Why Smart People Make Bad Financial Decisions During Change

Sabeena Bubber • June 12, 2026

Major life transitions - whether you are going through a separation, navigating a job loss, dealing with a health crisis, or simply facing a significant financial crossroads - are some of the most emotionally and financially challenging experiences a person can go through. They are characterized by upheaval, uncertainty, and intense emotional pressure. Yet it is exactly during these periods of maximum stress that you are expected to make some of the most consequential financial decisions of your life - including decisions about your home and your mortgage.


In a recent episode of The Divorce Circle podcast, host Sabeena Bubber, Mortgage Broker with Xeva Mortgage, sat down with Bruce Sellery, personal finance expert, bestselling author, and CEO of Credit Canada. They discussed why even the smartest, most financially literate people make poor money choices during times of stress - and exactly what you can do to protect yourself.


The Danger of Emotional Decision-Making

When you are under significant stress, your brain shifts into survival mode. Fear, anxiety, and overwhelm take the wheel, often pushing logic into the backseat. This is when financial mistakes happen - not because people are uninformed, but because they are human.

"People lose sight of the long-term consequences of their actions because the short-term context is so overwhelming," explains Bruce Sellery.


One of the most common examples of this is the battle over the family home. Many people will fight to keep their house driven by a need for emotional comfort and stability, without running the numbers to determine whether they can actually afford the mortgage, property taxes, and maintenance on their current income. Prioritizing emotional comfort over financial reality is a recipe for long-term hardship - and it is a mistake that plays out in mortgage offices across the country every day.


The 3 Biggest Financial Mistakes During Times of Transition

According to Sellery, there are three major traps people fall into when navigating significant financial change:

  • Acting Out of Guilt or Fear: Guilt and fear are emotions with zero financial utility. Making financial concessions based on emotion only punishes your future self. Treat major financial decisions as business transactions. Remove the emotion and rely on facts, numbers, and professional advice.
  • Rushing Major Decisions: Making massive choices - like buying a new home, cashing out investments, or taking on new debt - before the dust has settled often leads to regret. Wait until your situation has stabilized and you have a clear financial picture before making any major financial commitments.
  • Going It Alone: Avoiding conversations about money because of shame or overwhelm guarantees you will make uninformed choices. Build a team of trusted professionals - including a mortgage broker, financial advisor, and credit counsellor - to provide objective, expert guidance.

The "Chapters" Approach to Financial Recovery

One of the most liberating concepts Sellery shared is the idea of viewing your financial recovery in chapters rather than expecting an immediate return to stability.


The first phase after a major transition is Chapter One: Survival. During this time, your only job is to get through the day. If that means spending a little more on convenience, or temporarily pausing aggressive savings goals while you stabilize, that is okay. This phase is temporary and does not define your long-term financial trajectory.


Once you are through the survival chapter, you move into Chapter Two: Rebuilding - where you adjust to your new financial reality, establish a budget that reflects your current circumstances, and begin making proactive decisions about your future. This is often when conversations about mortgage strategy, refinancing, or home ownership become both possible and productive.


5 Steps to Rebuild Your Financial Confidence

Many people wait until they "feel confident" before tackling their finances. Sellery argues this is backwards: action creates confidence, not the other way around. Even when it feels overwhelming, these five steps will move you forward:

  • Lay the Foundation: Understand your current financial picture. What is your income? What are your debts? What does your credit look like?
  • Determine What You Want: Set clear, tangible goals for your financial future - including what homeownership looks like for you in this new chapter.
  • Develop a Plan: Create a realistic budget that aligns with your current income and obligations.
  • Take Action: Execute the plan, even in small steps. Every positive financial decision builds momentum.
  • Stay Engaged: Build sustainable financial habits and regularly review your plan with your professional team.

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