How to stop feeling yourself into debt

PHOTOGRAPH BY GEOFF WARD 2009

When it comes to money or the lack of it, a big determinant is how you feel. Many people use money as a substitute for emotions. Either they use it to make themselves feel better, more in control, more powerful; or their emotions drive them to act in a way that is contrary to their long-term best interests. Alvin Hall, the internationally renowned financial educator and TV/radio broadcaster in his book Money Magic: seven simple steps to true financial freedom; identifies the six most common feelings that drive people into debt.

According to Alvin Hall, our deadly emotions lead us to misuse credit. Because our emotions are a powerful driver, it is worth analysing your debt problems to see which of these unhelpful emotions are fuelling your debt issues. The six emotions are:

1. Denial. Denial let's you ignore your money issues and so you don't see them mounting up. The problem is that remaining in a state of denial can be terminal for your financial health. If you are being secretive about what you are spending or have started to tell half-truths or worse still lies, then this could be your signal to get help.

2 . Entitlement. The feeling that you deserve to reward yourself continually can be a sign of big trouble to come. If you feel entitled to treating yourself with purchases you can ill afford this could be masking a deeper need for recognition and appreciation.

3. Compensation. This emotion is driven by a feeling that your past has earned you the right to have the things you were previously denied. The deep sense of missing out can be a disastrous combination with a credit card.

4. Crowd – think. This is the herd mentality. I.e. you should be doing it because everyone else is. Therefore, instead of budgeting within your means, you are drawn into the consumer game and whip out your credit card in competition with your friends who are engaged with the same activities.

5. Empty hope. This is relying solely on the promise of better things to come, it is living within a fantasy, where you are rescued by a marvellous lottery win or a great pay rise. There is a fine line between believing in the abundance of the universe and simply ignoring your financial situation.

6. Finally we come to fear. This is the fear of maths and numbers. Many people considered that the number side of finance scary. They stick their heads in the sand hoping that things will go away by themselves. If you want to be able to handle money a lot better, a good place to start is with understanding your emotions. As Alvin Hall says, stop blaming someone or something else, take control of your feelings by being aware of what they are and then let them know who is really in charge.

What impulse purchases have you made recently – what were your feelings at the time. Please share,  I look forward to reading your thoughts and comments.