Tips & advice on getting your finances back on track.
I recently saw a headline that noted seven out of ten people have cried over debt. I have been a financial counselor and educator with Navicore Solutions for almost twenty years and, during that time, I have seen the true emotional impact that debt can have. Unfortunately, we have seen much more serious effects on mental and emotional health when it comes to debt. Recently, a young man ended his life due to perceived excessive debt through a day trading website. I was saddened and amazed by how many reports of suicide I came across when researching this topic. Credit card debt, student loan debt and the loss of homes to foreclosure were highly related as extreme stressors for individuals, and some of those people dealing with those issues without help have paid the ultimate price.
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There is a psychological aspect to debt. There are a number of psychological theories as to why consumers may overspend on credit. I would like to highlight a few of those theories. The first is the “anchor theory” which basically describes why stores have huge sales signs. The idea is that if we look at an item and see its original price and then see the sale price, which may be significantly lower, the desire to purchase that item increases greatly. Do you have something in your closet that you purchased and have never worn, but the sale price was too good to turn down? If so, you experienced the “anchor theory”.
The next theory is “supply and demand”. As humans, we are wired to believe that if something is hard to get, it must be worth more. I would like to point out the great toilet paper shortage of Covid-19. Many of us have been through natural disasters and have found it hard to find bottled water, canned food items and batteries. Our survival instinct, along with the messages from emergency management professionals, prompts us to think that we need extra water, food and batteries for light or radios. Why was there such an extreme shortage of toilet paper during the pandemic? If you found toilet paper, did you pay much more because of the shortage and the hoarding of others? I know I did! It was harder to find, therefore it increased in value and, as a result, I paid $3.00 for one roll of toilet paper, just to know I had it.
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The last theory is “shopping addiction”. I know that a lot of people think this is not real. “Just don’t go to the store!” If it was only that easy. Compulsive buying behavior (CBB), otherwise known as shopping addiction, pathological buying or compulsive buying disorder, is a mental health condition characterized by the persistent, excessive, impulsive, and uncontrollable purchase of products in spite of severe psychological, social, occupational, financial consequences (Müller et al., 2015). The results of CBB are often feelings of regret or remorse over purchases, shame, guilt, legal and financial problems, and interpersonal difficulties.
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These noted theories are just three a handful of beliefs that psychologists and psychiatric scholars have developed. As our country continues to see misfortune and heartbreak, I feel it is imperative that people know where to go to get answers and help with debt. Perhaps if the unfortunate people who saw no way out, just made a phone call to a reputable resource like a credit counseling agency, their fate may have changed. At Navicore Solutions, we are prepared to assist you without judgement no matter how insurmountable you feel your debt may be. We can also provide the resources to ensure that every client gets not only the financial education, credit counseling, student loan counseling, and housing counseling they need, but also refer them to mental health providers for a holistic approach to debt management, if needed. Please reach out to one of our Certified Counselors at 1-800-992-4557.
Kim Cole is the Community Engagement Manager for Navicore Solutions. Kim provides financial education workshops and seminars to communities. Readers can submit general questions relating to personal finance, credit scoring, debt management, student loans, home finance or bankruptcy which may be highlighted in the next month’s edition. All identifying information will be kept anonymous.
Please send your questions via email to DearKim@navicoresolutions.org