The first time I got myself deep into debt was when I had no sense of control with my spending. I opened multiple credit cards and swiped away. It wasn’t until all the credit card payments caught up with me, getting denied for my umpteenth store credit card, and having one of my lenders close a card that I realized I was in trouble. I wasn’t really monitoring my credit score at that time, but I knew it wasn’t good. Unfortunately, the emotional impact of bad credit hits you harder than you’d expect.
Not only are you kicking yourself for letting things get this bad, but you’re also left wondering what you have to show for all this debt…at least, I was! While that experience was tough to go through, I wouldn’t change it for the world. It taught me so many valuable lessons about credit, debt, and spending control. Although I got myself into debt an additional time, it was for different reasons (that I have since learned from). I’m proud to say I’ve been happily credit card debt-free for years.
If you’re in the thick of paying down debt, I want to help you heal from the emotional impact bad credit may be having on you. I’m sharing 6 tricks that can help you shift your mindset and focus on the task at hand…paying off your debt!
6 Tricks to Heal from the Emotional Impact of Bad Credit.
Trick #1: Separate Your Self-Worth from Your Credit Score
It’s so easy to be consumed by your credit score. Did it go up 3 points? Why did it drop 11 points? Why is this score different from the score showing on my other account? A person can drive themselves insane trying to beat the system. It’s not worth it. Your credit score is simply a number reflecting past financial behavior. It’s not an indicator of your self-worth or personal value.
You are so much more than your credit score…even if society makes it seem otherwise. If you want to heal from the emotional impact of bad credit, you’ll need to separate your personal value from your credit score. To help you do that, start journaling. Write out why you feel so personally tied to your credit score.
You can also leverage affirmations like: “I’m so much more than my credit score”, or “my credit score has no impact to my value as a human being”. The goal is for you to understand that your credit score is simply a number (that can and will change over time), and it has nothing to do with your value as a person.
Trick #2: Acknowledge Your Feelings and Forgive Yourself
When it comes to paying off debt, building up your credit, and healing from past financial decisions, it’s imperative to forgive yourself for past mistakes. This is probably the least exciting part of the financial freedom journey, but it’s one of the most important steps.
Regardless of where you stand with your finances now, or what your past behaviors with money were, sit with the feelings that come up without judgement. You may feel shame, guilt, sorrow, frustration or anger. That’s 100% okay and completely normal. Your past self did what it wanted to do at the time and your present (and future) self will be paying for it.
That’s how we learn not to make the same mistakes again, and how we grow as financially-savvy people.
Don’t shy away from the feelings. Embrace them and then forgive yourself. Vow to do better in the future. You can take this a step further by completing a forgiveness exercise. Write a letter to your past self, acknowledging what mistakes were made but also expressing forgiveness and a commitment to change.
Trick #3: Educate Yourself About Credit
I sat with Christina Roman from Experian (one of the 3 major credit bureaus) to talk about all things credit. Listen to all of the great advice she gave on CGS Podcast Episode #138 – Mastering Your Money with Credit. She helps listeners break through fact and fiction when it comes to leveraging and building credit.
Educating yourself about credit – the building process, the calculation process, and the maintenance process – can not only help you heal from any emotions and trauma around credit, but it can help you get your credit to an excellent standing. When you don’t know how to do something, it’s easy to do nothing (or do the wrong things). On the flip side, knowledge reduces fear and empowers you to make better decisions.
Make it a point to learn all about the credit process so you can feel confident in any future decisions you make involving credit. There are plenty of credit-specific resources on this website, across the internet and in physical books!
Trick #4: Focus on Small, Tangible Wins
When it comes to your credit, especially bad credit, it’s important to set manageable goals and focus on those small, consistent wins. Instead of setting a goal to pay off all your debt, set the goal of paying down one card at a time. Each time you pay off a card, celebrate that progress.
Another small goal to set may be to increase your credit score by a few points each month. To do that, you may always pay on time, pay more than the minimum, or call your lenders to increase your credit limit. Small goals, with small wins can lead to big wins in the future. Always celebrate your progress, no matter how small.
Trick #5: Surround Yourself with Support and Positivity
When trying to build your credit, recover from past credit mistakes, pay off debt, and heal from emotional impacts of bad credit, it can feel lonely. It can feel like you’re the only one going through the process. I can guarantee you that you’re not alone! Americans have over ONE TRILLION in debt. That means so many people are experiencing the same struggles.
Try to find your tribe! Join a supportive community like the City Girl Savings Facebook group, follow financial educators on social media, find an accountability partner, or work with a coach. The goal is to surround yourself with support and positivity as you embark on your rebuilding process. You don’t have to go at it alone! Positive reinforcement can be such a motivator, and it’s always comforting to know others are rooting for your success.
Trick #6: Visualize Your Debt-Free Future
I had a client who told me she would probably die with debt. She had no idea how she’d be able to pay off her student loans, credit cards, and still manage to live in an expensive state like California. Her journey all started with a coach (me) and a budget. She and I started working together back in 2016 and in 2021, she had emailed me to say she paid off her debt and had investments.
When we started working together, she took the time to visualize her life free of debt. Sure, she didn’t know how to get there, but she could see it for herself once she had a plan for her money.
If you want to heal from the emotional impact of bad credit and work towards a life of debt freedom, you need to be able to see it for yourself. Create a vision board or write in a journal what your life will look and feel like without debt. Visualization is such a powerful practice to reach your goals. It can motivate you, now that you can see it for yourself, and it can put the focus on future possibilities (instead of past mistakes).
Related: 5 Scary Truths About Carrying Debt Long-Term
While I don’t want to make you feel like the process of becoming debt-free is an easy one, I need you to know that it is possible. No matter how dire your situation seems. You can recover from bad credit, emotionally and financially. It starts with getting into the right mindset and then putting a plan in place.
If you need a budget plan that helps you cover your responsibilities, enjoy life (in moderation), and pay down debt, let me help! Get your custom budget plan today! Take one small step in the direction of healing from the emotional impact of bad credit and carrying debt. You’ll set in motion forward progress!
What trick will you be implementing? How have you gotten out of a negative mindset related to debt? Share your thoughts in the Comments section below!
-Raya
The CGS Team
