ONE of the most common queries to this column where we cover debt is the reduction of the costs of debt. Regularly we might see credit cards being used where the capital is not paid off and becomes persistent i.e. stays around for a long time.
You are not alone. In February, it was reported that 1.78 million people in the UK had a persistent debt (which is classed as paying more in interest, fees and charges than off the actual debt over an 18-month period).
Those in such a situation feel helpless, out of control and understandably, it could lead to depressed states.
This feeling is exacerbated further where being in debt is considered a failure, a stigma, and where the person in debt does not know where to turn and can have a contained conversation.
Containment is everything – the knowledge that you can ask any question without a ‘school teacher’ looking back at you down their glasses thinking you had just came up the river in a bubble.
It does not have to be that way. Actually, those who manage debt and advise on it are also those who, by definition, are caring in their nature and so understand your scenario, its complexity and social stigmas.
The key is to take control and make some small movement forward. As the saying goes, any movement toward a solution is stronger than the storm you will face, as it is an expression of hope and control.
Debt is not bad, but inappropriate and expensive debt is.
Rather than having to spend money taking advice on debt off people like me, whilst also overpaying on the debt, its worth looking at how we can all avoid getting there in the first place.
Covid
The last seven months through Covid and lockdowns has a significant impact on us all and in particular our approach to spending which can be a psychological escape.
The human givens approach to mental wellbeing is very useful in understanding debt and our own wellbeing during Covid.
Whilst we all have our physical needs (food, water, heat etc.), we also have given emotional needs.
If they are not being met, nature can ensure we suffer distress, and as a consequence we can try to have those needs met in different and unhealthy ways – Dopamine rushes through spending, alcohol etc.
You are not alone in feeling bewildered during this extraordinary time. The Human Givens Institute recognises that if just one of the nine needs are not being met, we can suffer significant distress. Consider how many of these are currently not being met during Covid, and think in the past when they were not and how our behaviours can change and look to unhealthy solutions to compensate for them.
Those nine emotional needs:
- Security – safe territory and an environment which allows us to develop fully;
- Attention (to give and receive it) – a form of nutrition;
- Sense of autonomy and control – having volition to make responsible choices;
- Emotional intimacy – to know that at least one person accepts us totally for who we are, “warts ‘n’ all”;
- Feeling part of a wider community;
- Privacy – opportunity to reflect and consolidate experience;
- Sense of status within social groupings;
- Sense of competence and achievement;
- Meaning and purpose which comes from being stretched in what we do and think.
For most of us, these will have been obliterated, leaving us bewildered, and that sense of control multiplies further each time the calamitous governments bumble their way around.
Further reading on the subject shows that psychologically our needs not being met can be masked by our ‘wants’, and those wants give us a short-term positive feeling of ‘whoop’, followed by that feeling of regret.
Moreover, spending compensates in some of those emotional needs above.
If I buy a nice watch, people will think my status in society is high, I will receive attention, I will be accepted. When I post on social media people will think the expensive dinner I’ve just bought is worth complementing.
The above should shine some light and hope on the psychology of debt.
There are solutions, so if you need guidance I will cover more on that next week, but yes, go take control and help those around you too.
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