Managing Debt with ADHD
You know that living with ADHD presents unique challenges, especially when it comes to managing finances. This can often lead to adding a challenge: dealing with debt. The tendency to impulse spend to chase dopamine and difficulty with an organization that often accompanies ADHD can lead to accumulated debt. And the added debt payments then add more challenges to your finances.
With debt often comes shame, and the shame about your debt is added to the shame you already feel because you think you ‘should’ know how to manage money and that you ‘should’ definitely be better at it. Add to that any shame that other financial ‘professionals’ may have already tossed on the pile when you reached out to them for help with your finances. This is something I hear way too often, really; hearing this once is too often, but I hear this regularly, and it makes me feel sick to my stomach because it’s hard enough to reach out for help.
So, let me try to take a small piece of that shame away for you. No matter where you are with your finances right now or how much debt you have, it doesn’t mean anything about who you are as a person. Without even knowing you, because you’re here, I know you’re pretty damn awesome and are looking to make changes. So, I’m glad you’re here, and I hope this article helps you.
Today, we are going to explore practical strategies for managing debt with ADHD and outline actionable steps to help you take control of your financial situation.
Before diving into solutions, it's essential to understand why individuals with ADHD are more prone to debt accumulation. I touched on this before, but ADHD often leads to impulsivity, making it difficult to resist the temptation of adding to a cart and buying all the tools of the trade for a new hyperfixation or the item from the ad you just saw. Add to that that we tend to avoid tasks that don’t get us excited (like budgeting), we get easily distracted and get hit with timeblindness, which can lead to missed and late payments (hello, late fees and interest)! It’s the perfect storm that can lead to debt.
But by dedicating some time and, yes, rolling up your sleeves and putting in some work (I can’t sugarcoat it; it won’t be easy, but it’ll be worth it). So, let’s get to it.
Action Step #1: Start by creating a really clear picture of where you are with debt right now. The first step in managing your debt is to take stock of your current financial situation. Gather all relevant documents, including credit card statements, loan agreements, and bills. List out all of your debts, including the outstanding balance, interest rates, and minimum monthly payments. This clear picture will help you understand the scope of your debt and get you thinking about where to focus first. Before you get started on this, plan a little reward for when you’re done, like maybe a fancy coffee or smoothie.
Action Step #2: Step 1 was challenging, but so is this one. Stick with me, as it’s essential for knocking down your debts. It’s time to build a budget for yourself. Having a clear plan for your money each month is the foundation for everything you want to do with your money now and in the future. If a budget makes you think and feel about restriction, I know I won’t change that today but start to think about a budget as freedom and not restriction. Having a clear plan for where you want your money to go can often mean that you feel like you have more money for the things you love because you see categories that you don’t love taking more $ than you want. Making adjustments can be so freeing!
Start by listing all your sources of income, including wages, freelance earnings, or any other financial support you receive. Next, categorize your expenses into essential categories such as housing, utilities, groceries, and transportation, as well as discretionary spending like entertainment and dining out.
Be honest with yourself about your spending habits and identify areas where you can cut back to free up more money for debt repayment. Remember, the key to a successful budget is finding a balance between paying off debt and maintaining a reasonable quality of life.
But all I want to share about budgeting can’t be captured in one article, so scroll down to the bottom for more support.
Action Step #3: Create a plan of attack. It’s important to prioritize which ones to pay off first. If you try and pay a little extra on each debt, you won’t see the impact that you will when you are making minimum payments on all your debts and focusing any extra payments on the debt you are focusing on. There are a few different ways that you can approach this (I’ll share that link below too). A few different options are to focus on the debt with the lowest balance, the highest interest rate, or even the one that has the most emotion or shame attached to it. It’s your debt, and your plan, so you get to decide!
Action Step #4: Automate anything you can! One of the biggest challenges for individuals with ADHD is remembering to make timely payments. Set up automatic payments for at least your minimum payment amounts to ensure your bills are paid on time each month. Most banks offer this feature, allowing you to schedule recurring payments for your rent, utilities, loans, and credit cards.
Ideally timing your automated payments to sync up with your paydays as this will make things easier for you. And getting the money out of your bank account has a lot of other benefits too. :)
Action Step #5: Know that you don’t have to do it along. If you're feeling overwhelmed by your debt, or struggling overall with managing money and making progress on your goals, don't hesitate to seek professional help, or the help of a loved one you trust. There are lots of options, from financial coaching (hey there, nice to meet you) or credit counsellor, to connecting with a bankruptcy trustee if you are not able to make your monthly payments. Different professionals can help in different ways but there are people out there that can help you develop a personalized debt repayment plan, negotiate with creditors on your behalf, and explore options such as debt consolidation or settlement.
Another great thing to consider is reaching out to support groups or online communities for individuals with ADHD who are navigating similar challenges. Sharing experiences and receiving encouragement from others can provide a much-needed boost of motivation and solidarity on your journey to financial freedom.
Managing debt with ADHD is undoubtedly challenging, but it's not impossible. By taking steps to understand where you are, working to create a realistic budget, and finding the support that you need you can make big shifts!
