial freedom.
In Dear Debt , Personal Finance author Melanie Lockert describes her own story of paying over $ 80,000 worth of student loan debt in less than five years. She says that while all the basic money tips are a necessary part of the plan, what helped her the most was changing her outlook on money.
Learn to show gratitude
It’s natural to feel resentful when you pay off debt. You have to give up some luxury items to pay off your balance, even small luxury items. When your balance sheet is huge, it seems like you should give up these expenses forever. Lockert told us:
When I was in debt and struggling, I was frustrated by everything I didn’t have. All I could not do. It paralyzed me, and I wanted to spend more on things to feel better.
After Lokert dealt with depression, she went to a therapist at her graduate school to talk about her concerns. On the advice of her therapist, she began writing down three things for which she was grateful every day.
They could have been anyone. So I put on things like a hot cup of coffee, having a place to live and my family. When I changed my mindset and focused on what I was grateful for rather than what I was missing, I realized that I didn’t need to spend money on other things. I was already “rich” in many other ways.
Gratitude can indeed go a long way in quelling some of the financial impulses that make it difficult to get out of debt. Research published in Psychological Science (PDF) confirms this. Before making a money decision, subjects were asked to write about an experience based on one of three emotions: happiness, gratitude, or “neutral.” The researchers then asked them if they wanted some money now or more later. Subjects who expressed gratitude were almost twice as likely to delay receiving rewards and make smarter overall financial decisions. You can see how the results have changed:
I can relate to Lockert’s experience too. I’ve spent years thinking about scarcity . When I finally learned to be grateful for what I had, instead of worrying about what I didn’t do, I felt more confident and stronger . It made it easier to put an end to emotional spending, but it also motivated me to learn about investing, take risks in my career, and overcome my fear of money in general. When you feel confident and empowered, it’s also easier for you to tackle difficult tasks.
Turn envy into productivity
Jealousy is generally destructive, and when it comes to your finances, jealousy often leads to bad decisions. The whole concept of ” keeping up with the Jones ” is based on jealousy. For example, like most people, when I am jealous, I feel inferior. In the past, when I felt inferior, I often made up for it with clothing purchases or other entertainment. Subconsciously, I decided that I looked good enough that I would feel worthwhile. This is not only emotionally destructive but also ruined my finances.
Lifehacker alumnus Melanie Pinola wrote about her own experiences overcoming jealousy . She said it boils down to being more mindful, accepting gratitude, and realizing that praise is not an exhaustive resource. The Five Reasons Method by Trent Hamm helped me. In The Simple Dollar, Hamm writes :
The whole problem of jealousy comes down to desire. For some reason, whether you are consciously aware of it or not, you desire something that the other person has. You want this in your life. The question is, why do you need this in life? I like to use “five whys” to answer this question. Whenever I try to answer the “why” question, I repeat it five times, asking the answer I come up with for each question.
This method is useful because you get to the very core of your jealousy and discover something much more productive: purpose. In terms of debt, it’s powerful because it helps you keep up with your goals and prevents you from making decisions that negate all your good work, such as spending on things you don’t need, only to get into debt. Not only can you keep jealousy from ruining your finances, but you can also evolve into something more productive. Lockert explains:
If you’re jealous of someone else’s success, let that inspire you to work harder. If they can do it, so can you. Everyone has to start somewhere, and you cannot compare yourself to someone else’s journey.
In her book, Lockert explains how she used jealousy to her advantage by creating networks. She contacted peers whom she envied and asked for advice and advice. This serves both practical and emotional purposes. You turn your negative feelings into something more positive, which makes you less inclined to buy shit that you don’t need to compensate for, and dig into debt even more. However, in this way, you also expand your network, opening up more earning opportunities for yourself.
Look for opportunities to pay off debt
You can be as frugal as possible and cut all your expenses to the bone, but making more money to start with will take you five steps further.
However, this is much easier said than done. Most people don’t have unlimited pay jobs. Most people do not have free time to find a second job or part-time job. This is where ingenuity comes in.
I realized that debt was running my life in different ways, and that my situation was holding me in a negative feedback loop. I felt stuck and didn’t know how to get out of the situation. I felt like this for over a year and realized that I had to change, so I started to go into problem solving mode. How could I get out of this situation? What could I have done to turn this challenge into something else?
Of course, there are many ways to earn extra money , but they can work for everyone. There are many things people sell or rent , but you may not have these things. At some point, you should exclude answers that do n’t work for you and focus on the possibilities instead. Lockert said:
Not being able to work full-time has taken a heavy toll on my self-esteem. I felt unworthy of working or making money. Because of the struggle, I got carried away with a secondary business in order to make more money. I have worked as a brand ambassador, event assistant, nanny, mom’s assistant and many others. I did my best. As soon as I stopped focusing on traditional work, I realized that earning opportunities are everywhere.
I began to believe that I was a money making machine and that I could use my skills, connections and fuss in my work. Work breeds more work, especially if you’re doing killer work, keep an eye on it, and build your reputation.
Lockert began to view her obstacles as opportunities. When I asked my mom how she managed to save ten thousand dollars and move us to the best minimum wage neighborhood, she said the same: opportunities aren’t always fun. For example, her “opportunity” was working overtime at her terrible job. “Most people will not see this as an opportunity,” she admitted. But all she cared about was how to support her goal to move, go to school, and find a better job.
Of course, this solution isn’t for everyone. The point is that you have to find out what works for you. Knowing how to look for opportunities to pay off your debt will go a long way. Lockert puts it this way:
It can be difficult to see the best side when working through problems, but if you focus on creating opportunities to solve a problem, you can get through a difficult situation even faster – and stay sane while your world is crumbling. It’s really about awakening hope when things can seem hopeless.
Most of the debt tips you read highlight the tools and tactics you need to get out of debt. Don’t get me wrong, these tools and techniques are not only important to learn, they are essential. However, it is easy to overlook the psychological loss of debt, and debt can really tire you out. It makes you feel defeated, helpless, and completely out of control. When you feel this way, it is difficult to achieve any goal. Once you learn how to deal with the emotional side of debt, it will be much easier to use these tools and techniques effectively.