Overspending

This article is based on a talk I presented to Michigan credit union professionals as part of their training to become budget counselors. It addresses the emotional “noise” that distracts someone with credit and overspending problems, and how to communicate productively with them.

Emotional Noise

When you feel like you’re getting nowhere with a client who has debt problems, you are probably competing with their emotional “background noise.” Understanding the pain that often lies behind overspending can help you build a bridge to someone who needs your help but doesn’t know how to ask for it. When you combine that with strategies for communicating in difficult situations, you will find your job easier and more satisfying.

Fallout from Michigan’s economy, medical crises, and other serious life problems are important factors in why many people are currently facing problem debt, bankruptcy, and foreclosure. Responsible people who unexpectedly find themselves or their family members in need of expensive medical treatment may have few options besides placing their expenses on credit cards. And while the loss of a job may not be sudden, people do not think clearly under the tremendous stress of finding themselves without a job, especially if they are self-employed or otherwise ineligible for unemployment benefits, or do not have family members who can provide financial or practical assistance.

In the absence of obvious external problems, many people with financial problems are going through life with tremendous emotional pain that colors their thinking and behavior. People who appear irresponsible, over-entitled, and immature may never have had the opportunity to learn how to cope with problems and disappointments in healthy ways. It may not show, but they probably feel a deep sense of shame and guilt about their overspending and debt, especially sitting in the office of a budget counselor. If the person comes across as flippant, seems to be in denial about the severity of their problem, or blames others for their predicament, it is almost certain that they feel they are defective human beings.

Think about what it feels like to go through life feeling empty, unlovable, and unable to measure up. You were never good at school, your family members fight and gossip about each other, you can’t understand religion — all those things that seem to help other people just don’t work for you. Then you find something that makes you feel better for a while — retail therapy! Now you can buy the love of people who don’t otherwise care about you. You’ve always felt you will never amount to anything, but look at all the nice things you have — this must mean you’re a winner! If your kids are getting into trouble, your spouse is having an affair, you can’t face up to some terrible mistakes that you’ve made, spending money can be the compelling distraction that gets your mind off problems you don’t know how to solve.

Keeping up with the Joneses

When someone in financial trouble continues to spend substantial money to maintain an impressive standard of living, we often shake our heads and conclude they are irresponsible. To understand them at a deeper level, though, it helps to think about the universal psychological experience of needing to look like other people. Our sense of being normal and acceptable is strongly related to looking like the people around us. Unless we have a firm grounding in something like our family, community, personal values, or spirituality, most of us feel deeply distressed when we see other people enjoying things we cannot afford.

Tom and Andrea, for example, both grew up in affluent families who were highly visible and respected in their communities. Their friends were successful financially, and socializing often centered around fine restaurants, travel, and formal events. They were already spending beyond their means to fit in when Tom was laid off and Andrea’s work hours were reduced. As their stress levels and insecurity rose and their self-esteem diminished, they quickly built debt to an unmanageable level.

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