We have lots of conflicting emotions about money. We think it is good, bad, evil and everything in between. We feel guilty for having too much or angry for having so little. We let money define our worth, so we start living beyond our means to remain competitive with our neighbors, friends, family and co-workers. Until one day we wake up and realize we are in trouble. Even worse, the blame rests solely at our feet. Now we succumb to another popular myth and believe ourselves to be a “bad person” for allowing this to happen. Does this sound familiar?
Debt Does Not Define You
I have seen countless people fall prey to the belief that they are a “bad person” because they have debt or made money mistakes. Whether they realize it or not, they have stamped themselves with a “bad” label and walk around in shame. This affects their ability to take action and get out of debt because they are so busy beating themselves up. Their energy goes towards punishing themselves, rather than taking positive action. Debt is a serious issue, but it does not represent who you are. Don’t give it that much power.
Understand How You Got into Debt
Of course, the easy answer is you lived beyond your means. But why? Did you lack the funds when an emergency occurred? Or were you trying to keep up with the Joneses? Or buying things to cope with your emotions? Understanding the “why” is critical to changing your behaviors. So let’s more closely examine the two most common myths people believe that lead to debt.
Everyone Has Debt, so It Must Be Okay
This is one of the biggest myths that get so many people into trouble. We believe debt is normal. In fact, some believe it’s more abnormal to not have debt, than it is to have debt. Is this something you believe? Or did a friend, co-worker or family member say something that made you think debt was okay? Or were you teased for declining to do something because you couldn’t afford it or it wasn’t in your budget? Many people end up in credit card debt because they blindly followed what others told them.
The Reality: Lots of people do have debt but that does not make it good or bad. Debt is debt and all debt has risk. Sometimes the risk is worth it. Other times it’s not. Most credit card debt is not worth the risk. At the same time, I don’t want you to irrationally fear debt either. Once again, you are giving your money and emotions all your power. You need to be in control. This means truly understanding debt and how it impacts your goals, so you know when it makes sense to leverage it and when it doesn’t.
I’m a Failure if I Can’t Afford …
Money has become a barometer to our self-worth. We feel if we have to say “no” to ourselves, our spouses, our children, our friends that we have somehow failed. Feeling as though we have failed loved ones is a powerful emotion, and it can cause even the most rational person to pull out their credit card. This particularly affects parents. The look of disappointment in our children’s faces can be devastating and conjure up our own bad memories of feeling deprived (even if we truly weren’t).
The Reality: You may feel as though you have failed in the moment but you haven’t. In fact, you have done just the opposite. You protected your family’s financial security by making smart choices with how you used your family money. You need to embrace this and make sure your kids do as well by always including the “why” when you tell your kids “no”. It doesn’t mean they will be happy that you can’t/won’t buy them the toy they want, but they will understand your money has another intended purpose. And if you can tie the reason “why” to something you are working together as a family to achieve, then you may be able to avoid any unhappiness or complaints from them.
Own Your Mistakes but Don’t Become Them
We need to own-up to our mistakes and learn from them, but we are not our mistakes. I see so many people carry around immense guilt and shame over their past money mistakes. It’s understandable that you may not be proud of some of your past decisions, but you also need to recognize and celebrate the fact that you no longer make the same mistakes today. You now make money decisions that support your goals and financial well-being. Don’t hide your mistakes, but instead use them as a cautionary tale to prevent your kids from repeating your mistakes. Most importantly, let them know that money mistakes do not make you a bad person or define who you are.