Cashing In Q&A columns

Financial denial: When avoidance creates money mayhem


In our final installment of money disorder stories, we focus on financial denial — when the anxiety of dealing with debt is so great that you just check out

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This is the final installment in our five-part series about severe money disorders (click through the interactive below to view the related stories). Although most people’s financial issues aren’t serious enough to warrant classification, we all battle some unhealthy money behaviors, and these articles can help you spot and address your own weaknesses.

No one likes to open a big credit card bill. But if the stack of unopened bills on your counter is about to teeter over or if you’re not answering the phone because you’re afraid it’s a creditor, you might have a money disorder called financial denial.

Do you lie to your spouse about your spending? Feel guilty about how much money you make? Constantly blow your budget? talked to a new breed of expert — the financial therapist — about the top five money disorders affecting people today. You can find the stories below.

Those in serious financial denial get so anxious about money that it’s painful for them to talk about or even think about it, financial psychologists say. “Unfortunately, this is something the bulk of my clients suffer from,” says Amanda Clayman, a financial therapist in New York City. “Money already causes a low level of anxiety for most of us. For these people, the anxiety is so great that it’s overwhelming, so they basically just check out.”

Here are some signs you may be in financial denial:

  • You don’t open your credit card bills, bank statements or overdue notices, or if you do open them, you look only at the minimum payment.
  • You constantly get new credit cards, shift money around and borrow from friends and family because you can’t afford your current lifestyle on your income alone.
  • You have no sense of your big-picture financial situation: how much total debt you owe and what it would take to pay it all off.
  • You believe deep down that no matter how bad things get, everything will work out.
  • You avoid conversations about money with your spouse and other family members, and when you are forced to talk about it, you reassure them that everything is OK.

People with financial denial often had early life experiences in which they received mixed messages about money, were told money issues should not be talked about or saw parents frequently in conflict around money, says Brad Klontz, a financial psychologist and author of “Mind Over Money: Overcoming The Money Disorders that Threaten Our Financial Health.”

Some have a dream they’re unwilling to give up, says Kenneth Settel, a psychiatrist, psychoanalyst and a consultant to executives in the Boston area. “I had one client who believed he was going to become a great novelist, and maybe he will someday. But in the meantime, his savings were running out. He wouldn’t face the reality that he needed to seek some other employment,” Settel says. “It’s great to chase the dream, but at some point you have to pay the rent.”

Financial denial always backfires, experts say. Typically, something drastic forces sufferers to deal with reality, whether it’s a civil summons, a foreclosure, eviction, bankruptcy or divorcedivorce. In extreme cases, financial denial can lead to suicide. “Some men’s egos are very wrapped up in their work and money,” Klontz says. “When everything hits the fan, they think, ‘I can’t pretend anymore, and I can’t fix this. The one thing I can do for my family is give them my $100,000 life insurance policy.'”

Identifying the cause, working toward a fix
Psychologists help people with the disorder by helping them identify the root of their anxiety or shame around money and forcing them to take an honest look at their financial reality. They also often recommend the following steps:

1. Come up with a plan. Meet with a reputable nonprofit credit counseling agency or a financial planner and let them help you create a plan to pay off your debt. Also set up a system to track your spending and stay on top of bills.

2. Find an ally. Enlist a friend, find a money group or join Debtors Anonymous to support you as you change your ways.

3. Create a daily routine. Try to get out of the habit of just looking at your financial situation when things are terrible, or once a month when you’ve already spent too much. Instead, sign up for online banking or a free service like and check your balances every day. Also, set aside time each week to balance your checkbook and pay bills.

4. Keep your spouse in the loop. Give someone you trust access to your account information and ask them to keep you honest by checking in every once in a while.

When your finances aren’t in tune with reality

Matthew Peters of Madison, Wis., said he started accumulating debt while he was still in college. “I didn’t really even pay attention to the debt,” he says. “I believed I was going to get this big, high-paying job, and I could pay everything off once I graduated.”

He ended up with a job that paid just above minimum wage and five maxed-out credit cards. When he married his wife a year later, he was $38,000 in debt. “I had this huge stack of bills by the door, and they were all past due,” Peters recalls. “When people would call — no matter who it was — I didn’t answer the phone because I knew it could be a creditor. I felt trapped, humiliated and embarrassed.”

Then, reality hit. His wife worked in the finance department of a large company, and a collector reached her there. “He was going to send a sheriff to her office to serve her papers if we didn’t start paying,” said Peters, author of “Don’t Own Don’t Rent Live Well.” “Since she worked in a finance department, that would have meant her job. So we had to get serious.”

The couple cut their TV, Internet and phone service and ate 25-cent boxes of macaroni and cheese for dinner. They became resident managers of their apartment complex to cut their rent, and Peters saw a credit counselor. Eighteen hard months later, he had paid off all his creditors. “It took a while to re-program myself,” Peters says, “but my heart doesn’t sink or race anymore when I open the mail.”

See related: Is it time to consider financial therapy?, Financial rejection: When wealth is uncomfortable, Money disorders: Financial dependency means losing self-worth, Financial enabling is help that actually hurts, When being frugal becomes an obsession

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