The Ins and Outs of Learning How to Manage ADHD and Debt

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Do you find yourself constantly trying to manage your ADHD and debt? Do you have ADHD, and find that you always have debt and just can never seem to get away from it? If so, you’re not alone. Many adults with ADHD share a common struggle with debt.

Whether debt comes from credit cards or taking out excessive loans, debt once you have it feels sometimes like it’s impossible to get rid of. Many people in our culture today continually seek out the magic solution for getting rid of debt. No more so do people with ADHD seek out this solution. Nonetheless, though, many people with ADHD just can’t seem to stop the debt cycle.

In this article, we want to pull back the curtain on ADHD and debt. We want to dive headfirst into this connection and find out both why we get into debt and how we can get out of it. Below we have some great strategies to help anyone with managing both ADHD and debt better. You might never get rid of debt, but no matter who we are, we can most likely all use tools to manage it better.

ADHD and Debt: Why We Get into Debt

To learn how to manage ADHD and debt well, you need to fully understand why people with ADHD get into debt in the first place. Most every adult has some form of debt. In fact, in many cases some debt provides a benefit. For instance, if you have a mortgage, you have debt, but the mortgage nonetheless helps you own a home and build equity and provides stability.

The other end of the debt spectrum, though, is the crippling debt that destroys your security rather than builds it up. This type of debt comes from unwise and risky arrangements and purchases. While, again, most people also have some toxic debt, people with ADHD tend to have more. Let’s look closer at why this might be the case.

Taking Risks

First, with looking at ADHD and debt, it’s helpful to understand that debt and risk are intertwined. When you take out debt in almost any form, you assume a certain amount of risk. Most of the time, you take on debt as a way of betting on future returns. For instance, you take out a loan with interest betting that you can use the money to provide greater benefit than the interest you will pay.

The interesting thing about most people with ADHD is that they like to take risks. Researchers believe this inclination towards risk has a lot to do with dopamine in the brain. Studies have shown that people with ADHD have lower levels of dopamine than others. Activities with risk help increase dopamine in the brain, which means that people with ADHD might be naturally drawn to such activities in order to increase their dopamine response.

This connection between dopamine and risk makes many people with ADHD want to seek out inherently risky activities. These things could include extreme sports or taking drugs or gambling or making financial risky choices. As a result, people with ADHD will more than likely take on more financial risk than others which in turn increases their chances for more debt.

Changing Jobs and Careers

Secondly, ADHD and debt sometimes balloons out of control because people with ADHD tend to make life changes more often than other people. People with ADHD have a tendency toward boredom. They crave innovation and change, and can easily get bored or overwhelmed with a regular consistent job.

Additionally, people with ADHD like to try new things constantly. Furthermore, many people with ADHD find starting a business and being an entrepreneur to be the best course of action for them. All of these things added together makes it challenging a lot of times for people with ADHD to stay with just one job or career.

With changing careers and jobs often, it makes it more difficult for people with ADHD to build a career and an income in one field. With moving from career to career, people with ADHD tend to start at the bottom again and again so their income level is consistently lower than their peers. Also, they might jump from one field to another and have to spend funds on training and certificates. Lastly, if they do end up starting their own business, most of the funds for those ventures come from themselves which can also drive up debt.

In short, many times staying in one field or career helps people build wealth and lower debts. For people with ADHD, their drive to keep moving, works the opposite way. Constantly changing careers can lower their income and drive up their debt obligations.

Making Impulse Decisions

Finally, ADHD and debt become an issue because of impulse decisions. We’ve just established that many people with ADHD like to make changes on a regular basis. In addition to that, they also tend to make impulsive decisions. This usually means that they simply don’t think through all of the implications of their decisions before making them. As a result, they can frequently spend money they don’t have or miss out on opportunities because they didn’t weigh all the factors.

The impulse decisions can be big or small, but either way they can quickly add up to more and more debt. From impulse buying at the grocery store to impulsively taking a trip around Europe on a whim, such decisions can wreck your budget and put you years behind your financial goals.

Building wealth and a savings or retirement fund takes slow careful planning. The impulsivity that many people with ADHD face daily continually fights against any notion to plan or prepare. In the end, the impulse usually wins out and the bank account suffers.

ADHD and Debt: How We Get Out of Debt

While it is helpful to look at some of the causes, at some level, we really all understand how debt occurs. Debt happens at the most basic level because we spend more than we earn. You can boil debt in any form to simply you spent money that wasn’t yours and was beyond what you could afford. Now, you have to pay for using someone else’s money or credit.

We all get that. We know that’s how we got to where we find ourselves today: drowning in debt. The bigger question many of us seek an answer to, though, is how to get back in the boat. We want to know how to get out of debt. Essentially, how can we manage ADHD and debt well enough that we no longer lose sleep over it.

Debt plays a different role in different people’s lives. All of us have different situations, limitations, and opportunities. Still, we can all take something from common strategies. We have here some great tools for starting on the path towards effective management of ADHD and debt. Read on for the best tools for keeping ADHD and debt in check.

Make an Assessment of Your Debt

Managing ADHD and debt begins with understanding how much debt you have. You can’t manage something well if you don’t know the extent of it.

Take for example, if someone asked you to clean up their yard. Before you showed up to work, you would need to know the size of the yard, what obstacles were involved, and if you were picking up trash or trimming hedges or pulling weeds or just mowing the grass. If you had no idea the extent of the job, then you might very well show up unprepared and not be able to do much at all.

The same concept applies to our debt. To start tackling your debt and getting it under control, you really need to have a clear understanding of the job at hand. Truth be told, very few of us understand fully our financial situation. We just get bills and do our best to pay them each month. We don’t look further than the pay amount, while looking further can actually help us do more than just pay the minimum each month.

To make an assessment, you need to make a list of all your debts each month. Put on your list all the debts you have from credit card payments to mortgages or rent to car payments and student loans. Next, take a closer look at each of these at the terms of the debt.

Make a list of the interest rates for each loan, the minimum payment, and the full amount you owe. Most likely you won’t know this information already, but you need to. Once you have an idea of what you owe and what you have to pay each month, you can then move onto to the next step of starting to cut down some of it.

Refinance or Consolidate Loans

Cutting down some of your debt begins with the question, what can I afford to pay off? You absolutely must get to a position where your ADHD and debt is manageable, which means you can pay your monthly obligations and still have money to save. If you can’t do that now, then you need to make a change somewhere.

The first place to look for making a change is at your list of monthly debts owed. Look over your list and make a note of the highest interest rates. The higher the interest rate on debt, the more you will pay over the life of that debt. Ideally then, you want to get rid of the highest rates if you can.

Some ways to lower your interest rate could include refinancing. Some lenders will let you refinance a loan or your mortgage. Refinancing typically comes with some charges, but depending on how much you can lower your interest rate, it might be worth it.

You also could consolidate several smaller loans with higher rates into a larger loan with a lower rate. So instead of paying multiple creditors each month, you’ll just pay one creditor saving you from having to remember so many payments.  You’ll also cut off some of the cost in the long run by saving on the interest rate overall.

Pay Off the Smallest Loan First

The next step to getting your ADHD and debt back in line involves starting to pay off the debt that you can. After you have consolidated or refinanced and have the lowest rates you can get, you need to figure out which loan is the smallest. You then need to focus as much as possible on paying that amount off. Pay just the minimum on your other debts if you need to, but set a target to pay off the smallest amount in the near term.

Then after you have paid off the smallest loan, take the money you were paying towards that each month and focus it on the next smallest loan. As you pay off more and more debts, you will have more and more funds to contribute to the next larger loan. This idea is called the snowball method and is taught by financial guru Dave Ramsey. The strategy sets out to leverage your money each month by targeting and eliminating loans one at a time.

This strategy may seem a little counterintuitive as you would think to eliminate the highest interest rate first. In reality, though, you can pay all you loans off faster and with less overall interest by tackling them this way.

Get a Mentor

The final advice we have for managing ADHD and debt is simply to get a mentor. Most of us were not taught how to manage our finances when we were younger. As a result, most people have no clue on where to get started.

Online articles and resources provide some directions, but the best help can come from someone close to you that you know and trust. You really need an older mentor with financial success to help you stay on track. This person could be an older neighbor or friend or someone in your family. Whoever they are, you want to ask someone that has saved well in their life and who could help guide you as you learn to better manage your finances.

Many people with ADHD tend to quickly get distracted. For this reason, accountability can play a pivotal role for accomplishing almost any goal. For financial success, you should find a mentor to act as that accountability partner in your life. Through guidance and dependence on someone you trust, you soon might find finances aren’t that difficult or frightening after all.

Continually Living with ADHD and Debt Well

Someone once said that two things are certain in life: death and taxes. For many reading this article, though, we can most likely add ADHD and debt to that list as well. If you have ADHD, you will always have ADHD. Additionally for most of us, we most likely will never entirely get rid of debt.

We might as well face it, ADHD and debt will probably always play some role in our lives. That simply means that you need to find strategies and tools that you can use to help keep your debt in line. Money management in general might not come naturally for many with ADHD. That doesn’t mean, though, that with patience and practice you can’t get better at it.

Start working towards freedom from strangling debt today. Use the tips from this post as your starting place. Once you gain some traction in the right direction, you might soon find that managing debt is truly possible for everyone.