Unmanageable debt is like a time machine. Borrow money today and you’re just robbing yourself of money you’ll really need in the future. If you’re struggling to understand the logic of the previous sentence, then you’re probably a compulsive debtor.
I am in no way pointing fingers or speaking from a holier-than-thou soapbox. I was a compulsive debtor for most of my life.
It’s only been about a decade since I realized that I had to perceive personal finance in a different way.
It’s embarrassing to admit, but I just couldn’t understand living life without being in debt.
I didn’t understand that there was any other way to live.
Are you a compulsive debtor? Compulsive gambling may be a symptom of compulsive debtor syndrome, but the problem is much deeper than that.
Unless you recognize signs that you are a compulsive debtor, you’ll never recover from the mindset.
Consider:
- Voluntary ignorance of finances
- Irresponsible borrowing
- Inability to save money
- Emotional Immaturity towards personal finance
Along with describing some symptoms, I’ll offer tips on how to recover.
Firstly, what is a compulsive debtor?
Compulsive Debtor
A compulsive debtor is someone with a chronic debt mindset. They’re unable to live without being in unmanageable debt.
This isn’t about falling behind in bills for a few months or sometimes forgetting minor bills. It’s about accepting debt as a mindset and a way of life, sometimes even unwittingly.
The only thing more unkillable than a zombie is an idea, or a firmly entrenched ideology.
A compulsive debtor can’t imagine not being chronically in debt.
For example, compulsive debtors always pay the minimum payment on credit cards. Or frequently skip payments.
This ensures penalty fees at interest and increased debt rolled over month-to-month.
A compulsive debtor uses credit cards to pay bills with no strategy of how to pay back those debts.
The compulsive debtor never plans for their financial future, saves money, devises a budget, or how to become debt-free.
The compulsive debtor treats financial illiteracy like a religion.
To a compulsive debtor, life and debt are irrevocably intertwined concepts.
So, how to recover? You must recognize the signs.
Voluntary Ignorance of Your Personal Finances
How much money do earn every week and month? Now, contrast that with your various expenses.
Do you know your debt-to-income ratio? How much of your income is dedicated to paying down debt? If it is over 40%, you won’t qualify for most unsecured credit card applications.
Are you aware of the interest rates on your credit cards?
Do you shop and buy more than you intended without caring about the financial consequences?
If you are content to never know the intricacies of your personal finances, you may be a compulsive debtor.
Irresponsible Borrowing
If you have no appreciable income, borrowing money is akin to theft.
And, the penalty could be more than accruing more debt. Like self-sabotaging relationships with family and friends.
Do you apply for credit cards even though you’re already burdened with unmanageable debt?
Are you in the habit of borrowing money from family and friends with no intention of paying it back?
Are you unconcerned with the consequences irresponsible spending could wreck on your credit score and credit history?
Do you shrug your shoulders when you overdraw funds from a bank account without considering the severe financial penalties?
Then you’re probably a compulsive debtor.
Inability to Save Money
Are you incapable of saving money for long periods of time?
Or unwilling?
Do you spend money the second it gets in your pocket?
Have you ever tried to open a savings or retirement account? Or does the thought inspire feelings of indifference?
You will never be free of the compulsive debtor mindset unless you start saving money.
Emotional Immaturity
Sometimes it can be hard to break the emotional ties you develop with family, friends, and significant others.
It’s easy to take for granted the idea that a friend, relative, or spouse will financially bail you out if you get in trouble.
So, if your financial actions have no consequences, because you treat your social network like a safety net, why worry about debt?
This is an example of a firmly entrenched ideology which best exemplifies the compulsive debtor mindset.
Improve Your Financial Literacy
The first step towards getting out of a debt hole is to stop digging.
Learn about financial literacy and strive to improve your own. Financially literate people make better informed choices about saving money, paying debt, investing, and planning for future financial goals.
Recognize the signs of the compulsive debtor mindset.
There many community-based financial advisers you may consult for free.
There is no shame in being a compulsive debtor.
The only shame is in being a compulsive debtor is not recognizing the mindset or in self-correcting the problem.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.