Why Resolutions to Get Out of Debt Fail -- And How You Can Turn Them Around
So here it is, a New Year, and you’ve already broken your resolution to stop using your credit cards and get out of debt.
That means you can put improbable notions of instant budgetary perfection to rest, and get real about changing your financial life.
“Getting out of debt” and “getting on a budget” often top the list of resolutions Americans make each New Year. We know what we’re supposed to do – track our spending, create a budget, and stop buying things we can’t afford. But we often end up doing exactly the opposite.
“From a psychological perspective, sabotaging budgets and cheating on diets are branches from the same tree. And you have to get to the root of the problem in order to fix it,” says Dr. Kit Yarrow, Consumer Psychologist and Professor at Golden Gate University.
Along with many other experts I queried, Yarrow believes that emotional and psychological issues must be tackled before we can expect to make long-lasting changes in our spending behaviors. “Budget-breaking is normally in compensation for a feeling of deprivation -- someone who is overburdened, feels unappreciated, who doesn’t have time for themselves or for pleasure may get a quick-fix out of buying impulsively,” say Dr. Yarrow, who says she’s also “found that people who feel they have to be ‘nice’ but are in fact angry about something often work it out through shopping.”
Emotional spending is as common as emotional eating, agrees Tricia Greaves, an addiction recovery expert and president of BeTotallyFree.com. She suggests asking yourself what feelings you are trying to fix when spend. “We want a purchase to change our mood - to make us ‘feel better.’ Well, it won't,” she says. “After the initial rush of a purchase is over, we'll feel just like we felt before...except a little broker! Things don't make us feel better, but facing our feelings and problems head-on can.”
This may not be a do-it-yourself project, advises financial planner Rick Kahler, co-author of Conscious Finance and The Financial Wisdom of Ebenezer Scrooge. He recommends a support system that includes a financial therapist, financial mentor, a professional bookkeeper, and one other person (not your spouse) whom you agree to be accountable to. “The mentor needs to be someone who models the behavior you are working toward—who is able to successfully pay taxes, fund a retirement plan, save and spend no more than his or her income,” he says. “The therapist needs to be someone who has done his or her own therapy around money.”
If you want to see how far you can go on your own, be realistic. Changing your habits can be most effective when you start with simple, small steps, advises Dr. Robert Maurer, a clinical psychologist on the faculty of the UCLA and University of Washington School of Medicine, and author of One Small Step Can Change Your Life. Dr. Maurer is an expert on kaizen, the Japanese technique of continuous quality improvement that had a lot to do with Japan’s industrial success after World War II.
To apply kaizen to your financial life, ask yourself a question each day such as, “What fear or challenge am I using spending to distract myself from?” he suggests. “With enough daily repetitions of this question, asked in a gentle tone of voice, the brain will begin giving you insights. Facing these fears will give you freedom from creating painful distractions,” he says.
Dr. April Benson, psychologist, founder of StoppingOvershopping.com and editor of I Shop, Therefore I Am: Compulsive Buying and the Search for Self, offers even more specific questions to ask yourself before purchasing anything that’s not essential.
“A debt diet is much like a weight loss program for people in debt…and so much more,” observes Gary Ryan Blair, a.k.a. “The Goals Guy” and creator of 10MillionResolutions.com. He recommends a strategy called “Divide and Conquer.” Take your bigger resolution of enjoying a debt-free life and make a number of smaller resolutions that, when applied together, will “accelerate the rate with which you gain back your freedom and control.”
He offers these examples of positive, but more manageable, resolutions:
And if those prove too difficult, keep breaking your goals down into even further. “Training the brain to spend prudently and enjoy it is best done in small steps,” says Dr. Maurer, who also admits that it may be easier said than done. “It is challenging to use small steps, especially since the amount of debt may be large, and self criticisms harsh.”
He warns that we are often tempted to take drastic steps to relieve our financial pressures and harsh inner judgments. But using kaizen, you take small steps to train the brain; the brain will make the big leaps once you have “programmed” it for the new behaviors you desire. For example, ask yourself once a day: “How can I save one dollar today?” With enough daily repetitions, the brain will start to give you very creative responses.
When starting, look for small ways to conserve cash, suggest Dr. Maurer. For example:
All this advice is assuming that you aren’t in dire financial straights. If you are falling rapidly behind on your bills and creditors are calling, you’ll need to take action quickly – and massive action may be in order. Talk with a debt expert and find out what your options are before you make irreparable mistakes, like raiding your retirement funds to pay off a credit card bill. Once you have stabilized your situation, you can then use these techniques to keep yourself from falling back into your old patterns.
Try, and Try Again
If you find yourself starting each year knowing that you probably won’t stick to your resolutions for long, maybe it’s time you admit that you are human. “Broken resolutions result in a lot of self-admonishment and guilt which, believe it or not, makes the problem worse,” Dr. Yarrow advises. “So people have to be gentle on themselves, open up, and take a look at what’s underneath those behaviors - and it’s usually not that they’re weak, or bad, or any other mean things folks say to themselves.”
You may also have to be more aware of and forgiving toward friends and family members who seem to sabotage your efforts to get back on track, much in the same way you learn to say no to your grandmother who makes your favorite cookies every time you start a diet. Ask them for help, support, and encouragement, but continue to be firm about your commitment to stop overspending.
And finally, be careful about getting too caught up in self-analysis. It’s possible to focus so much on the questions that you forget to find answers. As Dr. Phil says, “Get real and don’t live in a fantasy.”
A high credit score often equals savings on loans and credit cards.
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