How Debt Denial Can Really Cost You

One of the most common symptoms of being in debt is denial. You might know you owe money, but it’s easier to sweep the nitty-gritty details under the rug and remain blissfully ignorant.

I should know. When I graduated with my M.A. in 2011, I knew I took out a lot of student loans, but wasn’t really sure how much I owed. I just knew that I made payments for five years and that when I decided to go to NYU for grad school, I took on even more debt.

It wasn’t until after graduation that I knew something had to give. I had to get my financial life together and I started by signing up for a account. Using Mint, a budgeting software and money management app, I linked my financial accounts. Suddenly, everything became clear as day. After making payments for five years, I still owed a whopping $68,000. I felt a sinking feeling in the pit of my stomach.

After realizing I was deep in debt, I deleted my Mint account. I was in complete and total denial. I couldn’t face the reality of my debt and it was easier to go back to ignorance. If you’re feeling the same way, read on to learn why denial is so common, how much it can cost you and how you can reclaim your financial life.

Why denial is so common

More often than not, denial and debt can go hand in hand. When you’re not mindful of your financial situation, this can lead to more debt. The more debt you take on, the less you want to face the reality of your situation.

Denial is a safe, cozy place where you can pretend everything’s okay. Staying in denial means you can keep the status quo, yet this will cost you – big time. Facing debt head-on, however, is tough and requires facing the facts.

How debt denial can cost you

As you saw with my own situation, debt denial can have a big impact on your financial life. On a smaller scale, you might not realize just how much you owe. You may be buried in credit card debt, but opt to just pay the minimum and think it’s sufficient — not realizing that doing so could mean many years of repayment and paying much more than you borrowed.

On a larger scale, debt denial can lead to avoidance. The bills keep coming in and you ignore them. Past due notices arrive and remain unopened. Soon enough, debt collectors call and you find yourself being hounded. If you’re in credit card debt, your credit is shot and your creditors may take action. If you’re ignoring your student loans, your wages could be garnished in order to repay the loans.

The thing about denial is that the truth will always come and find you — even if you don’t want to face it. No matter how much you try to avoid something, there it is. That’s why it’s crucial to face your debt head on, if you want to get your financial life under control.

How to get out of debt denial

I often equate getting out of debt with the “5 stages of grief” — denial, anger, bargaining, depression, and acceptance. Having paid off a total of $81,000 in student loan debt, I know about this first-hand as I went through all of these emotional states. Yet, although denial is powerful, you can’t move forward unless you move past it. But how can you get out of denial without losing your mind?

The first step is to face the numbers and have a heavy dose of self-compassion. You can start by logging in to all your loan servicers and creditors’ accounts and writing down each total and the corresponding interest rate. Next up: add up all of your debt. And let it sink in. Take a deep breath and don’t panic. It can be tough to swallow, but the world isn’t going to end.

The next step is to create a plan of action. Look at your minimum payments and see how much more you can put toward your debt each month. Minimum payments are just that — the very minimum, but this won’t get you out of debt quickly. Taking action is the best way to combat denial.

Stick with this as. After a while, you’ll start to see progress. And progress can be addictive and used to your advantage!

Bottom line

Being in denial is often easier than facing the overwhelming burden of debt. But it won’t help you pay off debt and your debt won’t magically go away (we can dream right?). In order to avoid trouble with creditors, protect your credit and reclaim your financial future, it’s crucial to get out of denial and ditch debt – forever. Your freedom is priceless.

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