Overcoming the Shame of Credit Card Debt

ByBeyond Finance Team

This article originally appeared in Psychology Today on February 5, 2024. Nathan Astle is a monthly contributor to Psychology Today.

Overcoming the Shame of Credit Card Debt: Strategies for Emotional and Financial Recovery

While the holidays bring joy and warmth, for many, they also come with a hefty price tag. According to recent reports, 1 in 10 Americans experienced credit card debt due to holiday spending last year, with 46% of Americans lacking a debt payoff plan. For many, this marks the beginning of a painful cycle of financial strain that can affect both their wallets and their emotional well-being. The psychological impact of credit card debt can be significant, leading to stress and anxiety. But understanding how debt affects mental health and learning how to unpack its emotional burden can pave the way for financial recovery.

The Hidden Emotional Cost of Debt

Credit card debt doesn’t just drain your bank account. It can also take a severe toll on your mental health. At the core of this emotional turmoil is a sense of helplessness. The inability to stay on top of payments can amplify feelings of failure or inadequacy, which can trigger shame. Shame often arises when we feel that we’ve acted in a way that goes against our core values. If we overspend or mismanage our finances, it can feel as though we are somehow failing as people. We might think, “I’m bad with money,” or “I’ve failed at something that should be simple.”

But there’s an important distinction here: guilt and shame, though often used interchangeably, are not the same thing.

The Difference Between Guilt and Shame

Guilt is uncomfortable, but it can actually be a helpful emotional signal that something is off and motivate us to make things right. For example, if you overspend during the holidays, you might feel guilty, but this guilt could drive you to reflect on your spending habits and take corrective action.

Shame is much more harmful and can lead to internalizing the idea that our behavior makes us a bad person (for example, thinking “I am bad with money.”) This belief can spiral into avoidance, depression and a sense of powerlessness, further compounding the stress caused by financial difficulties.

Recognizing the difference between guilt and shame is key to managing the emotional toll of debt. When we feel guilty, we can reflect on how to change our behavior. When we feel shame, we are more likely to retreat.

Separating Your Behavior from Your Core Being

One of the most crucial steps in healing from the emotional burden of debt is learning to separate your actions from your identity to avoid internalizing financial behavior as a personal flaw. Below are several steps to take to begin unpacking the emotions surrounding debt:

  • Name the thoughts: One practical way to manage overwhelming thoughts is by learning to name them. For example, when negative or shame-filled thoughts arise, try saying to yourself, “That’s a shame thought,” or “That’s a guilt thought.” Recognizing that these emotions don’t define your worth can help create distance between you and the unhealthy narrative that debt may create.
  • Face the problem: Financial difficulties rarely resolve on their own, and ignoring them only worsens stress and anxiety. Partnering with a financial counselor, enrolling in a debt consolidation program or reaching out to supportive friends and family can help alleviate the burden. Shame thrives in isolation, so surrounding yourself with supportive people can improve your chances of managing the emotional and financial aspects of debt.
  • Understand your values: Reflecting on your core values can help you regain a sense of control and purpose. Using a list like Brene Brown’s List of Values can help reframe your financial decisions and provide motivation to make better choices in the future. Additionally, understanding where you’ve gone off track can help identify where you might have made a financially harmful decision and whether that decision was in alignment with your values.
  • Practice self-compassion: Self-compassion is key to rebuilding a healthier relationship with money and reducing the emotional weight of debt. You can’t shame yourself into better financial decisions. Change happens through patience, reflection and consistent effort.

Moving Forward with a Healthier Mindset

The emotional toll of credit card debt is real and often underestimated. By separating yourself from feelings of guilt and shame, facing the problem directly and leaning on a support system, you can begin to unpack the trauma and stress that comes with financial struggles. Understanding your core values and aligning your financial actions with them can also help you heal emotionally and move toward a more stable, fulfilling financial future. With the right mindset and tools, you can transform the emotional burden of credit card debt into an opportunity for growth and positive long-term change.