Seeing real-world reminders of debt—like credit card bills and collection notices—is scary enough. But there’s also a psychological component to consider when it comes to carrying debt.
According to one Stanford University-based psychologist, “What’s dangerous about debt is how pervasive and chronic it is. Most things in life that stress us out—a car accident, a divorce, a death in the family—happen, and then they’re over. Our bodies are designed to respond to these ‘emergencies’ and bounce back, whereas owing money can become completely inescapable.”
In other words, debt has the power to seriously affect mental health over time. Since money is a persistent factor across many aspects of our lives, it can certainly be tough to escape this mental baggage. One thing consumers can do is try to proactively address their debt while streamlining their financial habits. It’s worth a try: Beat stress and debt with these four tips.
It’s important to have hope. But there’s no way to wave a magic wand and fix debt in 30 seconds or less. It can help alleviate some anxiety to think of addressing debt as a journey, not a destination. It’s a process! Thus, it helps to start small and work your way up to larger accomplishments. This is especially true if you’ve been avoiding taking charge of your financial destiny due to fear or shame.
Utilizing “the snowball method” is a great way to harness the power of motivation and momentum to pay off multiple debts. Why? Because it involves paying off smaller debts first before moving upward. It’s easier to get started by focusing on one small task at a time. As you pay off successive debts, your money “snowballs” toward the next largest one. This tangible sense of progress helps consumers stay on track and actively outstanding balances.
Explore Relief Options
The snowball method is great for a certain amount of debt, but certain situations call for more drastic debt relief solutions. Many people find it helpful to talk to an expert about the specifics of their finances in order to choose the best strategy. For example, debt settlement allows some consumers to pay back a fraction of the total amount they owe in a lump sum. However, it hinges on negotiating well with creditors, which is where a sanctioned approach can help.
Debt relief can help alleviate the ongoing burden of serious debt, but it is not a one-size-fits-all proposition. Consumers who want to choose the right path must do their due diligence during the research phase.
Build an Emergency Fund
Tackling debt in a timely manner is important, to be sure. But not at the expense of everything else. On top of debt-related stress, it’s also taxing to worry about how you’ll pay for an emergency if one occurs. The only solution is building an emergency fund—even if it happens slowly over the course of many months using just a small fraction of your paycheck. This way, a minor (or major) emergency won’t completely derail your efforts in eliminating debt.
Automate Some Processes
Some of the stress of owing money is simply keeping it all straight: balances, due dates, addresses, phone numbers and more. By automating what you can, you’ll free up mental space and clarity to address the most pressing issues rather than trying to organize a huge mess each month. It’s also helpful to set up automatic reminders so nothing important slips through the cracks, which would only serve to compound your debt and stress.
Beating debt and its accompanying stress involves both short- and long-term commitment, but it’s entirely possible. As your financial situation starts to turn around, so will your mental health—and vice versa.