Gails Blog

I recently worked with a new couple that made go, “hmmm”. She’s only 26 and already owes over $40,000 in consumer debt, even though she doesn’t pay a cent in rent and has virtually no real expenses. Sure she has a cell phone and a nice car, but they’re toys, not tools of her trade.

He went nuts with his credit cards when he first got them – yes, he join three separate gyms – and then froze his cards. He’s been working to pay them off ever since. He’s paying in the high teens and mid-twenties when it comes to interest, but has never considered negotiating his rate down.

So what happens to us to make us think that when we’re using our credit cards we aren’t really spending real money? How do we come to delude ourselves? What lets us rack up thousands of dollars in debt without batting an eye? And what lets us carry around balances on our credit cards, at huge interest rates, without losing our minds?

Hey, I know there are people out there who use their credit to make ends meet. Lose a job, have a child get sick, or watch your car die in the middle of a highway, and the idea of putting it on a card and carrying a balance becomes a secondary issue to taking care of the BIG problem.

I’m not really thinking of those people. I’m thinking of the people who bemoan their debt while booking their next cruise. I’m thinking of the people who can’t drive a regular car, they have to drive a car they really can’t afford. I’m thinking of the people who can’t seem to find the money to repay their old bad spending habits because they’re too busy traveling (on credit), eating out with friends (on credit) or shopping (on credit.) What makes those people immune to the gut-wrenching stress that other people feel when they owe money?

Is there such a thing as a debtor personality? Or is it simply a case of being clueless?

Psychologists have done some research on the issue of debt personality. Some believe that people who accumulate debt also:

• Lack the ability to plan
• Are not reflective in their thinking
• Have an urge to be active
• Are impulsive
• Can be anxious or apprehensive about making the wrong choices
• Need excitement and novelty
• Tend to disregard possible negative consequences.

When I ask my fams what they spent their money on when they were going into debt, they can’t tell me. When I look around their homes I may see some evidence of their debt, but very often they don’t have a lot to show for the amount of debt they’re carrying. And when I show them how much money they’re spending, they’re stunned. Some accuse me of making the numbers up. Ha! I don’t have to; they’re great all on their own.

So how do we get so far away from the idea that what we’re doing is SPENDING MONEY and that at some point in the future that money will HAVE TO BE REPAID?

Part of the problem stems from the “Minimum Payment” … the idea that you can have what you want now, for as little as $10 a month. Hey, but that’s $10 a month FOREVER. Do that a couple of dozen times and now you’re up to $240 a month. Do that four years and now you’re up to $960 a month… and you’re no closer to ever being paid off. Ouch!

It’s easy to use credit. It’s hard to pay it off. And if your circumstances change and you find yourself with less money in the family pot, you can really strap your ability to roll with the punches if you’re carrying around a bag of debt.

It’s time to become a little more reflective in your thinking. It’s time to learn to plan. And it’s time to stop disregarding the possible negative consequences of your rampant spending.

Want some real excitement? Try living on half your income so you can put the rest to debt repayment. Have the urge to be active? Get another job and use all the income to pay off your debt. Impulsive? Eliminate the temptation: don’t carry your cards and stay out of the malls.

There’s always a solution. If you really want one. So, do you?