Paying off a substantial amount of debt is difficult, but certainly not impossible. With belief and commitment, you can tackle your debt and get rid of it for good. It’s all about getting into the right mindset and really wanting to be free from debt! The road to debt freedom contains plenty of ups and downs and as well as these, you might find yourself experiencing a rollercoaster ride of emotions along the way.
Every Wednesday for the next 9 weeks, I’ll be writing about some common emotions that go hand in hand with tackling your debt along with some practical advice on how to deal with them. If you missed last week’s post on ‘Fear’, feel free to check this out!
Stage 2: Denial
Being in denial about debt is strongly linked to that feeling of dread when we can’t bear to deal with the consequences surrounding our debt. Debt denial can be a huge obstacle in the paths of many people who have debt issues.
Often it feels easier and safer even to live in denial and carry on as we have been doing; keeping up with the Joneses, enjoying ourselves and living a ‘normal’ life like ‘everybody else’.
What is denial?
“Refusal to acknowledge an unacceptable truth or emotion or to admit it into consciousness, used as a defence mechanism.” Source: Oxford Dictionaries
In the context of debt, many of us are in denial when faced with the ugly truth of how much we owe to our creditors. It might be that we flat out deny the extent of our debt situation or admit that it’s true but instead skirt over the importance of dealing with it.
People in debt denial might be inclined to think along the following lines:
“What?! There’s no way in the world I owe that much. There must be some sort of mistake. Have I been a victim of fraud?”
“I know I’m in debt quite badly. Who isn’t? Oh well, you only live once after all.”
“Ok, so it’s more than I thought. Not to panic! It’ll be fine, things always work out in the end.”
“I know I need to start paying this debt off once and for all. And I will, just as soon as I’ve got my holiday out of the way.”
“I’m in a shed load of debt!! But I’ve got the wedding to pay for and we want to buy a bigger house. So I guess I’ll just have to work on paying it back after I’ve sorted my life out first.”
“I just can’t think about debts right now, it’s too much for me to cope with. I’m too stressed anyway about my job / family / college course. Trying to get my head around all this will just make me more stressed out.”
And there we have it: our debt has been nicely put on the backburner, ready for us to deal with it later when there’s no other option but to pay it back anyway – and more often than not at an even more inconvenient time.
If we allow ourselves to continue being in denial about debt for too long, we are inevitably making our problems worse. Being in denial about debt problems may be just the tip of the iceberg – what about planning for a secure financial future?
The chances are that if someone is in denial about debt, they might not be in the right frame of mind to be thinking about saving for retirement or building wealth. Clearing debt is the first stepping stone in getting finances in order.
How to stop being in denial about debt:
1. Recognise that you’re in denial
One of the main issues around being in denial about debt is that you probably don’t know that you are in denial. You might be fully aware of the extent of your debt but to you this is unacceptable, something that you don’t want to be thinking about and have shelved away at the back of your mind for another day way off in the future.
So something needs to happen to make you wake up and have that lightbulb moment. Hopefully you won’t have to hit rock bottom first. Look for the warning signs and try to be honest with yourself – your debt will catch up with you if you remain in denial. Only it will be much worse than it needs to be!
2. Decide to change and really mean it
Once you’ve realised that you’ve been living in denial about debt, the first step has been taken! Now it’s time to change. Here’s the tricky part… you have to really WANT to change. You might need to think about long lasting changes to your lifestyle which can be a bitter pill to swallow at first. But you will also have to change your mindset and view of debt.
Changing the way you view your debt is so important because after doing this successfully, everything else will fall into place. You’ll WANT to pay off your debt. You’ll WANT to live frugally in order to become debt free. And you’ll do what it takes to get there.
3. Think about what you want your financial future to look like
Once you’ve recognised that you’ve been in denial about debt, take a good look at what you want and need to achieve for a secure financial future. Do you want to have enough money to retire comfortably? Do you want to be able to see the world, buy your own home and have the option to send your children to university? Would you like to give more to charity; to family; to friends; or maybe just pick up the dinner tab now and then? Perhaps you’d like to make the odd purchase to treat yourself without feeling guilty. Where does having debt fit into all of this?
The truth is that it doesn’t fit. If you continue along the road of debt denial, then it’s very possible that your ideal financial future won’t take place.
4. Do the math and work out how long it will take you to get there
Once you’ve worked out what your financial priorities are, calculate how much you’ll need for them and how long it will take you to save or invest enough to make your vision a reality. It might just be that it will take longer than you think. But with this information, you can plan ahead and set yourself goals to achieve what you want.
5. What have you got to lose?
Whilst some people can manage their debt responsibly and even earn rewards from their credit cards without treading into the danger zone, there are others who find debt to be a dark lonely place. Being in denial about your debt will only lengthen the amount of time you need to spend in that place.
There’s always a way out, even if you need to ask for help from friends or debt management experts. You just have to really want it.
Can you relate to being in denial about debt?
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Related posts:
- The emotional stages of debt: Fear
- The Gift of Debt: A Taste of Freedom
- I will not give in: the cycle of debt has been broken
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37 Comments
I’ve never been in complete denial about my debt, but I’ve had moments where I don’t care about it and pretend to forget it. I guess it’s sort of like denial. Denial is such a great/bad coping mechanism. Great post and thanks for the tips!
Dear Debt recently posted…Your Self-Worth is Not Your Net Worth
Thanks Melanie! Like you, I always knew my debt was there but didn’t worry it too much at first. I just thought there was always later to sort it out!
Hayley recently posted…Personal Finance Blog Roundup: Friday’s Fab Links #22
Hi Hayley. Nice to see the second installment in this great series.
Back in the day when I had credit card debt, I would literally shove my reality in a drawer and not look back. Every bill I would get would immediatley be tossed into a drawer never to be seen again. Eventually this “strategy” would backfire and I would have to go into “save my ass” mode with not only CC bills, but collection agencies and utility companies as well. This was a pattern that followed me into my early thirties.
Over the years I got it all under control and now, as soon as a bill comes in, I open it immediately and try to pay it as soon as possible. I no longer deny its existence but accept it as part of my life.
Denial only makes things worse, which sucks!!
Thanks again Hayley and take care. My best to all.
Lyle
lyle @ The Joy of Simple recently posted…A Simple And Frugal Roast Chicken Recipe For About $10.00!!
Hi Lyle! I too went through many years of not opening letters or bills (so did my husband). We knew roughly what was in them – so we thought at least – and we didn’t want to worry ourselves too much by looking at the actual numbers… Nowadays though, we open everything! In fact, I look forward to opening debt statements as I can see the numbers going the right way now! 🙂
Hayley recently posted…Personal Finance Blog Roundup: Friday’s Fab Links #22
You’re so self aware, Haley. I have a hard time analyzing my own thinking as it relates to denial. It’s tough to know if it’s there or not. While I know we don’t have debt, it’s tricky to know if denial is at play in other financial arenas (are we just being prudent about proceeding with the side business, or are we procrastinating and in denial about it?…same question with rental property).
Done by Forty recently posted…Did Americans Really Overpay by $1B at Tax Time?
Thanks DB40! That’s an interesting perspective re your own possible denial. Procrastination does have a part to play when it comes to denial, there’s definitely that ‘putting off until later’ element there. Maybe the trick is to ask yourself what’s holding you back in those areas and then try to make a plan of action to get things started.
Hayley recently posted…Personal Finance Blog Roundup: Friday’s Fab Links #22
Great post! I don’t think I was ever in denial about debt or the amount, more like how much and how long it would take to pay off. People who just make the minimum payments are usually shocked to find out it could take 50 years or more to pay off their debt even if it isn’t a large amount. I always paid more than the minimum but I never fully realized how much of the money I put on my debt was going towards interest vs prinicipal for a long time, and when I did that it was a real eye opener and got me out of debt denial.
Morgaine recently posted…Weekly Spending: Jan 13-19
Thanks Morgaine! I could kick myself when I think about all that interest I’ve been charged over the years because I paid minimum payments for so long. I’ll definitely be educating my daughter about interest on debt when she grows. 🙂
Hayley recently posted…Personal Finance Blog Roundup: Friday’s Fab Links #22
Great post! I lived for years in denial because it was easier then facing the harsh truth. Sometimes I feel like ignoring a few debts to shorten the length of time I have to live on this extremely tight budget. But I talk myself out of it because I’d rather not owe anyone money and be happier in the long run.
Debt Busting Chick recently posted…8 Ways to Punch Your Spending Habit in the Face
Thank you! That’s exactly how I feel now – I’d rather not owe anyone anything. New outfit or making a payment towards debts? It’s the debts for me everytime!
Another excellent post!!
I think this is one of the scariest emotions to tackle since it requires a complete re-haul of mindset. And while overcoming denial is a painful process the end result is so empowering!
Claire M recently posted…Why It’s So Hard to Pay Off Debt – And What You Can Do About It
Thanks Claire! The problem that I faced with regard to being in denial was that I didn’t think I was in denial. I knew about my debt and was making minimum payments because I thought that was all I could afford. That’s where denial came in – I had to change my mindset to see things differently and was able to make some changes which have helped hugely along the way so far!
Nice work Hayley. The mental tricks we’re able to pull on ourselves, particularly when it comes to debt, would put Derren Brown to shame! It’s an amazing process of self-deception – there’s really nobody else to blame – and it’s sadly so self-destructive. You’ve provided a very practical framework here for helping people face the reality of what they’re in and how to begin to address it. Well done.
Wealth Tortoise recently posted…What Does it Mean to Invest?
Thank you so much! I really hope this series will be of use to people in situations like ours. What I’ve found amazing is just how much you can change things once you stop being in denial. People struggling in debt really can help themselves if they want to. 🙂
Of all the stages of debt, I think denial was the one that I lived in for the longest. It was only over a decade! 😛 “You just have to really want it.” – This is so true. Nothing dramatic happened to me to make me not want to be in debt any longer, one day I just realized this couldn’t go on any longer. It had to stop now.
Girl Meets Debt recently posted…Are You Addicted to Blogging?
Me too GMD. I remember thinking that I wasn’t in denial about my debt because I knew I had debt. But I wasn’t choosing to deal with it which is effectively denial at it’s best! Thank goodness we both saw the light! 🙂
Debt and drugs, YOU have to want to make the change. Everyone else can want it for you, but until you’re ready and willing to do the work it’s not going to happen. Great post.
KK @ Student Debt Survivor recently posted…Do I Need a Car in NYC? No, But I Have One
Thanks KK! Absolutely. Only when a person is ready to get out of denial, will they be able to do so!
I would say we lived in debt denial for about 4.5 years or until our student loan payments fired up. Until that point we just chose to block that part of our lives out of our minds. Sometimes I’m glad we did because it’s important to enjoy life. However I do wish we would have been paying extra when we could at the loans during the grace period.
It’s very easy to block debt out of our minds especially when repayments are low. For me, although I have good memories of the things I did whilst being in denial about debt, I wish I had faced up to it sooner because it probably wouldn’t have taken that long for me to pay it all back. And I could have made good memories in the years that followed whilst being debt free! Saying that though, I doubt I’d have the mindset I have now about money if that was the case!
Yes I can relate to this one the most. I just kept putting it off and putting it off..just paying the minimum. When I think about how much I paid in interest I could cry.
Tonya@Budget and the Beach recently posted…Five Smart Ways to Get the Most Out of Your Tax Refund
Me too Tonya! I often think about all the times I used to go out and blow money on nice meals and drinks whilst paying the minimum payment on my cards. Quite a sickening thought!
Keep going on your series! It’s inspirational.
I’ve never dealt with debt denial personally, but it does remind me of the millionaire mind. One of their key tenets is that to master money you have to master your relationship to money. Different people deal with money differently, e.g. debt denial, so by understanding your thoughts on money you’ll avoid the common problems like denial.
Jack @ Enwealthen recently posted…2014 Financial Goals: Are Yours Smart?
Thanks Jack! 🙂 I think you’ve hit the nail on the head with your point about ‘mastering your relationship with money’. Once someone in financial difficulty can do this, their situation can only improve!
I definitely think your right about having to WANT to change- just like breaking any other bad habit. And I’m definitely a procrastinator at the best of times, so at the worst…. I could certainly see a younger version of me in several of your denial quotes, especially:
“I know I need to start paying this debt off once and for all. And I will, just as soon as I’ve got my holiday out of the way.”
Mel @ brokeGIRLrich recently posted…From Scene Shop Minion to Stage Manager
‘Wanting’ to change is so important. I remember actually saying that to myself many years ago before I met my husband! I guess I didn’t really ‘want’ to be debt free back then.
I always knew the amount was there, but I did my best to ignore it. The funny thing is, eventually I even “forgot” about it. In my head, the money I have to pay back my parents, had become half as much as it really is. You can’t keep running and hiding, though.
Debby recently posted…Day 102 – With a Little Attitude.
That’s so true Debby, eventually things catch up with us and the time comes where we can no longer ignore our debt situation! Better to stop being in denial by choice rather than waiting until it’s too late.
I definitely was in debt denial during undergrad. At that point, my thought was “well everyone else has to take out student loans too so it’s really not that bad”. Wrong answer!
La Tejana @ Debt Free Tejana recently posted…Do the Hustle… The Side Hustle That Is
I was guilty of thinking along the same lines but with credit cards. Thanks so much for stopping by and hope to see you again! 🙂
OH yes, I lived here for a very, very long time. I’m SO very glad we’re not in denial now, but I still kick myself sometimes for not facing up to the facts sooner. But onward and upward, right?
Laurie @thefrugalfarmer recently posted…Best Personal Finance Articles for the Week ending 1/25/14
Definitely Laurie! There’s no point looking back – we shouldn’t have regrets in life. 🙂
Wow, can I ever relate to this post! If there was a way for me to dodge reality, I found it! Thankfully, being able to read about everyone else’s stories and starting my own with debt repayment has been the first step to success! Keep ‘er coming, sunshine. Lot’s of good stuff here.
Lindsey @ Cents & Sensibility recently posted…Empire Building Kit: Week 2
Thanks Lindsey! Reading other people’s success stories is really important. I came across lots of them once I started looking and it really spurred me on!
Ha! I’m a horrible PF blogger! We (he…I’m technically debt free) have a credit card (I was going to say it’s not that much, but realized that’s exactly what your’e writing about,) and we’re totally putting off paying the whole thing off till after the wedding. The thing is…I REALLY want to get married. We’re not going into further debt over it. But we would be saving on interest on what we already owe if we just paid that off instead. So I’m in denial. But I’ll get over it. In a few months. After the wedding. I’ve accepted my denial, at least?
femmefrugality recently posted…Financially Savvy Saturdays: Twenty Second Edition
Lol! I know how you feel, I did exactly the same although we owed many thousands in debt to worry about when we were planning to get married! Recognising the emotion is the important bit! 🙂 On another note, can’t wait to read about your wedding on your blog!