A woman stressed about debt.

Dealing With The Emotional Toll Of Debt

Debt does more than hurt your finances, it can also take a big toll on your emotional well being. If you are struggling to deal with debt, you also need to be concerned about your mental health. Here are some ways to deal with the stress and move forward with our debt reduction in a healthy way.

The American Dream has been one of the most influential and powerful ideologies in the world since its conception in 1931. It is an ideal that promises prosperity, happiness, and success through hard work. The idea of this dream has been threatened by rising levels of debt in America over the past few decades.

In order to maintain their quality of life and make ends meet, many Americans have resorted to taking out loans or credit cards to cover basic living expenses such as housing or food. This cycle can lead to devastating effects on individuals’ mental health as well.

Everyone that lives this way knows that it is a cycle that can not go on forever and the stress of knowing that they will have to face this wall of debt can be enormous. This is why part of your debt reduction journey should focus on your mental well being and dealing with the stress of debt.

Finding Your Money Happiness

The first step in finding your money happy place is to face your bills and balance your budget.

Calculate Your Income & Expenses

Start by calculating your monthly income and expenses. Make a basic spreadsheet and list all of your sources of income and all of your monthly expenses. Be sure to include not only your fixed expenses like car payments, but also your variable expenses like entertainment, groceries and fuel.

Make Budget Cuts

If you are already stressed, chances are good that you have found out that your balance needs some work. You are probably spending more than you earn, and this needs to change.

Take a look at your budget and see what you can cut. It might be something simple like going out to eat less or canceling your cable service in favor of streaming. This could also mean making big changes like getting a cheaper car or moving to a more affordable place to live. In any case, changes need to be made so that you can get your financial and mental life in order.

Increase Your Income

If making cuts does not balance the budget, your first thought should be adding some additional income. With the huge problem that businesses are facing in finding workers, this should not take much time. Even picking up a simple stocking shift at your local Walmart could add 400 dollars a month to your income. If that does not appeal to you, consider picking up a side gig of your own or working on getting a raise at your current job. The money is out there, you just need to look for it.

Negotiate With Creditors

This is a bit tougher, but it can be done. A creditor would rather take something than get nothing. There are several ways to negotiate with a creditor.

If you are looking to simply get your monthly spend down, negotiate a reduction in interest or even interest only payments.  In order to reduce debt, you can also attempt to negotiate a lump sum settlement for the debt. This is usually only an option after you have defaulted on a debt, but if you are under stress, you might be at that point already.

Stay The Course

Once you establish a balance between your income and expenses, you need to be sure to stay the course. As finances improve, start routing money towards savings instead of spending it. If you start earning an extra 200 dollars a check, for example, save it instead of blowing it.

You want to be careful to avoid “lifestyle creep”, which involves your quality of life slowly but continually increasing. As you are already aware, this only leads to disaster and stress.

Interesting Ways To Eliminate Debt

Debt, and the accompanying monthly payments are a huge drag on American families. The problem is that it is all too easy to get into debt problems and far too hard to get out of them. What might take days or only minutes to charge can take years to pay off. This is why you need a plan to eliminate your debt.

Balance Transfer Credit Cards

Can you use a credit card to pay off a credit card? Absolutely, you just have to be disciplined in how you use, or do not use, your newfound credit.

The trick is to find a credit card with a zero percent offer. If you have good to excellent credit, this should not be a problem. Once you have your card, you can transfer your high interest debt to the card and continue making payments without the burden of interest. Most zero interest cards will have terms of anywhere from 12 to 18 months with no interest. Once this time is up, if you are still in debt, repeat the process with a new card.

Debt Consolidation

Debt consolidation makes it possible for people who have many types of debt, to combine them into one new loan with a single monthly payment. This frees up money that would otherwise go to paying different credit cards and loans, and puts the person in control of their finances again.

The interest rate on a debt consolidation loan should be less than what you are paying on other loans and credit cards. This reduction will allow for a much faster elimination of debt.

Debt Relief

With debt relief, you are turning to a third party to negotiate your debt. For a fee, this company will negotiate with creditors to have fees, interest and even a portion of the debt removed.

The caveat here is that these programs often require you to stop paying on debt while negotiations are underway. This can negatively impact your credit score and your ability to obtain new credit. Debt relief programs should only be used as a last resort when all other options have been exhausted.

Posted by
James

James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.