We all have to learn to free our minds from the dangerous credit mentality that led us to debt. But with a society like ours, that’s easier said than done.
In this consumerist society that we live in, the use of credit is widely accepted. It might even be more accurate to say that they encourage all of us to keep using debt. There’s a whole industry that earns from the interest we pay every time we send our debt payments. It’s business for them. So if they can, they’ll encourage all of us to keep on using debt, that’s what they’ll do.
For instance, credit card companies offer a lot of incentives to get you to use your credit card. They have rewards programs and loyalty points – all of these are meant to make you spend using credit instead of cash. These tactics worked so well that people have begun to accumulate a lot of debts. In fact, 15% of cardholders admit that they’ll be paying off their credit card debt for the rest of their lives.
This is only one of the credit mentality that you have to overcome if you want to be free from debt. There are others that you have to identify if you want to solve your credit problems.
The truth is, these mindsets that we have about debt came from what society wants us to think. Remember, we are being encouraged to use credit. It’s not just because of the interest that they’ll earn from it.
Our economy is heavily reliant on consumer spending. Since credit cards and other loans increase the spending power of consumers, this will move the economy.
Credit mentality that makes debt freedom harder to achieve
As you can see, there’s a lot riding on our use of credit. This is why you have to be careful about your perception of it.
But here’s the truth. There’s nothing wrong with credit. It can actually make your life easier because it brings a lot of benefits. It only becomes a problem because of how we use it. If we abuse the use of credit and we are not responsible for paying it back, that is how it starts to become a problem for us. You need to be better at avoiding debt and change the habits that are causing you to abuse its use.
The best way to start is to change the credit mentality that got you in this mess. To be specific, get rid of the mindset that belittles that danger that comes with having too much debt.
Here is a list of what we commonly tell ourselves when we’re trying to justify our debt situation.
“I don’t have enough money”
This is a common excuse when people are asked why they aren’t aggressive in paying off their debts. Or why they continue to use debt despite their high balance. They say they don’t have money.
This is a valid excuse to not pay your debts or continue using your credit. But it’s not something that creditors and lenders will accept. In fact, if you apply for a loan, one of the things that you have to prove is your ability to pay it back. If you can’t prove that, they won’t grant it to you.
So the use of credit should not be because you don’t have money. And if you can’t pay it back because of the same reason, then you need to do something about that. Cut back on your expenses or earn more. That way, you’ll have enough money to pay off your debts.
“It’s not a problem right now”
Another excuse that comes from our credit mentality. We think that it’s not a problem right now. There are many reasons why we would choose to think this way. One is because we don’t think our debts are threatening. Or maybe we are currently facing a bigger threat in our life that makes our debt problem less of a priority.
Whatever the reason is, you have to always think of debt as a problem that you should solve. Even if you can’t afford to pay it off at the moment, that’s not an excuse. You have to find a way to solve it. Remember, the more you ignore debt, the worse it becomes.
“I have other financial goals”
We all want to reach financial goals successfully. There’s nothing wrong with that. But you should include debt as one of your goals. If you can’t pay it off, it can compromise the other financial goals. So you have to make sure that you allot enough funds to pay for your debts.
You have to realize that by getting rid of your debts, you’ll make it easier for yourself to achieve your financial goal. So make a plan to accommodate all of your goals – even your debts. That way, all of these goals will progress and help you improve your finances.
“Everyone has debt”
Finally, this credit mentality is deceptive enough to keep us in debt. Just because it’s the norm to use credit, it doesn’t mean you should be reckless with it. You say that it’s okay that you carry over a balance to the next billing cycle because everyone has done it is irresponsible. Use credit because you need to and you have a plan to pay it off. Don’t use it as a status symbol – feigning financial abundance because you claim you can afford to pay for something expensive.
Be smart with how you use debt. That’s how you can really keep it from ruining your financial future.
Why you need to change your credit mentality
With the average personal debt currently at $26,621, it’s obvious that our credit situation needs a lot of work. If you really want to be free from the dangers of debt, change your credit mentality. There are three benefits that you’ll enjoy if you do this.
To be a smart spender
Having the right mentality means you get to make the right decision about the use of debt. In effect, you become a smart spender. You’ll know that you need to consult your budget before you take on more debt. You won’t allow yourself to be reckless every time you use debt. You will take your time before the expense so you can really determine if you are making the right choice. And if you are getting the best value for your money.
To avoid going deeper into debt
Since your credit mentality allows you to make the right decisions when it comes to the use of debt, you are less likely to end up with a huge balance. You’ll know when you should stop borrowing. Or what to do if you need to pay off your debts but you can’t afford it. You understand what is at stake and what your responsibilities are when it comes to debt. All of these will help you avoid going deeper into a debt pit.
To live a stress-free life
Without the presence of too much debt in your life, you have a lot less to worry about. There’s no need to lose sleep over your debt payments. You know that you have it under control. In case there’s something that you want to buy, you can afford it. All because your debt payments are not restricting your finances. You know that you are in a better position to deal with any crisis that’ll come your way. And you are sure that your financial future is less likely to be compromised.