How to Really Mess up Your Finances

I have known patients who never open their mail – including bills.  They live in so much dread of bad news that they make a point of avoiding any news at all.

Anxiety is the signal that they are endangered by information they can’t face.  So, prompted by anxiety, they avoid threatening information when possible.  That’s extreme, of course, and only makes it worse when the information finally gets through to them – along with fines, penalties, extra charges, or loss of credit, not to mention embarrassment and shame.

We are all like that to some degree.  We put things off, we shut our eyes when the movie gets scary, we turn away from grisly accidents.  And that’s OK, if it’s just a temporary reaction that helps us get through the initial shock and prepare ourselves for eventually accepting the unwelcome news.  But it does not always stop at that point.

Denial is somewhat more extreme.  That’s when we actually succeed in obliterating the threatening information.  Investors were in denial when they kept buying financial instruments based on mortgages when it was increasingly clear that homeowners were defaulting.  Denial is what home owners do when they realize they can’t pay the mortgage but continue on with their usual spending habits.  Often, a kind of magical thinking goes along with this:  “it can’t really happen,” “I’ve always figured something out before the worst happens.”

The most extreme form of this kind of defense is “psychosis,” when we lose touch with reality altogether.  Some people with a “bipolar disorder,” for example, go on spending sprees when they feel poor.  They retreat into a bubble where they can sustain their alternate version of reality – until they can’t.

It doesn’t matter what we call these different states, or even how carefully we can distinguish them.  What does matter is being able to bring ourselves to face facts, unwelcome facts.  As we grow up, we usually get better at it, but the mind, driven by anxiety, always resists.  It’s not just that we prefer to believe what we want.  We shrink from the psychological pain of impending danger.

What can we do about this?  What will counter the mind’s own resourceful duplicity?

One thing I do is make a “To Do” list, to help me remember the things I know I want to forget.  It pops up when I turn on my computer.  That’s hardly fool proof, as I find it’s still easy to scan the list quickly and avoid the really difficult items I know are there. But it helps.

Someone I know leaves himself telephone messages.  Others make pacts with friends to review their financial agendas.  Some succeed in simply being more mindful, giving themselves daily time to reflect.  We each have to find the strategies that work best for ourselves, and that will involve trial and error.

This not just about money, of course.  There are many things we shrink from facing.  But money is probably the biggest source of the anxieties we all share in this world, and the biggest source of the trouble we can get into.