Signs You’re in Financial Denial

What separates the financially responsible from those in financial denial?

While the reasons may differ from person to person, one answer can be their willingness to correct money problems if and as they arise. A hallmark of being financially responsible is taking action to right your money ship, while someone in financial denial is not able to admit they are having financial problems. It can be hard to admit or even notice a money problem exists, so here are some signs you may be in financial denial.

You’re Not Honest About Your Finances

If you’re dishonest, look to avoid conversation, or even downplay financial issues, then there’s a good chance you are in financial denial. Avoiding financial problems will not only hurt you, but can also hurt your loved ones. Financial dishonesty can lead to further disaster as your family members may spend money based on how they believe they stand financially. Someone who is financially responsible should know their income, exact debt, credit score, what their budget is, how much they should save, and have long and short term financial goals.

You Borrow Money Often

While borrowing money may seem necessary at times, a person living in financial denial believes borrowing money is the norm. They may rely heavily on credit cards or borrow from friends and family in order to pay off debt and bills. In other words, they “rob Peter to pay Paul.” This will never get you on track as you are only taking on debt to pay other debts and will never teach you responsible financial habits.

You Think ALL Your Debt is Good Debt

These days, debt is a household word and is often used to help us purchase big-ticket items. Good debt can be any loan you take on with the ability to pay back or any debt that can generate future income such as a school loan, while bad debt is debt you take on that becomes unmanageable. A person living in financial denial believes all debt is good debt because they purchase items that they believe they’ll be capable of paying for at the end of the month. In truth, taking out more loans will not only make it hard to manage paying off, but can cripple you with interest payments and put you deeper into debt.

You Have an Excuse for Every Purchase

Everyone experiences some buyer’s remorse as some point. The feeling of regret over a purchase can be normal from time to time. But if you experience buyer’s remorse regularly or have an excuse for every purchase you make, you could be in financial denial. Consider asking yourself if you really need this item, if it’s logical, and if it is the right time to purchase it. Take into account when your other bills and expenses are due and how much you will need for them.

You Don’t See the Big Picture of Debt

Someone in financial denial sees debt in the smaller sense, or is only focused on what the monthly payment will be rather than the big picture, which is what their debts and interest cost them in the long run. They believe if they can afford the monthly payment then they will be able to afford the item. While the monthly payment may look good, you may want to look at your total debt and what the item really costs you once you factor in interest accrued over time. Consider asking yourself if you will be able to afford the item if an emergency arises. Which can certainly happen if you’re in financial denial.

While financial denial can really put you in a hole, it’s not impossible to get back on track. Admitting you have money problems can be hard, but the faster you admit it, the sooner you can help yourself get back to financial stability. Are you or someone you know in financial denial? What steps did they take to correct the financial situation? Please feel free to leave your comments!

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