Being in debt flat out sucks. It becomes even worse when debt begins to take a toll on your life and your relationships. It gets extremely dreadful when you start making mistakes that you normally wouldn’t have.

Today we’re going to look at some of the mental mistakes that are made caused by debt:

Spending even more money/racking up more debt

“If you have debt I’m willing to bet that general clutter is a problem for you too.”
-Suze Orman

This is kind of like when you open up a bag of chips. You open up the bag with the intention of eating a few chips. Once you start eating you
rationalize that you might as well eat the whole bag since it’s already been opened. Next thing you know you’re bloated and you’ve got an empty
bag in front of you.

Racking up different is unfortunately no different. It feels like you’re going nowhere fast, similar to running a treadmill. Many people become
accustomed to being in debt so they just figure they’ll just buy more stuff now and deal with the consequences later.

Not seeing an end to your debt

“If you think nobody cares if you’re alive, try missing a couple of car payments.”
-Earl Wilson

The next major mental lapse caused by debt is the fact that it feels like that there’s no end in sight. Don’t worry because we’ve all been there at some point. When you begin paying off your debt it’ll feel like the first day of class or the first day at the gym.

I could go on and share some feel good anecdotal tips but I’m not good at that. Instead I’ll scare you guys with some debt calculations.

Making the minimum payment

“Small debts are like small shot; they are rattling on every side, and can scarcely be escaped without a wound.”
-Samuel Johnson

It’s possible that you’ve found a debt elimination plan that works for you and you’re aggressively paying off other debts while making only the minimum payment on one debt.

Unfortunately, a major mental mistake we all make when in debt is to only pay the minimum monthly payment.

It’s fine that you’re making the minimum payment but do you realize how much this is costing you?

A $1,700 Macbook purchased with a credit card that has a 18% APR, where you only make the minimum monthly payment of 4% will cost you a grand
total of… $893.48 in interest.

That’s money paid on top of the $1,700 for the laptop. That’s a $2,593.48 laptop. I heart they’re good, but are they that good?

Not negotiating your APR

“One of the greatest disservices you can do a man is to lend him money that he can’t pay back.”
-Jesse Jones

Many of us assume our current credit APR or debt interest rate AS IS. The thing that I’ve learned about prices is that everything is negotiable.
Interest rates are no different.

Why would anyone care about a few percentage points?

Let’s go back to Macbook example.

Let’s assume that you call your credit card provider and either threaten to get a balance transfer with another credit card company or politely ask for a APR reduction because you’ve hit hard times. Let’s pretend they drop your APR of 18% by 4% to 14%.

Now let’s apply your new APR of 14% to the $1,700 Macbook. When you pay off this laptop you will have paid a grand total of…$616.54 in
interest. That’s a difference of $276.94 on just a laptop. Imagine the difference between the interest paid on both forms of debt on a major purchase like a car or home?

Whether you’re not comfortable with you phone skills or if you don’t think it’ll get you any where, you need to get past that. There’s a lot of money at stake. I know it’s easier said (or blogged) than done but if I can do it than anyone can.

(Note: I used arbitrary numbers and I inputted them into this handy debt calculator. Go check it out and run your calculations to see how much money your debt is really costing you.)

I hope that you all use the above information to your advantage. You don’t have to listen to me but at least take the numbers seriously.

Are there any mental mistakes caused by debt that I missed?

This is a guest post from MD of Studenomics. MD hates boring financial stuff and wants everyone to enjoy life. Stop by and check out the new design. If not, then please subscribe.

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