Dealing with debt: change your mental attitude

I assume that you have already worked out how much debt you have and the three ratios that will allow you to decide how to deal with it. If you have not done this yet you can do it by reading the articles we published on The Money Principle under the Debt Movement category – they are all there; from feelings, through number to tools.

Today, I would like to share with you how important I found mental attitude to be in dealing with debt and paying it down in record time. I already mentioned that when I first realised how much debt we had, I also realised what the saying ‘my world collapsed’ really means. It is like someone has put out the light of your life; like someone has built big, tall walls around your present and your past and future don’t exist. You look at your life partner and see betrayal; you look at your parents and see shame; and you look at your children and see deprivation for generations. I know it sounds dramatic – but this is how I felt for couple of weeks. I remember a hotel room in Lausanne (Switzerland) and me sitting in bed, not being able to concentrate on my work, just repeating ‘We’ll be OK one day’ again and again.

This was it really – I was not able to work and function; and working, having my smarts about me, was essential to getting out of the financial hole we found ourselves in. This continued until I realised that the only way to win was to change the way I thought about the situation; in other words, to change my mentality and attitude.

I did it; and so should you! There are three shifts in mentality that I found particularly helpful.

From ‘debt’ to ‘negative wealth’

This one is about not letting the debt get you down and upset you to a level where you are in a negative cycle around money and not having it. Allowing this to happen is a sure way to see debt as shameful (there are enough people who will try to make you feel somehow inferior for having debt anyway), and debt busting as a Sisyphus struggle – not good. Remember, Sisyphus continued pushing the rock up the mountain not because he was so strong willed but because this was his punishment from the Gods; so he had no choice. When debt busting, you have choice – to fall off the wagon and this is something you don’t want to do; it only leads to a cycle of self loathing.

How to change your attitude to debt? Remember that our thoughts (and the way we express these in words), our emotions and our actions are an unity. So, one way to change how you feel about debt is to change the way to think about it.

I, for instance, started calling our debt ‘negative wealth’ – technically it is correct; by reducing your debt you increase your wealth albeit a bit less quickly than through savings and investments. When I started doing this, someone asked me whether I call my savings ‘positive debt’ which completely missed the point. And the points is:

What you call your debt shouldn’t be wrong but this is not about what is correct or exact: it is about what is useful in making you feel better about yourself, your life and allowing you to continue with it.

Call me naive but I fail to see how calling my savings ‘positive debt’ is helpful; ‘negative wealth’ is another matter entirely.

You don’t have to do this; find your own way. Just don’t let the b*stard get you down!

From  ‘gazelles’ to ‘tigers’

Don’t get me wrong; I think that Dave Ramsey is one of the smart people in personal finance – I think that of anyone who has helped, and is helping, so many people get out of debt. There is one thing, I believe, he got wrong and by people repeating it, and adopting it, damage is caused: the ‘gazelle intensity’. This is where Dave explains that to get out of debt one has to develop gazelle-like intensity and focus.

What is the problem with this? The problem is that while you develop gazelle intensity you become prey. You may eventually get out of debt, but you will never win the money game if you become, and stay, prey.

I believe it is better to develop the focus of a tiger; then you are a hunter not prey. Becoming a tiger and ‘hunting’ with extraordinary focus and purpose is what will get you out of debt and help you win.

Forego convention

Most of us act in accordance with what is conventionally seen as appropriate behaviour. Nothing wrong with that – most of us spend most of our lives not wanting to attract attention. However, keeping within the confines of the ‘acceptable’ means that we strip ourselves of the creativity we need to ‘jump’ and are likely just to try to run fast.

If you want to get out of debt and change your financial destiny you need to learn to ‘jump’; this means learn to forego convention. Tim Ferriss helped me do this by the examples of ‘crazy’ awesome stuff he does as exercises. I tried my own ‘crazy’ stuff – and I knew that I am winning when I was standing at the bottom of a ski slope asking people to sell me the day passes they no longer needed for half price.

And this was only the beginning :).

Final words:

In a drive to be ‘objective’, mentality is often underplayed in personal finance. I found that it is as important, if not more important, than the numbers, ratios and spreadsheets.

Try it! What do you have to lose?

14 thoughts on “Dealing with debt: change your mental attitude”

  1. I think his metaphor means that as a “gazelle” you are supported by your herd, quick, responsive, alert and being fast on your feet. Most gazelles are not predated because they are so agile. They eat every day – as they need to to be so quick. When in the “Debt Busting” phase you need to be aware of everything, responsive and quick to make decisions to get you out of danger…… and it works so much better if you have the support of those around you. These are the debt fighters who have a plan, stick to a plan and it keeps them safe.
    Tigers on the other hand – only make a kill once for every ten attempts (Feast or Famine)  and don’t eat every day, indeed they spend most of the day asleep.  They are solitary animals – unlike other cats, like lions – so don’t have the close support of a group of their kind.  These are the debt fighters who think they can do it all on their own and are gambling on a big win (successful  hunt) to resolve their problems.
    But if your point is that you should move from thinking like a “victim” about your debt then I am all for that – thinking like that is very detrimental to your tackling your debt with any clarity as you are be definition refusing to accept that you are responsible for your own position.
    Just my tuppence worth 🙂

    1. @Elaine: OK, you have a point here, I’ll admit. Mainly about the support from others (we couldn’t have done it without the wisdom, support and tips of the Matrix. I still object to convincing people to identify with ‘prey’ – hunters have to possess all characteristics you listed, and then more. Shall we agree on lions (they leave in groups) :)?

  2. I couldn’t agree more with some of the points made here. Its so easy to let debt get on top of you and for it all to become too much. I got to that point once (when I liked the horses a bit too much) and it nearly beat me. In the end I did something similar to this article, in turning my train of thought around, picking up the pieces, and making money work for me. This can onoly happen when you get your mind out of that debt hole.

    1. @Wild about Finance: Thanks for stopping by and glad that you turned your financial life around; and that your experience and mine are in line – you have to become a hunter to win the money game.

  3. The biggest obstacle we’ve had to paying debt since we got serious about it is being able to weather financial storms. We had the $1000 emergency fund that Dave Ramsey recommends, but $1000 just isn’t enough. I just wrote a post today about increasing it to $3000. Looks like we are both disagreeing with Ramsey today!

    1. @Edward: I did find this hard at some point as well – my need for security and my desire to get rid of the debt fast were sparring and the victor was unclear. At the end paying off the ‘negative wealth’ fast won – we don’t have an emergency fund and I tent to agree that the biggest emergency is needing an emergency fund. If you have the cash flow to throw quite a bit of money on your debt every month, the only thing an emergency will do is slow you down a bit. However, I am thinking about this one as a Brit and realise that in the States you need something put aside for medical emergencies as well.

  4. I feel like I should be listening to “Eye of the Tiger” as I read this. Good motivational speech.
    I think some people get really depressed about their debt because they see it as a hopeless struggle. Typically it’s just a bad attitude (of course there really are some situations where a person has a legit revenue problem and there’s no way to resolve the situation no matter how much they pinch pennies).

    1. @Joe: Welcome, Joe, and very pleased to see you here. Now that you mentioned it, yes, I probably should have linked to ‘Eye of the Tiger’ – appropriate at so many levels. I will go a step further from what you said and argue that even when the debt situation is very serious attitude is very important and that very few get out of debt (and stay out) by ‘pinching pennies’. Usually it is about developing healthy money habits of not wasting but maintaining your life lush, and increasing income.

  5. I like the idea of foregoing convention.  I just made a pretty “bad” decision, leaving my job without another one lined up.  I feel great.  Who knows how I’ll feel in 3 months when my student loan payment savings dry up and I realize that I haven’t been aggressively paying down my debt, but something tells me that this adventure could be the beginning of new creativity and great ideas!

Leave a Reply

Your email address will not be published. Required fields are marked *