Having debt can be one of the most overwhelming experiences in life. Understanding the effects of debt will put you in a proper position to handle it mentally. The problem is not having debt, but controlling it with a positive mindset.
People pay close attention to individual debt but apparently could not care less about the total debt America is in. We forget that America is going into debt, daily, which never seems to bother us.
However, having a few grand in credit card debt causes loss of sleep and potential behavioral changes.
Being debt-free as an individual is one thing, however, according to the debt clock, you owe roughly $106k worth of government debt.
Each American citizen owes just over a hundred grand to the government if they decide to collect on it. Nobody would pay that and instead would be forced to work it off the rest of their days.
This is something to lose sleep over rather than a small amount of individual debt that could be taken care of if properly managed. The problem is that people have a hard time managing debt because they are too focused on buying items for the present time.
Having useless items is more important than lowering your monthly expenses to most.
Saving money is a vital concept in financial literacy because it demonstrates maturity. It never matters how much somebody makes because they tend to spend it all. Some people make less annually but have much larger savings.
Remember, it is not how much you make but how much you save.
The psychology of spending, mindset, and societal pressure affect achieving financial security, which is why understanding the effects of debt is so important.
The Psychology of Spending
One of the most important aspects of being responsible with money is avoiding unnecessary spending. The problem is a lack of willpower because we all love buying stuff. Planning to buy something is much different than impulse buying because it is thought out.
Planning a purchase rather than giving in to impulse offers a significant advantage in managing finances and ensuring satisfaction. When you plan, you can research, compare prices, and consider whether an item truly fits your needs and budget.
This thoughtful approach minimizes the risk of buyer’s remorse, prevents unnecessary spending, and allows you to prioritize your financial goals. In essence, planning empowers you to make informed decisions, resulting in more fulfilling purchases.
Avoid buyer’s remorse by asking yourself if the item is necessary or can be substituted. When the thought of impulse buying occurs, fast forward to the feeling of buyer’s remorse, and you will quickly remove that idea to purchase.
Chances are your money was earned the hard way, so why waste it on something that grants moments of temporary happiness?
Your goal is to eliminate spending, get into the mindset of saving everything, and begin experiencing joy. Joy lasts indefinitely, whereas happiness is quite fleeting and only in a short moment.
Many people who are subject to impulse buying find they are not in control of their money. They allow money to control them without thinking ahead. This leads to irresponsibility and can ruin your chances of having a nice savings account during retirement.
It is wise to plan your spending to avoid financial hardships that will arise. You may feel alright currently, but there will be an emergency, car issues, roof leak, medical problems, etc., and you should be ready when it happens.
Financial Trauma
Financial trauma is a very real and impactful experience that can deeply influence how people interact with money. It can lead to job loss, overwhelming debt, fear, and even insecurity.
People who do not understand how to use money wisely cause problems easily. Does maintaining a wealthy appearance truly justify the stress and anxiety it causes?
These people tend to live a modest life because they live in areas with low property taxes, drive a moderate, non-luxury vehicle, eat meals at home, and have several different savings accounts, like a Roth IRA.
Even though these people may live paycheck-to-paycheck, it is because they save most of it rather than spending it. Advice like this should be taught in schools rather than teaching that self-image is most important.
Some effects of debt cause behavioral experiences that may include:
- Avoidance. Some individuals may avoid dealing with finances altogether, leading to further problems. You should be taking control of your finances and not the other way around.
- Hypervigilance. Others may become overly anxious about every financial decision. Being grateful for having an income will empower you to take appropriate action.
- Scarcity Mindset. This can cause people to hoard resources or constantly worry about not having enough. Worrying about anything is silly and will get you nowhere.
- Trust Issues. Past experiences and bad advice can lead to trusting financial institutions and advisors. This is why you must educate yourself and be around people who enjoy talking about money.
As long as you plan properly, change your mindset, and focus on what matters, you will be able to navigate any financial hardships with ease.
Also, never compare yourself to others because it will rob you of joy.
Emotions of Overspending
If you grew up in a low-income family, you might envy those who had more. This envy arises from comparing your circumstances to theirs, a comparison that often happens without fully understanding the complexities of different life experiences.
Some people over-spend, some over-save, but do either feel comfortable and confident by doing either? Is true comfort found in extremes of financial behavior?
Overspending money is a way to seek emotional comfort, fill a void, or alleviate stress. Wasting money will not help with any of these, so it makes more sense to save it for a rainy day.
Low self-worth drives many people to spend, and they use material possessions to build confidence. They may also be reacting to past deprivation.
It may be hard to let go of past feelings, but there is no point in holding on to them. Life is about moving forward while learning and adjusting from past experiences.
Recognize that true worth is not tied to material wealth. Instead, cultivating inner peace and self-acceptance can lead to a more fulfilling and sustainable sense of well-being lowering the effects of debt.
The next time you think about spending to make yourself feel better, play through the emotions in your head. Imagine exactly how you will feel once you have that overpriced, unnecessary item in your hands.
Do you feel better or is it only a temporary happiness that will need to be replaced by more spending? Try not to spend when you feel down and instead do the exact opposite. You may be surprised at the results.
Related article: “Money Priorities: How to Turn Irrational Spending into Savings“
Excessive Saving
Excessive saving may stem from a deep fear of scarcity or financial ruin. It is understandable to feel this way, however, it is also irrational to have feelings for something out of your control.
You could have plenty of money saved up, then get hit with sickness and have to spend all that money fixing yourself. The intentions of saving are good, but in a world of uncertainty, it is impossible to control everything.
Always keep note that something major will happen, it is just a matter of when. Your best bet is to be prepared financially by saving a certain amount of money consistently.
This concept could also be linked to a fear of spending money on oneself. Again, this is an irrational concept to keep in your mind. The whole idea of saving money is so that you can spend it on yourself, but choosing which way is up to you.
Give yourself some time to reflect on what you want financially in life. Do not look at anybody else and what they have, but look inward to what you want. Buying a nice car or huge house will not impress anyone and may lead to resentment.
Ask yourself what impresses you. If you are impressed with where your money goes, that is all that matters. Avoid showing off how much money you spend because, at the end of the day, the only one you are impressing is yourself.
Your opinion matters most no matter what anybody else says. Avoid the pressure of everybody else making poor financial decisions and start making wiser choices.
It is important to recognize that these behaviors are often rooted in past experiences and emotional responses. Understanding these roots can be the first step toward developing healthier financial habits.
Pressure from Society
Keeping up with what society thinks is impossible and the race never ends. Society expects you to get a full-time job at limited pay, max out your expenses with what they think you need, and get trapped in this endless cycle.
The problem is that once you max out expenses with a car payment, insurance, credit card, etc., you will not have any to save.
Instead, envision this: you work diligently for a decade, accumulate substantial savings, and then launch your own company. You become your own boss, establish a Roth IRA, jump into investments, and generate passive income.
Society will affect your financial decisions without you even realizing it.
For instance, social media platforms are breeding grounds for curated perfection. Influencers and peers showcase lavish vacations, designer goods, and extravagant lifestyles, often masking the underlying financial strain or debt.
This creates a distorted reality where “keeping up” seems synonymous with happiness. This is a big lie you should not fall for.
Just because these influencers seem happy during their videos does not mean they feel the same once the camera is off. They too may have found themselves in a trap and the only way to escape is by dragging others along for the ride.
Constant exposure to others’ seemingly perfect lives may trigger the ‘fear of missing out’. This easily drives impulsive spending for those who want to avoid feeling excluded.
The fear of missing out will lead to overspending on experiences, gadgets, clothing, etc., even though it is financially unwise.
If you must spend money to maintain friendships, reconsider those relationships. True friends do not encourage financially irresponsible behavior.
Pressure from Peers
Social media thrives on visual validation. Likes, comments, and shares reinforce the idea that material possessions or experiences equate to social worth. This fuels a desire to acquire items or experiences solely for online approval, not personal fulfillment.
Peer pressure in the digital age will have a devastating effect if you are not careful.
Here are some ideas to be aware of when being pressured by peers:
- Instant Gratification Culture. Social media promotes an instant gratification culture, where delayed gratification—a cornerstone of sound financial planning—is often overlooked. Peer pressure intensifies this, as friends and influencers encourage immediate purchases.
- “Buy Now, Pay Later” Mentality. The accessibility of “buy now, pay later” services and online credit makes it easier to succumb to peer pressure, creating a false sense of affordability.
- The Normalization of Debt. Social media can normalize debt by showcasing seemingly effortless lifestyles financed by credit. This can desensitize individuals to the long-term consequences of overspending.
- Unrealistic Expectations. Young adults are especially vulnerable to this, feeling pressured to achieve a certain level of financial success early in life, even if their current situation does not allow it.
This combination of social media’s curated reality and peer pressure creates a toxic cycle of overspending, debt, and financial anxiety. Cultivate a mindset that prioritizes personal financial goals over societal expectations.
Instead of being pressured by the effects of debt, do the pressuring. Leading by example sets a good tone for yourself, and others will eventually follow.
Demonstrate to yourself that you are capable of ignoring the pressure of society by not spending frivolously and instead start saving like it is the new, coolest thing to do. Even if others do not catch on, you are all the more wise.
References:
- National Debt Clock: What is the National Debt Right Now? (2025, February 24). Peterson Foundation.
- The Impacts of Individual and Household Debt on Health and Well-Being. (2021, October 6). American Public Health Association
- Featured Image courtesy of Amiruddin from Vecteezy