Dealing with Debt and Financial Stress

When it comes to finances, money can manifest a number of stressors or anxieties. Carrying debt can have debilitating effects, from stress and depression to fear and anxiety that can be detrimental to health and mind. Coping with any sort of financial strain has consequences that can it’s toll. Concerns of significant indebtedness can also increase the risk of possible hypertension, stroke and impaired cognitive functioning. According to the Financial Stress Index study by FP Canada™ its money that’s the leading cause of stress among Canadians.

It’s fairly uncommon for people to not experience some kind of money troubles. Jobs may disappear, marriages may fail, people become ill, and bills keep piling up. The cost of crippling debt from loans or credit cards combined with other expenses like medical bills or unexpected expenses can disrupt your budget, leaving you with a financial burden that can become unmanageable. Fortunately, there is hope, and a few ways to fix your finances.

Debt Denial

Few have the luxury of endless spending, but many act like it, even with the signs of deteriorating financial health in front of them. Sometimes it takes being denied credit, the threat of foreclosure or to receive harassing phone calls from debt collectors to recognize the need for financial intervention before things get out of control.

But sometimes a sense of hopelessness can set in, where people try to relieve their depression with a shopping spree in an effort to relieve their depression, which can lead to more debt. 

Signs of debt denial can include avoiding to answer calls when you suspect that a collection agency is calling, underestimating or not even knowing exactly what you owe, and possibly not opening bills (or stuffing them unopened in drawers) to not have to deal with them. 

But sooner or later reality sets in, or you have a rude awakening, and come to terms about dealing with your debt. This is a first step to becoming financially fit. 

RELATED: How a Personal Loan Can Help Pay Off Your Debt Faster

Debt Dilemma

Fortunately, the answer to dealing with such depression and similar starts with taking the necessary steps to pull yourself out of debt. Starting with learning good money management skills to get your finances in order is achievable and can be accomplished by most with some determination. 

The temptation to spend on credit can be difficult for some to avoid, and when trying to adhere to a budget while improving your financial situation, it’s best to leave the credit cards at home and not use them while trying to solve your own debt dilemma. 

Developing a budget is essential, as much as it is to stick with it. Having a budget helps guide you to live within your means with the income you have while paying down outstanding debt you may owe. As simple as it sounds, it’s all about your ability to consistently execute on this plan so that you may eventually get yourself out of debt in future. 

In some cases it can make sense to consider a personal loan for debt consolidation, even if it may seem counter intuitive. Some might be thinking “I’m in debt, a loan is the last thing I need.” In many cases, it’s exactly what might be the answer. If you carry a good amount of credit card debt but have a good credit score, you might find that you qualify for a personal loan that could have a lower interest rate than your credit cards. If this situation applies to yourself, then a personal loan could be obtained to pay off your credit card debt and help you save in comparison to what the credit card interest rates might have amounted to. 

RELATED: How to Get Out of Debt Faster

Debt Discussion

While you can use software or a spreadsheet, you can start right now by determining all incoming and outgoing as far as your finances are concerned. This is not a budget, but a preliminary analysis, which you’ll eventually have to do, so why not get started right now. 

Take a piece of paper and write your monthly income in the upper left. Next, to the right of that number, write down all outgoing amounts with a note for each on what they’re attributed to per month.

Some of these might include rent/mortgage, car insurance, home insurance, utilities, loans, credit card payments, groceries, entertainment, dining out, gas or transportation costs, parking costs, and bills. Carefully add up those bills, such as mobile, streaming services and memberships, to other recurring expenses. 

RELATED: How to Manage Your Money With Debt

When you add up all of your outgoing expenses and compare it to your income what you don’t want to see is the outgoing is larger than the incoming. This could be a sign of a much larger financial issue. The good news, if that’s the case, is you’ve identified it early. But living on credit without properly tracking things can be an easy way to dig yourself into a hole, and even create more stress. 

Debt Decisions

Presumably you are looking to get yourself out of debt, and that can start with making some lifestyle choices. Avoid eating out, cutting memberships and subscription services, and looking for frugal options. It’s time to make some changes and those dollars quickly add up, getting you a step closer to digging yourself out of debt with each one you can save to pay off the balances sooner than later.  Otherwise, you may need to take more drastic measures.

Without a system or process to help you with managing your loans and paying your debt can further add to anxiety, stress, possible depression or impact your mental/physical health.

As you begin your journey to fixing your finances, you should develop a clear understanding of how and when you might get your debt under control. For most, it will take time. Another important aspect to becoming financially fit that hasn’t been discussed is your credit score. Unless you have a large sum of cash on hand, which means you probably wouldn’t be in debt if that were the case, then there usually comes a time that most might consider some type of personal loan. This might be a secured loan, for a car or home, or it might be an unsecured installment loan for a variety of things. 

How to Deal with Your Debt Dilemma

In order to take the first steps for getting your financial anxiety under control, here are a few ways you can go about managing things.

For some, it can start with a lack of financial literacy and understanding how they might be able to handle financial fundamentals like budgeting or saving. Fortunately, there is an abundance of free resources on the subject, including right here at GoodCheddar. Whether you’re looking for advice on money management, debt or something else, you won’t have too much trouble to locate what you need.

Perhaps your money troubles stem from picking up bad financial habits from someone when you were younger, that seemed perfectly logical and maybe still do. This sort of scenario can cause missteps with your finances. To cover the absolute basics, hopefully you have a budget along with an emergency fund and are able to save more money each month.

A few ways that can also help include;

Prioritize Your Payments

Focus on what is within your control to help improve your situation. Like cutting back on frivolous spending so you have more to put towards paying off your debt. 

Pay Essential Bills First

If you haven’t done this already, this is recommended and an easy task. This exercise not only helps to familiarize yourself with what is owed, it can also helping with payment prioritization and better budgeting.

Supplement Your Income

Since your income can only take you so far, another way that you can ease some of that financial tension can be to find ways to increase your income. It might be extra hours at work or finding a side gig to bring in a few more dollars. There’s always some options if you’re willing. 

Making a list of your biggest money challenges and working within your budget can help you deal with financial problems like paying off bills, reducing your debt, and taking control of your finances again. Tracking your progress can also help provide a sense of fulfillment that can also help relieve some of that financial stress while you eliminate your debt.

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