Finance

How To Regain your Financial Confidence After Debt

How To Regain Your Financial Confidence after Debt | www.TheHeavyPurse.comDebt robs us of so much, including our confidence. Most people spend a period of time where they are happily in debt, blissfully unaware of the danger lurking behind those shiny credit cards. After all, debt is a giver. It gave them a home, education, vehicles, clothes, vacations, a big-screen TV and so on. But once the debt veil is lifted, suddenly they see things very differently, especially when living beyond their means is the main culprit of their debt. For many, this is where guilt sets in, and they lose confidence in themselves. This is the dirty little secret of debt. It not only robs you of your financial freedom, but also makes you doubt yourself at a time when you need to be strong.

On Monday, I asked you whether you viewed money fearfully or joyfully and several of you acknowledged that you struggle to spend joyfully. This isn’t an unusual problem. Past circumstances can thoroughly ingrain the fear of making a mistake or going back into debt or not having enough money to point where you feel unable to even buy the things you have saved for. But don’t despair, you can find the joy in your money again.

Be a Financially Confident Decision-Maker in 3 Steps

It’s no fun when you find yourself second-guessing every decision you make and don’t trust yourself to make good choices. Some people believe this is their punishment for past money mistakes and others will give away their decision-making power because they no longer trust themselves. Please stop beating yourself up. It serves no one, least of all you.

What Have You Learned from Getting Out of Debt?

Many times when we lack confidence it’s because we don’t feel knowledgeable. But everyone who is working on getting out of debt or has successfully done so learned many things along the way. So write them down. You learned about different methods to get out of debt, you learned how credit cards work, you learned how to budget, you learned money was emotional and what your triggers were, you stopped playing “keep up”, you set goals that mattered to you and so on. Take a look at that list and see everything you are now doing right and be proud of the changes you have made.

What Are You Scared of Happening?

This is a place many people get stuck—the what ifs. What if I make another money mistake? What if I spend more than I should? What if I can’t pay my bills? What if I go back into debt? We let our minds linger on these questions and the fear rebuilds. The truth is these questions aren’t bad; the problem is we don’t give ourselves the peace of mind of knowing the answers.

Let’s answer the big one: What is the worst thing that can happen? You go back into debt. Understandably, this is something you want to avoid. So what can you do to minimize the chances of that happening? You can build a very comfortable emergency fund that covers 6-12 months of living expenses, giving you a very generous cushion. You follow a budget so you know where your money goes and don’t fall back into old habits. You save for the things you want and wait to buy them until you can afford them. You’re doing everything right, but let’s say something out of your control happens and you do go back into debt. It may not be anything to celebrate, but you can also get yourself out of debt again.

Why Won’t YOU Forgive Yourself?

As important as it is to take ownership of your mistakes, it is equally as important to forgive yourself. You made a mistake. We all make mistakes. And we will continue to make mistakes. Just because you are on the road to financial freedom or already there, doesn’t mean you will never make a money decision that you regret. You will. The good news is you will be in a position to do something about it. You can course correct and keep moving forward without derailing your dreams and goals. If you still find yourself struggling to forgive yourself, keep asking yourself why you can’t let go.

Set Small Goals to Find Your Joy in Money Again

I suspect one reason people struggle to spend joyfully is that it reminds them too much of the days when they lived beyond their means. They probably experienced a temporary high when they bought things, but now that they know debt really isn’t their friend, they react with fear when they feel that old familiar high again. One part of your brain is shouting “Danger! Danger!” while another part is reassuring you that it’s okay to feel happy about buying something. It’s no wonder you feel indecisive.

The best way to get over your fear and to learn to trust yourself again is by setting some small goals. Let’s start with a sharing goal. Keep it tangible so don’t send money to a favorite charity but get involved. Sponsor a friend doing a charity walk or run and be there at the finish line for him or her. Meet the people you are helping. Let yourself get caught up in the joy and excitement and feel good for helping make a difference.

Spend Joyfully on Yourself and Others

Hold onto those feelings of joy and know you can feel that way every time you spend your money whether it’s for yourself or others. And if you don’t, slow down, and ask yourself why. Is it because old fears are rearing their ugly head or are you spending money out of alignment with your values or goals. Now you’re in a position to truly know the difference.

Shannon

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May 7, 2014  •  38 Comments  •  Finance

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  1. Wednesday, May 7th, 2014
    I don't feel like I ever lost my financial confidence by being in debt....I feel like I GAINED financial confidence by getting OUT of debt. Now we do something we never did when we were racking up credit card debt...we pay our bills FIRST and ONLY spend what we have left. I don't have any fear of spending money when I know my bills have all been paid. :)
    • Shannon Ryan
      Wednesday, May 7th, 2014
      YEAH!! It's always interesting how some people gain confidence as they get out of debt while others lose some of their confidence. I'm so glad that it was confidence-gaining experience for you and you can spend joyfully and confidently.
  2. Wednesday, May 7th, 2014
    I think when you are in the debt paydown stage is when you have the least confidence. Things like student and consumer debt can seem like insurmountable hurdles (I know from experience!) and I think your tip of setting smaller goals is extremely important. Accomplishing small benchmarks can raise your confidence immediately.
    • Shannon Ryan
      Wednesday, May 7th, 2014
      Very true, DC. Sometimes debt seems overwhelming and you can't imagine every being rid of it. Of course, we both know that it is possible too, even if it takes longer than we'd like! Small benchmarks can definitely keep you going and help you clearly see that you are making positive changes too.
  3. Wednesday, May 7th, 2014
    Boy...those "What ifs" can really stifle any forward movement. I've dealt with those a bunch and they lock me down every time. I simply have to keep reminding myself that I can only make decisions based on what I know in the present. Any attempt to figure out what the future holds is futile...so much of it is an unknown.
    • Shannon Ryan
      Wednesday, May 7th, 2014
      Those "what ifs" can really cause a lot of problems if we don't get control of them. And you're right - you have to make decisions based on what you now. Otherwise you can second-guess yourself right into the future. :)
  4. Wednesday, May 7th, 2014
    Personally speaking, the what-ifs were the struggle I dealt with. I thought I'd get tempted to return back to my former way of life or start spending on things I didn't or shouldn't be spending on. I think that's when I really started working on having goals to save for things I wanted. Seeing that I could develop that discipline to prioritize and save for those things/experiences was huge in helping me start to regain that confidence.
    • Shannon Ryan
      Wednesday, May 7th, 2014
      Many people fear returning to old habits and struggle to permit themselves to buy things or feel too happy about the things they buy. Goals definitely make it easier. You know that you've taken the time to figure out what you want and saved for it - no more mindless spending! Glad you reclaimed your confidence and are showing your kids the importance of goal-setting!
  5. Wednesday, May 7th, 2014
    These are great tips to keep in mind Shannon. However, I think I'm still going to be scared for a while yet. I just had a money mistake not even 2 weeks ago and I'm very new to paying off my debt. I think it takes a while to change one's mindset and using these tips will help, but before I can spend joyfully, I need to say and pay off debt joyfully :)
    • Shannon Ryan
      Wednesday, May 7th, 2014
      It does take time to change your mindset and for that fear to lessen. And don't forget - money mistakes will still happen. So don't beat yourself over making one. And notice how quickly you recognized it too. The old you may not have even realized it, so you are on your way. :)
  6. Wednesday, May 7th, 2014
    I'm not out of debt yet but I will definitely bear this post in mind for that wonderful day when that happens. I think debt has tainted the way I think about money right now but I hope to overcome that by the time I'm debt free. I'm confident I won't slip back into my old ways though that's for sure. I guess I'm just conscious that I don't want to waste a moment longer making bad decisions about money!
    • Shannon Ryan
      Wednesday, May 7th, 2014
      You and your husband has made a lot of positive changes this year, Hayley. Debt can definitely taint how we look at money but it boils down to making mindful choices, which you now make. You'll find that joy again. :)
  7. Wednesday, May 7th, 2014
    I think it is really important to set small goals for yourself when you are coming out of debt. I tell people it's like having to lose 50 pounds, it's not going to happen overnight and we can't expect ourselves to make huge changes in a short period of time. However, the small goals along the way are great for keeping focus and regaining confidence.
    • Shannon Ryan
      Wednesday, May 7th, 2014
      Absolutely! In our excitement we sometimes shoot for the moon instead of setting reasonable goals, then we feel frustrated when we don't achieve them quickly. Small goals keep us moving forward and help us rebuild confidence to tackle those bigger goals.
  8. Wednesday, May 7th, 2014
    Excellent points Shannon! I needed to read this.
    Even though we are still working on paying off debt and building a savings, I do find that the mistakes we made with money and business investments are preventing me from moving forward with my life\career. There are things that I want to do but they mean that I would have to invest money (again) and the "what if" it doesn't work out again, haunts me. So instead of doing something I do nothing. By doing nothing I am not spending money, but then again I am not building a future for myself either.
    • Shannon Ryan
      Wednesday, May 7th, 2014
      The "what ifs" can be difficult, Sicorra. Sometimes they hold us back and we find ourselves unable to make a decision. It sounds like that's where you are right now, and it's a tough place to be in. When I'm stick I find listing out the pros and cons to each helps me see the bigger picture, and I'm sure you've already done this. :) Good luck, my friend. I know you can figure it out.
  9. Wednesday, May 7th, 2014
    Working with people to help them get out of debt has really given me tons of experiences. I can't tell you how many times, even after all debt was gone and savings was there, I had clients that would call to get my opinion on them spending a little extra on their wife for the anniversary. OK, debt sucked for everyone who's ever had to deal with it, but you can truly be financially stable without financial confidence in yourself! Great post and great tips! I think the most important step ex-debtors should take is forgiving themselves!
    • Shannon Ryan
      Wednesday, May 7th, 2014
      Yes, people sometimes have hard to trusting themselves to make decisions after they get out of debt. And I agree they need to forgive themselves! Many people don't realize how mad they are themselves and skip this step but you have to let go of past mistakes to move forward.
  10. Wednesday, May 7th, 2014
    Being in debt certainly stole my confidence in the future for things like sending my kid to college or being able to ever retire. Paying off debt has given me a huge amount of confidence in my ability to do the things that used to keep me up at night with worry. We might have stumbles, but I've learned how to avoid debt and am very confident we won't go down that road again. It did take three cycles of paying off large amounts of debt and running it back up again to learn that though.
  11. Thursday, May 8th, 2014
    Great post!

    There really is no reason to beat yourself up over the past. All you can do is move forward, right?
    • Shannon Ryan
      Friday, May 9th, 2014
      Absolutely, Holly! Learn, forgive and move forward - that's my motto. :)
  12. Thursday, May 8th, 2014
    I think when you are trying to get out of debt, there is the fear that you'll slide back down the slippery slope right where you were before. Or even worse, more debt! I have to sometimes remind myself, that there is a light at the end of the tunnel; we'll be debt free one day! :)
    • Shannon Ryan
      Friday, May 9th, 2014
      Yes, I think it's pretty common for people working towards financial freedom to worry about slipping back into old habits. You do need to remind yourself of all the good changes you've made and that light at the end of the tunnel gets bigger every day from an emotional standpoint. And knowing that you're following a budget, so you don't spend mindlessly and set goals to work towards can help you from a logical standpoint. :) You can do it, Mackenzie!
  13. Thursday, May 8th, 2014
    My in-laws faced a very big financial problem before, they were buried with debts! I really thought that they would give up, but they didn't. I saw them stumbled and fall, but they managed to stand up again. They went back to abroad again and work hard and now after 9 years in abroad they are coming back again to have a short vacation. They paid their son's full tuition and just purchase two condos in the big city.
    • Shannon Ryan
      Friday, May 9th, 2014
      That's fantastic that your in-laws were able to do such a dramatic turn-around. I see it all the time too. People think can't undo their mistakes, but with hard work and adjusting their money attitude, anything is possible. It sounds like they are doing great and truly enjoying financial freedom!
  14. Thursday, May 8th, 2014
    I think the idea of building up an emergency fund is a great way to build confidence! It shows you that you CAN save and gives you a plan for a rainy day. It can help you deal with all the "what if's". Great post!
    • Shannon Ryan
      Friday, May 9th, 2014
      Thanks, Leah! An emergency fund can truly give you peace of mind. It's helps quiet those "what ifs" and definitely reinforces that you can save and be responsible.
  15. Thursday, May 8th, 2014
    I could see where people can get accustomed to living beyond their means, and the thought of having to scrimp and save to pay down their debt is often scarier to them than the debt itself. But setting small goals and tackling things one at a time is a great tip. And I like the idea of a sharing goal. You can learn a lot from helping others. Great post!
    • Shannon Ryan
      Friday, May 9th, 2014
      Sadly, for some people, the thought (and pain) of changing seems much scarier than their growing debt. I understand how it happens too but once you dig in and tackle your debt, you realize how much better true financial freedom will be. Small goals are particularly key when you are first getting start. Otherwise it can really get overwhelming, plus a few wins help keep you motivated.
  16. Friday, May 9th, 2014
    This makes me think of my mom. She got herself into so much debt at one point that she lost all of her confidence in herself financially. It really is important to forgive yourself I think. That's definitely what was hindering her. Now she is doing so much better and living debt free. She even let me help her with her budget and investing for retirement, but she had to get over her fears and forgive herself first. Thanks for the great post!
    • Shannon Ryan
      Friday, May 9th, 2014
      I'm so glad your Mom was able to work through her fears and had you to help her regain her confidence. Forgiving yourself is so important and a step many people skip or don't realize they need to do. But I find some people really struggle to forgive themselves. While it's great they take responsibility for their actions, they made a mistake that they are working so hard to correct. And that's deserves praise.
  17. Saturday, May 10th, 2014
    It feels so good to get out of debt slowly. No matter how much i hate debt, I feel like it gives me a goal in life to keep going. Imagine if i had all the money in the world, life would be boring without no goals and nothing to look forward to. My car loan is slowly clearing up with $5000 left, now I wish i could get rid of some of my student loans. Great blog! keep up the great work.
    • Shannon Ryan
      Sunday, May 11th, 2014
      Yes, it does feel great getting out debt! Seeing the numbers shrink can be incredibly motivating. And once it's gone, you can set new goals and create the life you want for you and your family. Thanks for stopping by and commenting!
  18. Sunday, May 18th, 2014
    This is a great read, Shannon! Sorry I'm just getting around to it now! Glad I didn't miss it though. ;-)
    • Shannon Ryan
      Sunday, May 18th, 2014
      Glad you enjoyed it, Deb!
  19. Monday, August 11th, 2014
    I never really had a lot of financial confident until recently. Now that I have knowledge, focus, and drive I feel so empowered. The lack of knowledge I think is what ultimately frustrates most people. It's almost as if the people who are making money, purchasing homes, investing, etc. are a part of a game that you don't know the rules to play by. Once you learn the rules then you can be a part of the game. Until then you feel powerless.
    • Shannon Ryan
      Tuesday, August 12th, 2014
      So true, Michelle! And I so proud that you are now in "the game". Knowledge is key because so many people don't even know what they are doing wrong but they feel left behind and/or under a mountain a debt. I am glad you reclaimed your financial confidence and are helping others find theirs too.
Shannon Ryan SHANNON RYAN, CFP®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan
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