I get panicky when I check my credit card balance — it’s always way more than I would like it to be. Because I hate checking my balance, I end up missing payments. (Yes, I’ve heard of autopay, but I also get anxiety setting up my autopay info.) Then I end up feeling even worse about myself. What’s the best way to overcome debt stress and stop letting emotions get in the way of getting financial stuff done?
— Freaking Out Financially
Dear Freaking Out Financially,
First off, take some deep breaths. While you may feel uncomfortable, you’re not alone. In one of my favorite studies, researchers asked people to estimate the amount of their credit card bills, right before opening them. Every single person underestimated their bill. And they weren’t just a little off — they underestimate the size of their bill by an average of 30 percent.
Using a credit card temporarily numbs the pain of purchasing. You don’t necessarily feel the twinge of discomfort that you might when paying with cash or with a debit card. Because of this, and because it sounds like you’ve leaned on credit cards pretty regularly in the past, it may be best to stop using credit cards entirely for a few months, and stick to debit cards or even better, cash. That way, you can re-learn to live within your means.
Second, that panicky feeling is telling you something! Listen to the emotions that are coming up surrounding money. In order to deal with your debt, you’ve first got to face it. It may be all too easy to ignore your bills, but the key is to face your total debt, then come up with a plan to deal with it. Remember, emotions aren’t bad; they are powerful tools that can help us get to where we want to be. The panicky feeling tells you that your spending patterns aren’t making you feel good: Digging deeper into what you spent money on can help you suss out some habits you’ve fallen into — and ones you can fix. Have you been living beyond your means, or did a pricy vacation push your budget out of whack? Do you find yourself spending on your credit card when you’re out with friends, pushing your balance higher than you anticipated?
Having some financial blind spots doesn’t mean you’re a bad person, or you’re not good with money. The more you can objectively see where you struggle, the more easily you can come up with a plan, such as only bringing cash for nights out with friends and making a commitment that the night is done when you’ve run out of money. If you can harness the emotion — which is powerful — and turn it into action, you’ll find a way to stay on top of your bills. And you may actually start feeling good when you check your statements.
Elizabeth Dunn, Ph.D. is a professor in the Department of Psychology at the University of British Columbia who researches how time, money, and technology shape human happiness. She is also the scientific advisor for Happy Money, a financial company that combines psychology and money to help people live happier lives. Have a question for Liz? Write her at email@example.com and check back every Tuesday for her next column.