Credit Repair Psychology: Why Do We Spend?

Credit repair and personal finance can seem like a never-ending math problem:

Money in-money out = discretionary income

Discretionary income-savings = fun money

Fun money = spend, spend, spend!

The possibilities are endless. Despite the indisputable arithmetic, there is another school of thought in play when it comes to the concept of wanting: psychology. Why do we spend when we know savings are more important? According to Dan Ariely, a Professor of Psychology and Behavioral Economics at Duke University, we may not fully recognize our own reasoning. In his bestselling book, Predictably Irrational, he states:

“Most people don’t know what they want unless they see it in context. We don’t know what kind of racing bike we want-until we see a champ in the Tour de France ratcheting the gears on a particular model. We don’t know what kind of speaker system we like-until we hear a set of speakers that sounds better than the previous one. We don’t even know what we want to do with our lives-until we find a relative or a friend who is doing just what we think we should be doing. Everything is relative, and that’s the point.”

To his point, Mr. Ariely has astutely identified something every consumer should recognize: the tendency to be swayed by external forces. If you are prone to credit repair blunders and can’t figure out why, read on to discover some common sources of spending temptation. Avoiding them could help you get back on track.

The media.

A recent article published by MSN Money highlighted the media’s impact on consumer expectations, the wedding industry in particular. Many brides who watch popular shows like “Say Yes to the Dress” are shocked to learn the actual cost of wedding attire. What’s more depressing: Many are willing to pay the larger sticker price.

In a media world that thrives on excess, it’s no surprise that a “more, more, more” attitude can lead to credit repair trouble. Keeping up with the Jones’s is hardly a new concept, but “Keeping Up with the Kardashians” is another story.

The lesson:

You may aspire to celebrity status, but at what expense? Are you willing to put your financial future at risk for things you can’t afford? Think twice before you overindulge. Momentary satisfaction isn’t worth a lifelong credit repair battle.



We all handle stress in different ways. Some people exercise, some people meditate, and some people spend. If you reach for the credit card when things get tough, you are an emotional spender. It’s easy enough, right? People do it in the movies, and we never see scenes of bill collectors calling movie stars.

The lesson:

Spending to relieve stress is a vicious circle, one that will inevitably include credit repair. Take a breath and do something constructive with negative energy, like cutting the fat from your budget or finding a part-time gig to help you pay down debt. Why not turn a negative into a positive?



Maybe you aren’t swayed by the media. Maybe you don’t let your emotions allow you to make bad decisions. Maybe you’re just in a rush and have no time to waste. A busy schedule can cost you more than a few lost moments in the day. If you shop for convenience instead of savings, the result is money wasted and a depleted bank account.

The lesson:

While there might be a popular grocery store within a mile of your house, does that make it the right choice? Do yourself a favor by shopping at the most affordable locations in your area. Why spend more if you don’t have to?  

No long-term goals.

If your goal is to simply get through the week, then congratulations, relying on the media, emotions, and habits is definitely a quick way to sway your buying decisions.

The lesson:

Think beyond the end of this week, month, or even the end of the year. What do you want your future to look like? Do you want a comfortable bank account, a home you can afford, retirement savings, etc.? These things require careful planning—an undertaking that won’t occur overnight. Make a list of life goals and use your resources wisely. When you have an end-game in mind, staying on course is an easier goal to achieve.