Most people in debt don’t even know how much they owe
April 22nd, 2011 - 55 Comments
Yesterday, I ran a small survey: How long until you’re out of debt?
I’ve long suspected that most people in debt don’t even know how much they owe. I’m trying to dig up data on this, but from talking to tons of people about this, I feel comfortable saying “most” people in moderate to significant debt have no idea how much they actually owe.
When you internalize this, you start to see why debt is far more emotional than mathematical. This is why throwing a personal-finance book at someone in debt, or showing them some stupid compound-interest calculator, produces virtually no behavioral change.
Because if you’re too afraid to even open the envelopes that will tell you how much your total debt is, “information” is not what you need.
This is also why you see people in debt doing curious behaviors. For example, they’ll buy things with their debit card, instead of their credit card, because (1) they don’t want to tack on additional payments to their already overloaded cards and (2) they don’t trust themselves to pay off their CC debt.
I’m running a small test on my Insider’s List to help people in debt. I’ll let you know how it goes.
For now, understand that if you have a friend or relative in debt, showing them the math of paying off their debt is one of the least persuasive things you can do.
But there are things you can do to help. If you’ve helped a friend/relative with their debt, let us know how you did it — share your story below.
Read more iwillteachyoutoberich posts about debt.
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