Are you addicted to debt?

Can’t stop spending on credit cards you can’t repay? Hiding your bills? Discover how to get more intimate with your cash, learn the tricks businesses use to manipulate you emotionally to spend, and find your way back to the black

In the UK personal debt increases by £1 million every four minutes and in the US total debt amounts to $160,000 for each person, including children. Saving for the future is a dated concept next to the new ‘have it now’ mentality. But when debt starts to spiral out of control, it’s time to rethink your emotional relationship with your money and find a way out.

Although the spiral into debt and substance addiction are, in many ways, two very different phenomena, they share many similarities too. People in debt, like those addicted to drugs, suffer low self esteem, a loss of control and are often secretive about the extent of their problem. Just as it is seemingly easier in the short term to stay addicted to a drug than go through the long process of withdrawal, so it is the same with remaining in debt over committing to repayment – they both have a price to pay.

‘There is a big argument about whether it makes sense to talk about non-substance addictions’ says Professor Stephen Lea, Head of Psychology at the University of Exeter in the UK. ‘But substance abuse and other problem behaviours like those associated with debt have this much in common: that avoiding them, and getting out of them, requires you to prefer a long-term good over a short term pleasure. That is close to what we refer to in every day speech as “will power”.’

Debt triggers

Debt can creep in at any point in a person’s life, but students are particularly vulnerable with recent research from push.co.uk suggesting that the average UK student debt is now £17,000, while a graduate degree in the States costs an average of $45,000. But there can be other less obvious triggers, besides paying for an education, which can tip someone into debt.

‘Emotional problems can trigger debts’ says Frances Walker of the Consumer Credit Counselling Service (CCCS). ‘In the case of divorce, for example, it is common for a person to overspend to overcompensate for feelings of guilt they may have towards their children’. But it isn’t just traumatic events that can trigger debt, it’s a daily pressure also; ‘spending is an emotional problem as well as a financial one’ says Walker. ‘Why else do we refer to shopping as “retail therapy”?’

Beware the debt pushers

Consumer retailers are experts at manipulating the emotions and feelings of consumers in order to improve their profits. ‘Shops and business are getting cleverer at using persuasion tactics to make us spend’ says Jasmine Birtles, financial expert from www.moneymagpie.com. ‘Many even employ psychologists to zombify us into a state of spending.’

Notice how in department stores and supermarkets, the cheaper products are higher or lower on the shelves than the more expensive brands, how every smell attracts and entices and how in fashion stores, thin mirrors and soft lighting are used to flatter female insecurities. This is no coincidence, says Birtles: ‘its all about pressing the right buttons to make us abandon rational thought and spend, spend, spend’.

But debt pushers are not just in shops they are on your television too, with celebrities such as Carole Vorderman ‘endorsing’ financial products such as personal loans or debt consolidation services. ‘TV advertising and celebrity “hire” is very expensive and suggests that such companies are making a serious profit from their customers’ warns Birtles. ‘If it is a truly competitive product they are unlikely to be making a big profit - which is why they are competitive in the first place. Cut through the hype and get independent advice by shopping around a bit on websites like fool.co.uk, moneymagpie.com or by visiting finance forums’.

How debt can hurt your health

Society is beginning to appreciate the emotional and mental health problems associated with debt. According to Tony Unwin, occupational psychologist and general manager of BUPA Psychological Services and BUPA Wellness ‘a person whose financial future is uncertain is highly likely to feel pressurised and unable to cope’. Unwin continues ‘money-related issues are more frequently cited as the reason for calling a helpline than trauma or substance abuse problems’.

Statistics show stress as the number one cause of absenteeism among the non-manual workforce, contributing to an annual cost of £13 billion to UK business. It is little surprise therefore that organisations such as BUPA are urging employers to set up support systems for staff who are struggling with debts in order to boost productivity.

How to break the debt addiction

Many people find excuses for being in debt, perhaps convincing themselves that it is not a long term problem or that ‘everyone is in debt these days’. ‘This is what psychologists call cognitive dissonance’ says Lea. ‘It happens when people engage in a behaviour - such as getting into debt - that contradicts their core beliefs, causing individuals to adjust those beliefs to fit this conflicting behaviour, and make it more acceptable’.

An important first step is to recognise and accept that your debts are a problem. ‘If you have got to the point where you are shoving your bills in a drawer then the tiger has become a dragon’ says Birtles. ‘Ask a close friend or family member to go through unopened bills with you. Check your statements for any fraudulent activity or bank mistakes, and think instead about how much you can make from opening those statements, rather than what you might lose’.

If you are no longer able to keep up repayments, and cannot find a way out on your own, contact a debt charity such as the CCCS who can help you deal with creditors and work out a debt repayment plan. ‘When people first call us they are usually very upset emotionally, but once they have talked about it, they start to feel better, more confident and less apprehensive’ says Walker. ‘They are back in control.’

Sadly, due to expensive university and college fees, many people begin their adult lives in debt so do not know how it ‘feels’ to be in credit and watch their money grow. But as any rich person will tell you, having a healthy relationship with your money can positively impact on all areas of your life, and goes a long way towards less stressful living.

If you are struggling with debts and need help, contact the Consumer Credit Counselling Service at www.cccs.co.uk in the UK or www.debtadvice.org in the US.
For personal finance advice, go to www.moneymagpie.com

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