The Psychology of Debt

The Psychology of Debt

Whether you like it or not, sometime in your life you are, more than likely, going to be in some type of debt. Even more likely you are in some type of debt right now. How we use and experience debt in our lives will impact how we accumulate wealth, and experience freedom. So, it is very important to understand debt, how to use it, manage it, and eliminate it.

Becoming comfortable with debt is an absolute must for creating wealth. However, there is an important distinction to be made about the type of debt you are comfortable with. Good debt vs Bad debt. The simple definition as offered by Robert Kiyosaki is ‘Good debt puts money into your pocket’, ‘bad debt takes money out of your pocket’. What this really means is that good debt can build your wealth, bad debt will erode your wealth.

The state of the nation

We are in such a consumerist society, with a massive hint of instant gratification thrown in. We are taught that debt is a natural part of life. There are all forms of credit freely available from credit cards, personal loans, store cards, loans for cars and boats. In addition, when we want things, we want them now. It is a fact that the average consumer in Australia spends 121% of their income! Yes you read right, all earnings are spent and then an extra 21% is spent on top of that through accumulating more debt. It is no wonder why most people are broke, and simply are working to pay their bills, desperately trying to make ends meet. Many other countries are facing the same debt addiction situation.

Debt is a part of our lives, whether you choose to be in debt in order to keep up with the Jones’, or whether you use ‘good debt’ or investment debt to build your wealth. We need to understand debt, and how to use and manage it in our lives.

The Psychology of Debt

There is truly a psychology behind debt which you must grasp to truly master it. Most people see debt as a very negative thing, but if you truly understand debt, then you can begin to strip away all of the layers of stories and old belief systems you have about it, and learn to master it.

Be Grateful for Your Debt

This is something I learned from Demartini: That debt is previous investment in you. Someone or some company in the past has believed in you enough to lend you some money. Now you have the opportunity and gift of repaying that belief.

Powerful right? When you shift your focus like this, you can actually become grateful for the debt that you have, and feel thankful to be able to repay it. When you don’t appreciate it, you don’t want to pay it, but when you find the gift in repaying that investment in you, it becomes much easier, and even satisfying. Start by looking at each of the debts you have right now and find the investment someone made in you and the gift it is. Be grateful for each and every debt and change your perception of it.

Shift Your Focus

“What you focus on, you get more of.”


This next bit may seem a bit counter-intuitive; however if you want to really take debt away from being a problem in your life, stop focusing on it. Instead focus on maximizing the other areas of your life. You can then eliminate debt, not through going without but through creating more abundance in your life, by becoming more.

Here are two key ways to do this in your life:

1. Become more efficient: Find all of the areas where you are wasting money right in your life and learn to become more efficient and productive with your finances. This can be done through budgeting, negotiating lower rates with utilities, doing an audit on every cost you have in your life. Start running your finances like a well-oiled, and lean tight ship.

2. Focus on creating more income: While you are looking for ways to become more efficient, also focus on becoming more valuable as a person to the marketplace. You will get paid more, and create more profit allowing you to rapidly eliminate your debt.

Guess what happens now you have eliminated the debt? You now have a big chunk of spare cash flow in your life. You can use this to begin investing to create wealth, and you will have also grown exponentially as a person.

Notice in any of these points I did not talk about going without or anything to do with lack or scarcity. What we are focusing on is creating more, and becoming more as a person, and wealth creator. The psychology behind this for you is not only in eliminating debt, but in becoming truly wealthy.

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