Can Debt Change the Way You Think?

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Conquering your debt can have some unexpected benefits

Debt affects more than what people spend money on, effecting the way you think and approach life according to a recent survey. Debt can affect you in ways you might not expect. The more you understand about how your debt is affecting your life, the better prepared you are to conquer it.

Here are some subtle ways your debt can be affecting the way you think and live.

Short-term thinking

People who are in debt are driven by fear, according to Gian Gonzaga, chief data officer at the student loan financing company Earnest, who has a PH.D. in psychology. It’s fear that causes people to think in the short-term. “Fear makes you narrow your decision to the thing that is the most concerning and worrying to you,” Gonzaga says. “That can actually take away from your ability to think creatively about what other ways you’ll be able to dig your way out of [debt].”

Short-term thinking can lead you to focus on the wrong expenses. For example, sixty-eight percent of student loan borrowers say they’re focused on paying off credit card balances or mortgages before paying off student debt, according to a new survey by NerdWallet and Harris Poll. Many students surveyed said they’ve skipped a student loan payment to pay rent, their mortgage or a credit card bill. However, this type of thinking can lead to more debt. Missing student loan payments can lead to late fees, as well as increasing your overall debt. Try to pay your minimum payment each month at the very least to avoid penalties.

Putting short-term gratification before savings

There’s nothing like the gratification you get from paying off a debt, but don’t get too consumed by paying off smaller debts that you forget about larger ones. You can save more money by prioritizing your debts with the highest interest rates, according to a study in the Journal of Marketing Research. More borrowers pay smaller debts first, even though it may cost them more in the long run. While paying off a smaller debt seems more manageable, than paying off a full loan balance, it’s better to pay off debts with high interest first – just don’t forget to make your minimum payments on other debts.

Accepting defeat

Don’t become a defeatist. Many who find themselves in debt for several years can experience learned helplessness, according to Gonzaga. You may stop trying to rid yourself of debt, and instead accept a life in debt. By not opening yourself up to the possibility of becoming debt free, you may miss out on new opportunities to improve your financial situation.

Remember that laws change constantly, and interest rates fluctuate. There may be government programs that can help you, like student loan forgiveness, or a better interest rate if you refinance or consolidate your debt. To change your mindset about debt, try thinking long term. Think about where you want to be in a few years, then map out a way to get there. The path will vary depending on the type of debt you have, and your finances, but there is a path if you do the research.


This post is not intended to be a solicitation for a loan. Pomo One Marketing, Inc. provides these blogs for entertainment and informational purposes only. Remember to consider all your financial options before making any decisions related to credit.


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