Home » How to Pay off Debt : Beating the Broke Mindset

How to Pay off Debt : Beating the Broke Mindset


As we began weaving through the process of figuring out how we got into debt and how to pay off debt, it occurred to me that we really had no control over our emotions during that time.  As I’ve mentioned before, our debt load didn’t come from big purchases – we literally nickeled and dimed our way into debt.  Rick had been laid off in 2010, and had subsequently, after 7 months, taken a job at 80% of his former salary.

Since we’d been living paycheck-to-paycheck on his previous salary, it became obvious pretty quick that we were going to be short on money each month, but in our infinite wisdom (insert sarcasm here) we reasoned that we’d just put any excess expenses on the credit card, and that eventually he’d work his way up to his previous salary.  No talk about cutting expenses or bare bones budgets. Yeah, we really didn’t know much about managing money. Rick slowly worked up to making what he made before he was laid off in 2010, but the problem is that our “necessary” credit card purchases left us with super high credit card balances and high payments to go along with them, basically nulling and voiding his new, higher salary.

As I continued to dissect the mistakes we made during that time period, I’ve come to realize that we had several beliefs that belong to what I call a “broke mindset”.  That is, we used to expect and accept being broke, and subsequently, we made choices that fell in line with our beliefs.  Here I’ll outline some of those dangerous beliefs, and how to conquer them so that you can start living life with a wealthy mindset instead of a broke mindset.

Broke Belief #1: There’s Nothing We Can Do About it

This can be, in some circumstances, a good mindset.  But in order for it to be a good mindset, it has to be titled “We’ve done all that we can do, there’s nothing more we can do about it”.  When Rick lost his job and then took the new job at the lower salary, we had this mindset that told us that the whole thing just wasn’t our fault, therefore we were justified in putting expenses over and above our income onto the credit cards.We never acknowledged the fact that years of money mismanagement put us in a place with no savings, no budget experience and no self-discipline where money was concerned.

Recommended Reading: 925 Ideas to Help You Save Money, Get Out of Debt and Retire A Millionaire: So You Can Leave Your Mark on the World

In order to beat this “broke belief”, it’s imperative that you adopt a conqueror’s attitude.  Acknowledge past money mistakes and determine that you will figure out ways to do more; to cut more expenses, to earn more side hustle income, to sell whatever you need to sell.  If you want to know how to pay off debt, you need to first understand that your debt is an enemy, and then treat it as such, pulling out every weapon in your arsenal that will help you to increase income, decrease expenses and kick that debt to the curb.

Broke Belief #2: We Deserve

This was another dangerous mindset we had when Rick was making less money after his job layoff.  “We deserve” a pick me up treat.  “We deserve” a new rug for the entryway, or whatever.  What we didn’t understand is that we deserved financial peace more, and that financial peace brings much more gratification than all of those little treats that you’ve convinced yourself that you need.  If you’re really wanting to know how to pay off debt, it’s imperative that you understand and eliminate this dangerous belief.

Recommended Reading: The Recovering Spender: How to Live a Happy, Fulfilled, Debt-Free Life

A good way to go about this is to make a list of your short and long-term goals, and post them in a prominent place in your home.  Then, when you’re feeling tempted to spend money on things that you “deserve”, look at that list of goals.  What do you deserve more:

  • Dinner out or early retirement?
  • A night at the movies or that dream vacation?
  • That trip to wherever or financial freedom?
  • A new shirt or a plushier savings account?

Think long-term, think big-picture, and don’t be fooled into thinking that those little treats will do any more than give you short-term satisfaction.

Broke Belief #3: We’re Not as Bad as the Others

I remember using this one constantly as we justified our myriad of small purchases made during the time we accumulated our debt.  We had done some very, very minor cutting of expenses, and so we would justify expenditures with statements like “Well, we’re only spending $900 a month on groceries; most people spend MUCH more than that.”  Or, “We only spend $175 a month on entertainment.  That’s much smaller than what most families of six spend each month”.

It took us awhile to see and admit this, but this attitude is nothing more than a simple case of pride.  I don’t mean to offend anyone, but pride can be a dangerous enemy.  It has a great way of encouraging us to reason in our minds that what we are spending is justifiable.  The problem with this attitude is that can be, in the long run, devastating to your future financial self.  It may seem like because you’re “not as bad as some/most/those we know” people that you’re doing well, but this is a LIE.  Just because you’re not doing as badly as others in your spending and money management does NOT mean you’re doing well.  There’s a huge difference.

Not doing as bad as others means the hole in your financial ship is smaller than other people’s holes, but it’s still a hole.  Doing well means that you are making notable progress – no matter how small – toward your goal.  It’s imperative that people understand this difference if they want to truly understand how to pay off debt and keep that debt gone forever.

As I’ve said a million times before: YOU DESERVE BETTER.  Make a choice to diagnose and beat the broke mindsets in your life today, and catapult your way to financial peace.

What broke mindsets keep you or have kept you from achieving your financial goals?


  1. Laurie,
    The we deserve mentality is the worse. I’ve had many bankrupt family members who continue their bad finances because they deserved a certain lifestyle. Sad really.

    • Laurie says:

      I agree, Charles. We were there for a long time, and I’m SO glad we’ve woken up to the truth. A much better, happier place to be. 🙂

  2. When my father passed away, that was 8 years ago, we knew it that we was totally broke. He was our only bread winner and we had a large hospital debt. But thankfully, we did manage to survive and get back on the right track.

    • Laurie says:

      Clarisse, so glad you were able to overcome the financial issues there. It’s hard enough losing a loved one, but then to have to add financial problems on top of it, that would be tough.

  3. I think #2 is horrible, but I was horrible with #3. I thought, well I’m only buying “smaller” things I can’t surely be as bad as someone who goes out and spends on big ticket items. Well, guess what, I was still in debt and I just had more junk to show for it. 🙂 Consumer debt is bad and I was just trying to rationalize it.

    • Laurie says:

      Oh my gosh, John – we were SO there for a long time. It’s amazing how very quickly dimes and nickles can be wasted away.

  4. I struggle with #1 There Is Nothing I Can Do About It. Sometimes I just throw up my hands and buy something I shouldn’t because I am so far in debt that a little bit more really won’t change anything.

    Money and emotion go hand in hand and it is the emotion that has tripped me up so many times.

    • Laurie says:

      We struggle with that too, Jane, but for both you and us, every step we take in the right direction is a step of victory. 🙂

  5. I see this mindset with many people. #1 is a tough one because if you don’t Think you can do anything about it, you’ll just give up and not do anything. And with #3, it’s best to surround yourself with those who are good with their finances so you don’t continue to think that being in debt and broke is not a problem since everyone is living that way.

    • Laurie says:

      So true, Andrew. If we choose to surround ourselves with people who manage their money poorly, it sure is easy to justify doing the same, isn’t it?

    • Laurie says:

      I think so too, Raquel. So often we mistakenly believe that NOT spending our money is a form of punishment, and I think the marketing industry shoulders a lot of the responsibility for this.

  6. anna says:

    Before I discovered PF blogs, I absolutely loved playing the “I deserve this” card… and did it all the time! Thank goodness we both woke up from the ‘broke’ mindset, Laurie. Great strategy with thinking that people deserve to be debt-free!

  7. Brit says:

    “I deserve this!” I work so hard and so why not? This was my attitude before. My other way of thinking was, I will pay it with my bonus. This will help me justify my spending. Sad part was I never did because something else came up. Great post!

    • Laurie says:

      Oh my gosh, we would do that too, Brit. We’d figure that, “Oh well, the tax return/bonus/extra check is coming up, so we’ll just pay it with that.” Yikes! Glad you broke free from that mindset too. 🙂

  8. I remember always saying that my debt wasn’t “that bad”, but in actuality, it was. This thinking kept me from doing anything about it and I paid the price in time lost and interest paid.

    • Laurie says:

      Yeah, it’s easy to focus on others in worse situations and comfort yourself into complacency, isn’t it? We were SO there for so many years.

  9. #2 and #3 are the two that I struggle with the most I think. Even now that I’ve admitted my debt to myself and starting making some progress, sometimes #s 2 & 3 still sneak up on me. Knowing is half the battle, so now that I know I still struggle with those 2, I will work harder to avoid those situations.

    • Laurie says:

      Good for you, SHNM. It can take some work to change your mindset in those areas, but once you can overcome those temptations, they’re often gone for good.

  10. #3 is the typical comparison trap that we fall into all the time. It’s really easy to rationalize our decisions and fool ourselves into thinking they are “not as bad” as the neighbor next door. I think we do this for two reasons: 1) it’s an attempt to make ourselves feel good and 2) it keeps us from facing our problems. Neither reason is wise thinking.

  11. Oh gosh, I know this feeling so well and not just for finance.

    There’s a certain amount of difficult circumstances that make me buckle down and fight… but there’s definitely a threshold where I just feel out of control and paralyzed — ultimately making it worse.

    It’s a feeling I don’t wish on my worst enemy…

    • Laurie says:

      Yeah, we’ve been there lots too, Mario, and you’re so right about it being paralyzing. We went through a lot of months – and still occasionally go through them – where we just can’t move and are holding on to our debt payoff plan for dear life because it’s so paralyzing emotionally.

  12. We occasionally get caught up in the “it’s not as bad as so-and-so’s debt.” We have to remind ourselves that yes, it is bad! It’s bad for us. It’s not better because someone has more debt than we do.

  13. Great insight, Laurie! Those are traps everyone has fallen prey to at some time, especially #2 and #3. The “we deserve it” mentality to me is the most prevalent and dangerous one. It’s so easy to justify and fully believe. And it’s the one we most readily teach our children. We tell them all the time when we buy ourselves something that we “deserve” it. It’s no wonder so many people buy things as either a coping mechanism or as a reward. It’s to easy to justify everything as something I “deserve”.

    • Laurie says:

      Agreed, Shannon. These beliefs are so dangerous, and they are what I believe is keeping so very many families financially troubled these days.

  14. You’re a wise lady Laurie 🙂 You are so right about how we all make choices in line with what we believe, so we need to change what we believe about our situation if we want to make any progress! Changing the 3 beliefs you listed will make a HUGE difference for people who are trying to get out of debt. It’s amazing what a difference a change in mentality makes.

    • Laurie says:

      “we need to change what we believe about our situation if we want to make any progress”. LOVE that, Stephanie! Changing your beliefs at first can be scary, but after you get a taste of it, there is such a huge amount of freedom, isn’t there?

  15. Kay says:

    I think the “we deserve” mindset is the most destructive of all of them. It’s what leads people to live beyond their means and it is never an isolated incident, meaning those types of purchases are repeated.

    • Laurie says:

      “it’s never an isolated incident”. That is a huge problem, Kay. We soon get into a habit of “deserving” lots of things, and before you know it, 5 or 10 or 15 years have passed and you’re still a financial mess.

    • Laurie says:

      Brian, we have SO been there. I occasionally get tempted still, but Rick is right there to remind me what we’re working for.

  16. Oh I know the “we deserve” excuse only so well – it’s probably the one I see more than any other amongst my less-than-frugal friends.

    The classic example is a friend of mine who dislikes their job but doesn’t want to quit because they’ll likely have to take a pay cut if they get an equivalent job elsewhere.

    Yet they drive miles each week to and from their work, and hate it so much she “treats” herself to new toys that she “deserves” each week because she works so hard. From new phones, to computers to nice cars etc.

    I try telling her that if she got a job she enjoyed more she wouldn’t feel the need for these treats and so she’d probably end up better off even with a pay cut but she just can’t see it!

  17. It kind of reminds me of when I was a kid and I wanted to do something because all the other kids were doing it and my Mom would say, “Well if everyone jumped off the bridge, would you jump after them?” I didn’t really get it then, but we certainly jumped off our own bridge with the excuse that everyone else was jumping too. Herd mentality gets you in trouble most of the time.

  18. I think you’re totally right about people thinking they deserve something- I know I used to think I deserved things because I was an “adult” and other “adults” I knew had nice things. So what if they were on credit? Everybody else had loads of credit card debt. But man were we wrong. I don’t think you deserve something just by virture of your job or your age or anything like that. I still see tons of people wrecking their finances because of some notion that they deserve their high priced lifestyle. It’s a total shame.

    • Laurie says:

      We always like to remind ourselves that we deserve financial freedom more. Looking at the big picture helps SO much. Great comment, Ryan.

  19. Ooh the old “I deserve it” mentality. I hear SO many friends say those words. We don’t deserve anything….we’ve earned it. If you want something…fine, but own up to what that is actually going to cost you. I know thinking that way keeps me in check.

    • Laurie says:

      “If you want something, fine, but own up to what that is actually going to cost you”. LOVE that, Tonya! Thanks for sharing that wisdom. 🙂

  20. We had a bad case of the “we deserves.” I just always rationalized that I worked hard so I was entitled to “enjoy” my money. It is amazing how much money we spent with that mentality. Now I am focused on working hard and not spending my money so I won’t have to work hard forever.

    • Laurie says:

      Oh, yes, Shannon. We were SO there too. Shifting your perspective in that area and realizing that you deserve financial peace more is a huge victory, isn’t it?

  21. “Just because you’re not doing as badly as others in your spending and money management does NOT mean you’re doing well.” BAM. That brutal reality hit me hard last year but I’m oh so glad it did because I needed a wake up call for sure!

    • Laurie says:

      I know that was a huge eye-opening revelation for us, GMD. And one I wouldn’t change for anything. We love the freedom we have now that we’re not being held in bondage to that excuse.

  22. Oh number 2, I know you so well. “But we both work so hard, don’t we “deserve” those $100 dinners?” Thankfully, I got that out of my system young. These days I’m just as happy with a $20 takeout meal (probably happier because I’m not stressed about the cost).

    • Laurie says:

      You are lucky that you got out of that system young. We waited long, but at least we’re out. We now get just as much enjoyment out of a takeout pizza as we did on those dinners at sit-down restaurants. It’s all about perspective. 🙂

  23. Just some fantastic stuff here, Laurie. Life changing, potentially. We personal finance writers focus a lot on the tips and tactics to get out of debt and build wealth: save X percent of your income, find a side hustle, negotiate, etc. etc. We have a box full of great tools. But unless someone has the right mindset, they never pick up the hammer.

    • Laurie says:

      So true, DB40! We were “them” for many years. We’d read the books, etc., but it just wasn’t sinking in. It wasn’t until we changed our mindset that the ball started to roll.

  24. Liz says:

    We are definitely guilty of “deserving” things. It can be so hard to think long-term and how such small decisions can have such a big impact on our lives and add up quickly. It’s very easy to rationalize little splurges with “I deserve it”

  25. I totally have suffered from number 2 and still battle with number 3. I know we are good in a lot of ways, but that doesn’t mean being bad in other ways, just because most people are worse. You are so right, it’s not the same as doing well!

    • Laurie says:

      Yeah, I can identify, Melanie. It’s definitely a work in progress to change those mindsets, but both you and I are well on our way. 🙂

  26. Initially, when we got through my loss of income earlier this year, we kept saying that we’re still not as bad as others and, even though we downsized a bit, we still spent more than we were making. That’s really a bad thing to do!

    And as if people really smell you being in trouble, just the other day I got a call from the bank trying to make me get a credit card (they are barely used here in Romania). “You can go in a vacation tomorrow and you won’t have to worry for paying anything for three months” – this was their promo for those starting a credit card and at first I said “well, that’s a good deal, actually!” I only needed a few seconds to realize, though, that if I don’t have the money now, there are few chances that I will have them three months later…

    • Laurie says:

      That’s terrible, C, how they targeted you like that! Good for you for recognizing the trap – that’s 90% of the battle.

  27. I can identify with all of these! I’ve used them myself and seen other family members use these excuses over the years. You’re so right, though: we deserve early retirement way more than we deserve any “stuff!” Great post!

  28. Hey, we had ALL these mindsets!!! No more, however…..The biggest one for me was “We Deserve.” I still use that mindset…but now it’s not about how we deserve stuff….it’s I DESERVE to NOT have to worry about how to pay my bills, or put food on the table. I DESERVE financial freedom!

    • Laurie says:

      We do that too now, Travis, and it’s such an awesome feeling, knowing that you’re making decisions that bless your family both short-term and long-term. Good stuff!

  29. Laurie! We have said each and every one of these things to each other countless times! You are dead on! Michael was out in 2010 too- similarly, we utilized cards to eek by. It was a mess. Treating our debt like a pariah is so helpful in staying on
    course . We still catch ourselves in some of these bad self-talk habits. But we catch it and stop it and make much better choices.

  30. Chris says:

    I think #3 is the hardest to deal with. I think reality and plain looking at the numbers will break people of #1, and #2 is just an easy excuse that you can train yourself to ignore or delay. But thinking in relative terms, people always assume they’re not spending as badly as their neighbors – without having any knowledge of their neighbors income or debt. We need to take an absolute view of our finances. If everyone is buying too expensive a house and is underwater on their mortgage, well that doesn’t mean we won’t lose our house too. And if they’re burning their cash in huge chunks, it doesn’t mean you won’t run out just because you are burning smaller piles.

  31. I think a lot of people think that there’s nothing they can do about it and end up wasting valuable time that they could’ve spent paying off debt. Good for you for realizing that it isn’t true!

  32. There are a ton of people who go around thinking all of these thoughts, which lead them into deeper and deeper traps. I definitely find myself thinking that oh, I’m not doing that badly, I can definitely go and buy myself this or that. But being able to catch myself early on has lead me to prevent that happening with even bigger purchases.

    • Laurie says:

      I think all of us who are working to get out of debt go through that at one time or another. It seems to happen less over time, thank goodness. 🙂

  33. Jim says:

    Yep Laurie, I think these broke mindsets are what most people suffer from. Don’t you think it would be good if they could teach how to deal with this in elementary and high school? I mean I know its the parents job as a whole, but man reinforcement of it by the school system seems like a good idea?

    • Laurie says:

      Oh, I wish!!!! Sadly, though, I can’t see it ever happening, as the masses seem to think that type of education should be back burner to learning to be “intelligent”. 🙁

      • jim says:

        Oh, I can see teaching personal finance in high school spreading like crazy. Once we reach FI I intend to volunteer to teach this type of class even if it has to be deemed and extra-curricular activity.

        • Laurie says:

          Oh, I hope so, Jim. What an awesome thing that would be, wouldn’t it? I love your idea about volunteering to teach that type of class after reaching FI. That would be right up my alley too.

  34. Great post, Laurie. I used to be so bad at #2. I figured that I had a high-stress job, earned a good living and “deserved” to splurge. I treated myself to lots of clothes, shoes, meals out, etc. Fortunately, I didn’t go into debt, but I spent every penny of my paycheck on a lot of stuff I regret now (and that’s the stuff I even remember). There are so many others things I would LOVE to do with all that wasted money today. Live and learn. 🙂

    • Laurie says:

      Yeah, it’s hard to think back to what all of that wasted cash would’ve added up to; we struggle with that too, but onward and upward, my friend. 🙂

  35. Syed says:

    I feel you on the comparing yourself to others mentality. Most Americans are in debt, but that doesn’t mean we have to be. The most important thing is to better yourself day by day. Great post.

    • Laurie says:

      “Most Americans are in debt, but that doesn’t mean we have to be.” LOVE that, Syed. That statement should be posted on billboards around the country.

  36. Yeah I remember my wife used to say that we deserve to eat outside once a week after a long hour work and stress. This mentality is like an self escape goat just to accept our spending habits.

    • Laurie says:

      So true, MWD! We have been there as well, justifying our expenditures for reasons of work and stress, but now we know that financial independence will feel SO much better. Thanks for weighing in. 🙂

  37. I think the ‘we deserve’ and ‘we’re not as bad as others’ are easy broke mindsets to fall into. People are CONSTANTLY comparing their finances and lifestyle to others, for better or for worse. I sometimes wish I had tunnel vision so I can focus on my own goals without any influence from others.

    • Laurie says:

      Yeah, it’s so important to work to compare your progress to your goals and your goals alone. If we can do that, we’ve won a big chunk of the battle. 🙂

  38. I can really relate to all of these mindsets Laurie! Especially the first one. Both myself and the hubby genuinely believed that we could do nothing about our debt situation but plod along as we had been doing for years.

    I think that we’ve now battled on past the broke mindsets at last!

  39. Marvin says:

    Fantastic points here! Nobody deserves to be in debt, I honestly believe that are in debt see that huge mountain they need to climb and decide not even to take the first couple of steps.

  40. Pingback: Week End Round Up #25 » Debt DisciplineDebt Discipline
  41. Love this post, Laurie — an oldie but a goodie.

    As you noted, the difference between a healthy mindset (I’ve done all I can so that’s all I can do) and a harmful one (there’s nothing I can do about this) is a matter of framing, and it’s not all that big a difference. If we’re not careful with our stinking thinking, it will get the better of us.

    • Laurie says:

      Oh my gosh, Brad – you are SO right. Problem is that it’s very destructive to long-term wealth/health and people don’t even realize it. 🙁

  42. BTW, it would be cool if your tweet button had “via @…” with your twitter handle. I try to remember to add it manually for you. Would help with some social sharing if it was pre-filled though. Just a thought. Keep up the great posts! 🙂

  43. Michael says:

    Great post, Laurie! My worst enemy was fear. I was too afraid to look at how much I owed across all my credit cards. The day I tallied up the total of what I owed was the day when I overcame my fear. That was the turning point for me.

    Debt is an enemy you gotta look right in the eye and knock him down. He gets no time to breathe between your punches 🙂

    • Laurie says:

      I hear you on the fear thing, Michael. Even after we totaled up all of our debts we were in shock for months. Yeah, we were that in denial. But it was worth it, facing the fact. Thanks!!

  44. katscratch says:

    Yes! For me it was the chronic “when I’m better off somehow” mentality that really did me in – I’m not sure how exactly I thought I was going to magically become “better off” and honestly I didn’t even know what “better off” looked like, so it’s no wonder it took so long to shake that mindset 🙂

    • Laurie says:

      Us too!!!! We had a hope for “someday” but NO plan to get there!!! We left it all to “fate”, which was our fancy way of saying “I don’t want to be responsible for my decisions.” 🙂

  45. Josh says:

    I have been struggling with Broke Belief #2 “We Deserve” this week. It would be really nice to buy a used family vehicle that is bigger and more practical than our current one. But, we don’t have the money to buy one with cash right now.

    This then leads into the positive form of the third broken belief #3. We have three paid-for cars in our driveway that function properly. Granted two of them are not worth much more than scrap, but, they make great daily drivers. “Some” Americans are just grateful to have the means to afford one reliable vehicle.

  46. Before I got out of debt I use to say that I was spending towards more important things. This was backwards as getting out of debt was the important thing. Now that I’m debt free I can’t imagine having this type of mind set ever again.

  47. Angelica says:

    These mindsets are super relatable.

    I think there’s another, equally bad “I deserve” that people fall into–I know I have. It’s like, if my finances aren’t great, it’s because I deserve to be broke all the time. You have to take responsibility for how you’ve managed your money, sure, but it doesn’t help to accept financial difficulties as due punishment, either. It encourages getting stuck in a pattern of “learned helplessness” where, even when great opportunities finally do present themselves, you refuse to take them.

    Just my 2 cents, heh.

    • Laurie says:

      Great point, Angelica! And I have been there too. It really is a fine line and balance of taking responsibility for past mistakes but not allowing them to hinder your future as well. Great comment!

  48. Maxene says:

    The positive mindset is important not only in paying off debt quickly but also in being successful in finances. When you have that mindset, you get to have a good lifestyle and make better decisions in life.

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