I used to dread the end of the month. Getting the mail that included the credit card statement, and at one point, multiple statements, was enough to induce fear and resentment.
Do you know the feeling?
The dread before you open that statement, knowing the news is not going to be good, reports News.com.au.
You know you spent more in the month then you should and now the reality of having to pay for it hits you, and hits hard.
How are you going to get through another month?
The psychology of debt is effectively a battle between two parts of your brain for control of what you do.
There's the thinking, sentient, rational part of our brain called the prefrontal cortex. It's the part that acts like the responsible adult, thinking about the future, not getting carried away with the present.
It's usually the section of the brain that gives the warning signals, like 'whoa … maybe that's not such a good idea'.
The prefrontal cortex is often battling the limbic system, which is sometimes referred to as the 'monkey brain', since it is the same system that we share with monkeys.
That part of your brain wants fun and excitement, and wants it right now.
The 'monkey' brain is the one that tells you that eating ice cream while you're on holidays doesn't count because you can start your diet as soon as you get back home, only to come up with another excuse when you are home, like, you can't start a diet on any day that ends with a 'y'.
When it comes to debt, marketers have developed professional techniques to talk to your 'monkey' brain — and they are highly skilled and effective.
Modern society has everyone constantly in a rush to keep up, to fit in, spending money you don't have.
This prevents you from taking action to achieve your dreams, of achieving the financial freedom you desire.
The simple solution to beat the monkey brain is … to leave your credit card at home.
Sounds strange just reading it, doesn't it!
But the problem with paying by credit is that it doesn't induce the link with your brain that you get when using cash.
When you only use cash for everything you purchase, you activate the emotional trigger that comes when you physically exchange the cash for your purchase. The brain makes a connection between the money, and how hard you worked to gain it.
This trigger generates a type of pain that helps prevent you from overspending; it's like a squeamish feeling in your stomach.
If you experience this feeling often enough, eventually you understand this feeling and it is much more likely that you will be able to control the situation and therefore your money.
Despite what you might think, humans don't like feeling bad, especially when it is self-inflicted.
So now that you now the psychology of debt, and the secret to eliminate debt faster, here are some techniques to use to tackle your debt problem.
The first step in taking positive action and getting out of the hole is to acknowledge that you got there in the first place. Now you're choosing to take the steps required to eliminate debt, to overcome the problem. This is a very empowering step, giving yourself permission and control to address the problem.
The next step is to change the behaviours that got you into debt. There is a pattern of behaviour you may recognise that explains why people stay in debt. It goes like this:
• I buy things I can't afford
• I get into debt
• An increasing portion of my income goes to repaying debt
• I can't afford to buy stuff
• I buy things I can't afford.
Changing your behaviour more than likely requires you to tone down your lifestyle and live within your means.
It requires that you break this cycle. Leaving the credit card at home is a great start.
Once you acknowledge the situation, change the behaviours that cause debt and start living within your means, you will be free of money stress and free to grow your wealth.
So, leave the credit card at home and you won't ever have to dread the end of month mail again.
Andrew Woodward is a mindshift.money accredited money coach based in Sydney who teaches people to take control of their money and invest for their future, simply and efficiently. Sign up for his free weekly money tips at his theinvestorsway.com.au.
'Debt becomes more like a rent payment that people get so used to paying.'