Many people today are struggling with overwhelming credit card debt (as well as other kinds of consumer debt) and are looking for a way out. There are certainly many strategies that you can pursue in order to better manage your debt load. However, before you concentrate on the mechanics of paying off your debt, it can be quite helpful to examine some of the psychology behind consumer debt.
I saw a couple of figures recently that astounded me. The number of households filing for bankruptcy was about 1.5 million in the year 2003, and the average consumer debt load for each household was more than $18,000. These figures, by the way, are now several years old and do not even take into account the effects of the recent credit crisis and subsequent recession.
When you realize how common it is for families to struggle with debt in the United States, it becomes imperative to understand some of the underlying causes. Here are several common traits among those who spend more than they can afford.
1. They are over optimistic and ignore reality.
I believe that optimism is important for happiness and success, but some people take it to an extreme. In fact, it may be better not to use the word optimism when referring to these kinds of individuals, since what we are really dealing with is a kind of fantasy world in which everything will be okay regardless of a person’s actions.
Too many people focus on the relatively small monthly payments so they can enjoy items that they can’t really afford (at least in the short term) and assume that they will be able to pay things off without any problem whatsoever. They consistently ignore the exorbitant interest rates and the total debt (as opposed to the minimum monthly payments) so they can keep a smile on their faces. If the debt begins to accumulate and it becomes more obvious that there is a significant financial problem, these kinds of people might assume that the money will come from somewhere instead of simply choosing to change their habits.
2. They use shopping as an escape from their problems.
Many people use shopping as a way to release tension related to their jobs, family lives, or other issues. Of course, an occasional item wouldn’t be such a problem, but far too many people make this a harmful habit. They do this consistently, perhaps because of low self image issues, and they use their credit cards, of course. Things would be bad enough if they simply spent their paycheck on frivolous items, but they go beyond this and charge purchases so they can spend more than they are taking in.
3. They demand instant gratification.
Modern Americans are blessed to live in a land of plenty, despite whatever economic difficulties we may be going through at the moment. That blessing, however, can be a double-edged sword, and so many people have grown up accustomed to this gratification. They have never learned the importance of self-discipline and long-term perspectives.
If you see yourself in any of these descriptions, at least you know where you stand and can begin to make changes in your lifestyle. All of us have the occasional urge to buy some fun item at the mall, but this is not really what we’re concerned with. Moreover, many families have accumulated credit card debt because of medical expenses or other urgent transactions.
Still, so much of the consumer debt in this country is the result of poor financial planning and a lack of self-discipline. Please do yourself a big favor and begin to examine your own habits you can improve your life for the better.