Debt 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.
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.
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.
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.
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.
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.
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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SHANNON RYAN, CFP®
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.
There really is no reason to beat yourself up over the past. All you can do is move forward, right?