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The Emotional Stages of Debt

By Paul Murphy

The time we spend thinking about money is all consuming. Whether it is how to earn more money, or the necessity to spend money, thinking and worrying about money takes up a substantial portion of our lives. We can safely say that the vast majority of people would like to earn more money, have more savings and increase their assets. Having sufficient money means we can comfortably provide for our families, create a long term financial roadmap and spend time enjoying recreational activities. Money determines where we live, which school our children attend and which social circle we move in. Money is also responsible for our attitudes, our confidence in certain situations and our relationships with family and friends. Money has a greater hold over all of us than we would ever care to admit.

It’s very rare that we will go through life without experiencing any type of money troubles. The older we get the more responsibilities we have, and the greater the financial challenges become.

There are a number of life events that can generate an enormous amount of financial stress, and lead us to incur significant and unwanted debt. It may be as superficial as trying to keep up a lifestyle beyond what our income allows, or as life-altering as a failed business, divorce or serious illness.

Debt retains a sense of stigma which leaves people feeling alone and afraid to address their problems, with often damaging results. Debt is often hidden, embarrassing and something we try not to speak about. Debt can be life changing and the way we deal with it follows a distinct pattern. We will look at the stages now.

An auto loan is another example perceived as good debt and it can be categorized so if the vehicle is essential to doing business and earning and income but vehicles are a depreciating asset so it is not in the buyer’s best interest to pay interest on a loan against an asset that is declining in value if it can be avoided.


Denial is the first stage of dealing with debt and any negative situation. We simply find it too difficult to face reality and address the situation. We continue to spend, continuing to ignore the deteriorating financial condition. This is usually put off until some significant outside event forces us to deal with it. This may be denial of additional credit, pending legal action, threats from collection agencies or risk of losing our home. Ultimately this forces us to finally change our lifestyle and attempt to begin making some tough decisions that are long overdue.


Denial leads to stress and once reality has set in, we are constantly aware of the situation. This leads to sleepless nights and everywhere we look we see reminders of debt. We are always worried about how to deal with the debt and onslaught of bills that seem never-ending. This can put immense stress on the family and change how we do the simplest of everyday habits. When the phone rings you don’t want anyone in the house to answer it because it could be a collector; mail doesn’t get opened as it may contain a demand notice. All aspects of your daily life become dictated by anxiety and debt.


Stress leads to anger. In most cases we can easily find someone to blame, then we become angry at ourselves and those closest to us for allowing us to get into this situation. Blame can be apportioned to many different sources that appear rational at the time: your employee for not paying you enough, the banks and credit card companies for charging high interest and late fees or for being unwilling to work with you to resolve the situation. We become angry at our family because of the burden they have placed on us through their dependence.

If left unresolved this can lead to a state of hopelessness with the feeling that things cannot be fixed or changed and ultimately lead to depression.

There is no benefit dwelling on personal failures when so many causes were actually beyond our control. As hard as it may appear, this should be an education and an important lesson we learn from these situations – to prevent them happening again; to recognize warning signs for the future; and to possibly help friends and family facing a similar situation.


Hopefully the move from resentment and anger to acceptance in the shortest time possible will help but it is unusual to skip the earlier steps before coming to terms with the difficulties and starting to deal with them in a meaningful way. You are certainly not alone in your struggles and you need to start to engage and communicate the problems to ultimately move through them. Moving towards acceptance will be welcomed and embraced by everyone close to you; this starts the resolution and what everyone has been seeking. You will now start looking at your debt differently and start looking at all the options to rectify your situation. You will become eager and excited to find a resolution but now is not the time to rush into a decision regardless of the pressure you are feeling from the creditors. You need to fully understand all your options as there can be long term implications that need to be understood. At this stage, professional advice is highly recommended as the plan needs to not only deal with the short term issue of the debt but also suggest a long term plan to minimize the fallout and create financial stability.

A Brighter future

Life will continue to move forward and with a plan in place the stress will be removed and you will begin to take back financial control of your life. The phone will ring and you will answer it and you will open the mail without fear. You will have made meaningful, long lasting changes to your life and the hard lessons will slowly turn into positive life situations. You will understand more about your finances and credit than you ever did before.

Debt will always be with us in some capacity and is part of life, it should not be unspoken and should not be feared but it should always be understood.

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