Three reasons why you're still in debt
You're not just bad with money - psychology is at play here too.
If you’ve ever wondered why your debt hasn’t gone down, even though you’re earning more than you did a few years ago, you’re not alone. Here are three powerful psychological forces that keep people stuck financially - yes, even smart, capable, hard-working people.
The Hedonic Treadmill
Psychologists call it the hedonic treadmill, a term popularised by researchers like Philip Brickman and Donald T. Campbell.
The idea is that you quickly return to a baseline level of happiness after positive (or negative) changes.This is why when you get a pay rise, it feels amazing… for a few months. You upgrade your phone, exciting… for a few weeks. Your brain adapts, so you chase the next upgrade because the last one stopped delivering the emotional payoff you expected.
The problem isn’t that you’re irresponsible, but that your nervous system normalises improvements and starts craving more. If you’re constantly spending to feel better, you’re running hard, but not getting ahead. That’s the treadmill.
Lifestyle Inflation (or creep)This is what happens when your spending rises alongside your income. You earn more, so you:
Upgrade your car
Invest in skincare
Eat out more often, or get more takeaways
Subscribe to more services
Travel more luxuriously
None of these are inherently bad, but the issue is unconscious expansion. When your income increases, your standard of “normal” rises with it and what used to feel like a treat becomes a baseline expectation. Instead of using pay increases, bonuses, or side income to aggressively eliminate debt, you absorb them into a more expensive version of everyday life. From the outside you look successful, but on the inside your balance sheet hasn’t changed.
Social Comparison
This is the most harmful of all. We are wired for comparison. It’s part of what psychologist Leon Festinger described in his Social Comparison Theory: we determine our own worth by measuring ourselves against others.
Today, this tendency is amplified by social media, because you don’t just compare yourself to your neighbours. You compare yourself to:
People in higher tax brackets
Influencers with curated lifestyles
Friends posting highlights, not reality
When someone upgrades, travels, renovates, or buys something new, it resets your internal benchmark for what doing well looks like and our expectations rise again. And sometimes you spend not because you deeply want something, but because you don’t want to feel left behind. Social comparison makes enough feel like not quite, and that gap often gets financed with debt.
How to Break Free From These Three Mindsets
Escaping debt isn’t about maths, but interrupting patterns. Here’s a practical reset:
Create a “pay increase rule”
Before your next receive additional income or a more permanent pay rise, decide in advance:
50–80% goes to debt repayment or saving for short term goals
Then put some towards investments for your future (if you don't have debt)
The remainder can improve lifestyle
Automate it so you never “feel” the money.
Add a 30-Day upgrade pause
Before any major upgrade, wait 30 days and ask yourself:
Do I want this, or the feeling it gives me?
Will this meaningfully improve my life 12 months from now?
Is this aligned with becoming debt-free?
This weakens the hedonic treadmill.
Define “enough” on paper
Write down:
What kind of life is actually enough for you
What level of housing, car, travel, and possessions align with your values, not social comparison
Debt isn’t proof you’re bad with money, but it might be proof that psychology has been owning you. The good news is that once you see the treadmill, notice the creep and recognise the comparison, its easier to step off. And when your income rises next time, you'll know what not to do.
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