Here's another popular question I get about working with families who have almost insurmountable debt, "Victor, how do they accumulate that much debt?" It's a good question, but an even better question would be, "How do they allow the debt to keep growing?"
People go into debt and eventually file for bankruptcy usually because (1) Medical emergency that took their life savings (2) Change in marital status like becoming a widow or divorce (3) Became disabled and unable to work full time (4) Started a business and it went under (5) Student loans (6) Lost you job and so on.
But what about those who experience none of the above and are living with debt and in some cases adding to it; why? In other words, "How do they allow the debt to keep growing?" I believe one explanation is what psychologist call the "Mere Exposure" effect. The simplest explanation is when we are exposed to something repeatedly our fear center gets use to it to the point where it no longer fears it (i.e., no longer scares us). We come anesthetized (numb) to it!
Imagine for a moment I put a small tiger into your house. At first you would be scared, horrified and paralyzed. A week later, after realizing that the tiger wasn't going to eat you, you got use to the tiger but were still somewhat leery of it. A year goes by and you don't even fear or see the MUCH BIGGER tiger anymore. In fact, you're so use to its presence you even feed it by hand.
The tiger is much like the total debt people have. Initially they're horrified by what it might do to their credit report, ability to borrow money, their family and their ability to survive. But over time, when they aren't 'eaten' by their debt, they get use to it. They see the bills every month (mere exposure effect) and just put them to the side. They learn to live with the presence of the debt (tiger). Once they get use the debt, they eventually start adding to it (feeding the debt) since they're no longer afraid of it.
One couple I worked with actually put their bills in a box in the basement as if that would make it go away or disappear. I'm not making this up! This is equivalent to putting the tiger in the basement hoping it won't get bigger and just go away!
You may be thinking, "But why don't they just take control (i.e., kick the tiger out)? Why can't they stop adding to their debt" Good questions! I'll cover those in my next post!