In my blog, I don’t talk a lot about the nuts and bolts of personal finance, but recently, I was working with an individual client who was struggling with getting out of debt. I realized that I was forgetting how hard it can be, to make a shift from thinking of yourself as a person who “always” has debt to someone who is debt free.
The “Getting Out Of Debt” Mindset Components
Your mindset is what you believe about the world and everything in it…it’s the paradigm and belief system you use to make all of your decisions, and 90% of the time, people aren’t totally conscious about the mindset they are applying to the different areas of their lives—especially when it comes to getting out of debt.
The components that are important to look at then, are the ones that create conditions in your life that don’t make you happy (like having debt). Many people want to believe that since they have never thought about it, they don’t have a money mindset/paradigm. You DO have a money paradigm, even if you’ve never thought about it.
I’ve found the three most important components of mindset when it comes to money are:
Short-term over long term thinking. Long term can be 25 years or it can be next week, but there has to be something compelling built into your mindset that makes you want to act for tomorrow as well as today.
Pain versus pleasure. Your mindset might be entirely about avoiding pain or finding pleasure, so your mindset has to include ways to deal with instinctive responses you might have as you go about your day.
Who you are. Most importantly, a money mindset has everything to do with identity and self worth, which answer the questions of: “Who do you want to be in the world?” and “Who will you ALLOW yourself to be?” Even if you haven’t thought through the answers, your subconscious is already making decisions for you!
The Challenges With Getting Out Of Debt
The biggest obstacle to getting out of debt is not knowing how you think about the mindset components. Each one of us has a choice to make: can we take responsibility and change our effect on the world around us, or are we just victims, a leaf whirling on the winds of change and circumstance? I choose to believe the former—and when it comes to getting out of debt, it’s essential to believe that you are the solution to the problem.
To strengthen your mindset you must:
- Take responsibility for your choices and seeing yourself as “willing and able” to effect change in your life
- Become conscious of how your behaviors and past decisions paint a picture of the mindset you’ve been operating from, and
- Connect the dots for yourself between short term gratification and long term vision so that BOTH are equally compelling for you, so that your behavior moves you closer to the vision that you have for yourself.
Getting Out Of Debt Requires A Conscious Mindset
To get started on changing your mindset, consider taking these 4 steps:
- Examine your current beliefs/mindset. Ask yourself: “What would someone conclude about my attitude toward debt or money based on this evidence?” Evidence is current financial situation, choices you make throughout your day, etc. (This isn’t about shame/blame, it’s about empirical evidence).
- Identify what has to change. What do you WANT someone to conclude about your beliefs and mindset by looking at your behavior, choices and situation? WRITE THESE THINGS DOWN.
- Commit to change. Decide: what are the behaviors and steps I would take to embody this new mindset?
- Baby steps. One small step at a time, start taking manageable actions to change the way you’re showing up.