6 ways to overcome the shame of debt
Shame over debt is a common reaction to stacks of unpaid bills and calls from collection agencies, but experts say that the stigma must be overcome in order to lead a healthy emotional and financial life again.
Just how deep-seated is our shame of debt?
According to a 2013 CreditCards.com poll, card debt is the No. 1 taboo subject, topping details about our love-life and discussions about salary, weight and political views. And debt can take a toll that extends far beyond your wallet. An April 2016 New York Times story pointed to economic woes as a possible reason for an alarming jump in suicide rates – 13 per 100,000 people – the highest since 1986.
Surprising? Not to psychiatrists and financial counselors.
I don't know how anyone can transform their financial life without moving through the shame.
Financial Psychology Institute
Seven of 10 clients at Cambridge Credit Counseling Corp., in Agawam, Massachusetts, “are upset or ashamed and don’t have answers, and are wondering how they got into this position,” says Gordon Oliver, student loan counseling manager at the nonprofit agency.
The pileup of finance-related shame makes sense to psychiatrist Brad Klontz, founder of the Financial Psychology Institute.
Facing facts about money – you grew up in poverty, so didn’t receive the tools to handle money properly, or nobody ever showed you the right way to use credit cards – can help people erase shame. Doing so is “absolutely critical,” Klontz says. “I don’t know how anyone can transform their financial life without moving through the shame.”
Here are six tips from Klontz and other experts to get past the stigma of debt and take steps toward a healthier emotional and financial life:
1. Realize you’re not alone. If you have financial difficulties, “You’re the average American,” Klontz says.
A Federal Reserve study based on research in 2013 and published in July 2014 showed that only 48 percent of Americans could “easily” access $400 to cover an emergency. That means 52 percent would have to sell something or borrow, including using a credit card, to cover that unforeseen expense.
That statistic led to The Atlantic’s May 2016 cover story, “The Secret Shame of the Middle Class,” in which author Neal Gabler confessed to being one of those unable to cover a $400 emergency.
2. Realize it’s not all your fault. Two generations ago, before the days of easy credit, most people didn’t worry about falling into debt, Klontz says. Nor did they need to worry about saving for retirement, given that most companies offered pensions.
“Your grandparents didn’t need to know much about money, so they didn’t teach you those skills,” Klontz says. Realizing that a mound of debt isn’t the result of being “lazy, crazy or stupid” can help a person move on emotionally, he says.
3. Air your shame. “Shame festers if not brought into the open,” says psychiatrist Robert Shulman, associate chair, director of clinical services in the department of psychiatry at Rush University Medical Center in Chicago.
Sharing a sense of shame, to family especially, can help a person overcome it. “The sense of self-loathing kind of goes away, and you can start to do the work to pull out of it,” he says.
4. Ask for help. Call a nonprofit credit counseling agency. “It’s just a conversation, a place to get started,” says Donna Loitz, credit counselor at American Financial Solutions, a nonprofit agency in Bremerton, Washington. “If you aren’t comfortable, then call someone else.” The nonprofit Financial Counseling Association of America and National Foundation for Credit Counseling are two places to start.
5. Give yourself permission to change. Clients in higher income brackets often develop a twisted sense of “needs,” Loitz says. “They have lost the idea that needs are basic – a roof overhead, food on the table, a vehicle to get you to work,” she says.
Clients must give themselves permission to change and focus on those needs, rather than “wants” such as cable and fully packed cellphone plans. “It doesn’t mean you can’t come back to those things, but you have to start somewhere,” she says.
6. Give your plan time to work. At Cambridge Credit Counseling, Oliver and his colleagues ensure clients that “whatever we come up with will get them to a better place financially,” he says. Oliver says that half the clients who begin a debt-reduction program at Cambridge follow through with the plan, and 60 percent eventually become debt-free. The average plan, he adds, spans four or 4.5 years.
As the plan unfolds, be it for bankruptcy, asset reduction or debt management, “The process of counseling starts to empower them,” he says. “When they start to feel there’s an answer, you see the shift,” Oliver says. “They are thankful there’s a plan in place.”
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