6 Tips to Stop Being Ashamed of Your Debt and Take Control

What would you be more embarrassed to shout from the rooftops: your weight or your credit score?

For the general public, the answers are pretty surprising. The National Foundation for Credit Counseling conducted a poll asking participants to finish this sentence: “I’d be most embarrassed to admit my…” And respondents made it clear that debt shame in the United States is worse than even diet shame. A whopping 37% of people answered that their credit card debt was the most embarrassing, followed by 30% of respondents admitting they wouldn’t want to fess up to their credit score. Weight made only 12% of people sweat, and came in a distant third place.

Obviously, most people would like to keep their debt and credit score to themselves. But when the average credit card debt in the United States is more than $15,000, you’d think that debt is normalized in this country. Instead, despite the fact that debt seems to be as certain as death and taxes, it can create a lot of shame.

Some might think that debt shame is a good thing – after all, if you feel bad about it, you’re less likely to incur more, right? Unfortunately, it’s not so simple.

When consumers feel a deep sense of shame, guilt, and embarrassment over debt, an opposite effect can take place. Instead of curbing spending and improving debt payoff rates, the embarrassment causes debt to fester unacknowledged and keeps consumers from getting the help they need to take control of their finances. Furthermore, a study published in a 2012 issue of The Economic Journal found that individuals who have “problem debt” (defined as debt that is burdensome) are more likely to suffer from mental health issues, such as anxiety and depression.

If this discussion is causing you to squirm a little, you might be suffering from debt shame yourself. And while you probably don’t want to shout your credit score from the rooftops, it’s possible to conquer that shame and cultivate a healthier relationship with money.

How to Overcome Debt Shame & Take Financial Control

Once you surmount your debt shame, you’ll be mobilized to pay off debt and make better financial decisions in the future.

1. Understand Why You Feel Shame

It may surprise you to know that many of your attitudes about money and debt are formed throughout your adolescence. A study published in a 2012 report for the Association for Financial Counseling and Planning Education found that familial habits and attitudes toward money – from financial prudence to wasteful spending – can predict an individual’s later financial experiences.

Understanding why you feel a certain way about money doesn’t absolve you from responsibility, but it gives you a starting point for how to deal with it. It helps you better understand why you’ve made the choices that landed you in debt, and thereby recognize your debt triggers and make better choices going forward.

couple with money troubles

2. Differentiate Between Character and Behavior

You’ve obviously made choices to put yourself in a position of debt, and you might feel bad and berate yourself for those choices. Stop that kind of thinking and remember this: Overspending and going into debt aren’t character flaws – they’re behavioral issues.

If you’ve made poor decisions in the past, you’re not a bad person. Acknowledging this can help motivate you to come out from under the shadow of your debt – being in debt doesn’t mean there’s anything inherently wrong with you. Just admit that you might have a behavioral issue, and proceed in getting help.

3. Educate Yourself

In 2011, a study published in the Journal of Economic Psychology found a direct correlation between poor spending habits and financial literacy. Those who aren’t well-versed in finances are more likely to spend compulsively, use credit, and experience negative impact from changes in income or unforeseen events.

Take time to educate yourself about money. Those who are highly financially literate aren’t the ones hiding their credit card statements.

You can learn more about credit and finances by doing the following:

  • Take an online course (many are free)
  • Take a class through your community college or community center
  • Make an appointment with a financial advisor
  • Ask someone you trust for a few pointers

Being willing to learn means you’re no longer hiding from your debt and financial faux pas. Instead, you’re ready to take responsibility and work to change. That’s not embarrassing – that’s admirable.

4. Stop Spending

Once you’ve  resolved to make a change in your life, it’s time to spring into action and start making changes. The best way to start is to stop spending with credit cards. There is no way to get out of debt by incurring new debt, so it’s time to cut up those cards – or at least store them somewhere you can’t get to them.

Eliminate as much temptation as possible. For example, if your downfall is online shopping, use a web blocker to block yourself from your favorite stores. If you tend to spend when out with friends, suggest a night in instead.

You still need a concrete debt payoff plan to conquer debt and associated guilt. However, one small step toward your ultimate goal can help boost your confidence, acknowledge your triggers, and, most importantly, give you a chance to forgive yourself for past missteps.

erasing debt

5. Make a Payoff Plan

Now is the time to create a plan to pay off your debts and feel more confident. I personally love the idea of tackling the smallest debt first. Here’s how:

  • Look at All Your Debts. Gather up all bills and overdue notices that have been accumulating and be sure you’re well-versed in how much you owe and to whom.
  • Find the Smallest Balance. Check your bills to find the smallest balance. This will be the first payoff that you tackle with your plan. Remember that while you pay down that amount, you still need to make the minimum payments on your other accounts to keep them current. Use money that might have otherwise gone to entertainment, clothing, or eating out to send extra payments to your bill with the smallest balance. Eliminating that balance becomes your first priority after your basic needs are met.
  • Utilize Extra Funds. Whether you got a check from Grandma on your birthday, a bonus at work, or any other extra funds, use them to pay down your balance in addition to what you’re already paying. It means you get to eliminate your debts that much faster.
  • Move to the Next Balance. Once you’ve paid off an entire account – no matter how small – pat yourself on the back. You have taken a solid step toward regaining control of your debt. Now it’s time to move onto the next largest balance.
  • Celebrate. No, not with a new pair of shoes or other costly reward. But each time you pay off a balance, treat yourself as a way to encourage and continue your good behavior. Part of feeling comfortable with money is acknowledging that it’s not your enemy – the same money that kept you imprisoned before will be the key to your freedom. You can draw yourself a hot bath, borrow a book that you’ve been dying to read for a night in, catch some live music in the park, go for a hike – anything that gives you a chance to bask in and reflect on your progress.

6. Talk to Someone

Psychologist Tara Polson tells the American Psychological Association that talking to someone can go a long way in ridding the feelings that come along with debt, noting, “Doing so may force you to sit down, stop the denial game, and make a plan for paying it off.”

If you feel that accumulating crushing debt is the result of a psychological impulse, you may need to talk to a mental health professional. Together, you can discuss why you might be overspending, as well as identifying coping mechanisms to help retrain your behavior so your debt doesn’t become your defining factor.

But you can also come clean to other people in your life. Talk to a close friend, parent, partner, or financial advisor to stop feeling guilty and start feeling like yourself again.

If you still don’t feel comfortable talking about your debt, look for online communities that can help. Starting a “getting out of debt” blog or checking out online debt support groups can help you stay accountable and remember that you’re not the first person to let your debt get out of control. Communicating with people online who have been successful in taking control helps you retain some anonymity while still getting to share your experience, get advice, and ask questions.

financial advisor meets with couple at home

Final Word

Realizing that you’ve let your debt and spending get completely out of hand is enough to make you feel guilty. But the bright side is that if you’re feeling guilty, you’ve seen the light and know that your behavior needs to stop. The trick is to not let your guilt and shame get in the way of coming clean and working on a plan to get your finances back on track.

When you’ve acknowledged there’s an issue and have a desire to get out of debt, you’ve already cleared two major hurdles in your payoff plan – and that’s nothing to be embarrassed about.

Have you dealt with debt shame in your life? Do you have any additional means of coping with it?

  • http://indebtedmom.com/ Kirsten

    I definitely have shame (and blog anonymously partly because of the shame), but not for these reasons. Our debt is all student loan debt and it seems like we just weren’t wise about the loans and for seeing how much money we’d need to earn in order to pay our loans and not be living paycheck to paycheck.

  • http://www.thewealthnumber.com/ Romeo Jeremiah

    I believe the most powerful item on this list is number 3. Educate Yourself. Of course, this education can be formal or informal. As long as readers are coming to sites like Money Crashers, they’ll gain both education and inspiration to change.

  • http://debtdebs.wordpress.com/ DEBt DEBs

    I like how you’ve addressed the psychological damage of debt in this article. Managing money is not complicated but if debt grows it can be debilitating if you don’t look at it the right way (or at all). Acknowledging your fears and then facing them is not as bad as it seems once you do it.

  • Travis Pizel

    An important aspect of making a pay off plan is to educate yourself as to what your options are. Your finances may be in such a state that you may need help to make progress eliminating your debt. This could be a debt consolidation loan, or a debt relief plan.

  • http://www.thinkingwealthy.com ThinkingWealthy.com

    People think it’s something to be ashamed of. You made a mistake, own it and move on!

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  • Darren Novak

    There is no need to feel shameful when falling into the debt trap. You made a mistake and there is a way to fix it. No need to have negative thoughts. Those thoughts will make things worse. Keep a positive outlook and you will have less stress.