Having out-of-control debt is a source of major stress and worry for many. Debt can start small and manageable, but often continues to escalate if not handled properly. Dealing properly with debt stress is important.
Try the following:
1. Assess the scale of your debts.
Part of the problem for many is not knowing precisely the extent of their debts. If your debt is a mixture of types, such as credit cards, store cards and perhaps a bank overdraft, then you can soon just be thinking of a general vague ‘amount.’ It’s important to write down and monitor the extent of each debt so you can say “I owe $XXXX.XX” overall, and how that debt is divided amongst your creditors. By knowing the extent of your debt, you can stop constantly thinking about a general ‘big’ unwieldy debt you may have. It also empowers you to create a get-out-of-debt action plan.
2. Draw up small action steps.
Think of how you can improve things by taking sound advice and basic action. On a credit card for example, paying even a modest extra amount over and above the minimum payment can significantly cut the time it takes to repay the debt. Taking small yet effective steps such as this will mean you’re doing something proactive that can help reduce your feeling of ‘helplessness.’ (See my article 5 Steps to Get Out of Debt.)
3. Be mindful of emotions.
Debt can provoke various feelings and emotions and it’s important to be aware of them:
- Anger – at yourself for getting into the debt situation to start with; resentment at perhaps a big
and unexpected bill appearing; maybe anger at not being in a higher paying job; even anger at
not ‘getting lucky’ and winning the lottery to solve your debt problems.
- Fear and panic – a helpless feeling that your debt burden is insurmountable.
- Denial – attempting to ‘forget’ about the debt.
- Shame – We are often ashamed of our poor choices and embarrassed we weren’t more financially on top of things.
Differing feelings and emotions can ‘come and go,’ but don’t let them take hold; take steps to nullify their effect. For example, something as simple as deep breathing or reminding yourself you’re taking action and things are improving may be all it takes to change your state.
4. Take proper advice.
Whether following advice online or face to face, debt counseling is very worthwhile; formulating a proper debt reduction plan you can adhere to puts you in control. Some actions that might be suggested:
- Eliminate wasted spending – A basic audit of your current spending might yield useful savings you could channel into paying down some debts. Check what you spend on utilities; shopping around for alternatives, canceling subscriptions you do not need, and packing lunches for work from home are all worthwhile exercises.
- Cut interest payments – Moving credit card balances to 0% interest cards can at least cut interest payments while you tackle the main debt (beware of balance transfer fees). Similarly, moving some debts to other lenders by checking other loans online, and similar options may be worth investigating. There is a free download for how to calculate your interest and how to slash that interest payment here.
- Talk to creditors – Many lenders are prepared to work with you to manage your debt and work out a payment plan or cut the amount you owe which will make it more affordable.
5. Look after yourself.
Don’t turn to excess alcohol, more spending, or overeating to try to feel better. Eating properly, getting enough rest, and some fresh air and exercise are all important measures. Spending more (retail therapy) will only make you feel worse long term. Being ‘good to yourself’ improves your state, helps you think more clearly, and will help you reduce stress.
Seek the right help. There are plenty of sources of free information as to how to deal with debt, save money and handle the psychological aspects of debt. Don’t allow the stress of debt to get you down. Using the aforementioned tips will help you stay healthy and balanced as you tackle the burden of debt.