3 Tricks Our Minds Play That Keep Us In Debt

getting out of debt
“If you can change your mind, you can change your life.” – William James

In his book, “Secrets of the Millionaire Mind”, T. Harv Eker suggests that our ability to earn, hold and grow our money is heavily influenced by everything we’ve ever heard, seen or experienced in relation to money. Over the past few years, I’ve come to believe that one of the most important factors in getting rid of debt and building wealth is overcoming the psychological barriers that stand between your current situation and your future success.

Here are three potentially hazardous thought processes that you may be falling prey to that have the ability to sabotage your best efforts without even realizing.

The Danger Of The Comfort Zone

We get comfortable with what’s familiar to us and, as a result, our brains get very nervous when a familiar situation shows signs of changing. One of the brain’s many jobs is to protect us from pain (both physical and emotional) and often it reacts so quickly that we don’t even notice the danger (our hand on a hot surface) until we’re already taking action to avoid it (pulling our hand away). Most of the time, the brain does a great job of keeping us safe, but sometimes its efforts work against us, especially when it comes to emotional pain.

The brain creates feelings of fear and anxiety to warn us to proceed with caution, but these feelings often lead to us staying in the same place and repeating the same patterns. This is especially true when it comes to debt. We get “comfortably uncomfortable” with our situation, we get used to the constant state of anxiety and we lose the ability to picture life any differently. Consciously, we justify our situation and subconsciously we avoid doing anything that will change it. The problem with this is that with every month that goes by, we’re digging ourselves more firmly into the debt rut. If we truly want things to be different we have to be willing to step out of our comfort zone and into a growth zone and we have to get comfortable with getting uncomfortable. Logic says that if we don’t like the way things are then we have to change. Knowing and doing are two totally different things, but if you can summon up the courage and motivation to take the first step, all you have to do after that is keep walking.

The Danger Of Knowing

Many of the beliefs that we hold aren’t ideas or concepts that we came up with on our own. They’re beliefs and attitudes that we’ve absorbed from people around us and adopted as our own. Often, these beliefs were adopted at an early age and because they came from people who we looked up to (parents, teachers, peers etc.), we never actually questioned whether they made sense, we just accepted them.

One of the key steps in making a change is to identify any beliefs or habits that you hold that won’t help you get to your goal. For example, a belief that you’re a terrible cook and that all vegetables are gross and disgusting will hold you back from developing healthy eating habits. Similarly, a belief that you’re a terrible money manager and that you’ll never be rich will hold you back from taking control of your finances. If you want to make a change then you have to be willing to entertain the idea that, just because you’ve believed something for a long time, doesn’t mean that it’s actually true. In fact, you have to be so okay with the idea of being wrong that you’re willing to look for examples that prove it.

This is a strategy that has worked really well for me. For example: if I want to get better at managing money but I think it’s hard to do, then I look for evidence that managing money is easy. If I want to get out of debt but think that I just don’t make enough money, then I look for stories about people in similar situations who became debt free. Doing this shows your brain that your goal is possible and makes it easier to take the steps necessary to make a change.

The Danger Of Ignorance            

Often, the debt traps that we fall into are traps that we weren’t even aware existed. We don’t teach the principles of debt management in schools, we don’t educate people on how interest is calculated on loans and credit cards. We don’t teach them that the true costs of home ownership are much bigger than the cost of a mortgage payment and, as a result, people find themselves responsible for far more debt than they realized. We live in a society that increasingly measures the cost of things in terms of the monthly or weekly payment and not the total purchase price. The reason for this is simple: it’s a marketing ploy designed to hide the item’s true cost to increase sales.

For example, we might be hesitant to pay $17,000 for a car but when it’s priced at only $89/bi-weekly, it seems much more affordable.  We overlook the fact that signing up for this deal commits us to seven years of loan payments because we’re excited to drive away in our new vehicle. Similarly, we might overlook the high interest rate on payday loans because paying $69 to get $300 of breathing room before payday seems like a good deal. The danger with this is that when payday rolls around, you don’t have the $300 to repay the loan and so you borrow again against your next pay cheque. If you’re not careful, you can find yourself in a vicious cycle that can rapidly get out of control.

One thing I believe very strongly is that, ultimately, we are responsible for our own situation. While we can’t control what life throws at us, we can control how we react to it and we can do things that make us less vulnerable. Carrying debt makes us much more vulnerable to the ups and downs of life. We are hit harder by the lows and we can’t fully benefit from the highs. Understanding how our money psychology could be holding us back from making positive changes, allows us to drop the beliefs and habits that don’t serve us and adopt new beliefs and habits that will take us away from our current situation once and for all.

Category: Debt Solutions | Tagged in:

Feb 18, 2015

About Sarah Milton

Sarah Milton is currently stretching her professional wings in Edmonton, Alberta in a role that allows her to combine her talent for writing and speaking with her training in the financial services industry. She is passionate about inspiring people to get excited about their money and empowering them to take control of their financial future. Sarah is the co-author of the book, Take Control of Your Money, she writes a weekly post for RetireHappy.ca and writes twice a month for MoneyProblems.ca. You can follow her on Twitter @5arahMilton

Join the Conversation

Leave a Reply

Your email address will not be published. Required fields are marked *

2 × 2 =