Psychology of Debt

South Texas Bankruptcy and Debt Relief Attorney

Debt affects more than just your finances. Having unpaid bills or bills that you are unable to pay is incredibly stressful. This stress can cause many negative side effects, such as: chronic fatigue, a weakened immune system, feelings of guilt, mood swings and irritability, and arguments with your spouse, friends, or family. These social and personal consequences of debt are a driving factor in our efforts to help our clients. A dedicated and experienced South Texas bankruptcy attorney at our firm can assist you with credit card debt, bankruptcy, and bankruptcy alternatives.  If you have debts in McAllen, Corpus Christi, Brownsville, or Harlingen, contact our firm today.

Psychology of Spending

Deciding to file for bankruptcy is an incredibly important decision, and we at the Malaise Law Firm want to assist you in this process as well as equip you for the future. For our clients who have consumer debts, we believe that it is important for them to evaluate their spending habits and determine why it is they spend more than they can afford. Often, these reasons are either emotionally-influenced spending or being manipulated by the credit card companies. In order to avoid these traps, you first have to understand what they are.

• Emotional Shopping: We have found that many of our clients go into debt because of impulse purchases that they make when they are feeling sad, overwhelmed, or lonely. These feelings are not always obvious and can sometimes present themselves as positive feelings about the purchase as opposed to negative feelings about their lives.
• Delayed Payments: Whenever we spend money, there is a positive feeling associated with the purchase, and a negative feeling associated with the payment. The negative feelings increase substantially when we have to pay with cash or debit cards; this is called "future discounting." When we buy on credit, we do not have as strong of negative associations with the payments because they are in the future. We then are more willing to spend more money.
• Special Intro Rates: Whenever we sign up for a credit card, the credit card company offers special introductory rates. Future discounting influences this because we do not realize how painful the regular rates will be simply because they are in the future.
• Increased Spending Limits: Whenever a credit card company increases our spending limits, they are "anchoring" our feelings about our financial situation to a higher amount. This causes us to change how we view our budget, and we then spend more money. The credit card company benefits from this because they can then collect higher interest payments.
• Low Monthly Payments: Although a low monthly payment seems like a good deal, in fact we actually end up paying more money. The low monthly minimum also "anchors" our thoughts about our debts to a lower amount, so that we do not believe we have to pay as much. Often, we have the means to pay more, but choose not to because of this psychological anchoring. Again, the smaller the payment that we make, the more money that the creditors charge.

By increasing your knowledge about consumption and credit card companies, you can avoid falling into debt again. If you need assistance dealing with your present debts, contact a South Texas Bankruptcy Attorney. We serve clients in Corpus Christi, Harlingen, Brownsville, McAllen, and the surrounding areas.