There are few things more difficult, complicated and stressful to deal with than debt. But like it or not, money’s a central detail for our lives. It influences routine everyday decisions and shapes many people’s life paths.
Given how money can affect people in even good financial standing, it’s easy to see why many debtors experience health issues. If you’re on your last strand of sanity trying to cope with—and reel in—your debt, consider the following advice on how to better manage your outstanding balances.
Know Where You Stand Financially
It’s common for debtors to avoid knowing exactly how much they owe because they feel that’ll only cause more internal stress. No wonder 68 percent of Americans don’t think they’ll ever be debt-free; acknowledgement is the first step on any road to recovery.
So, much like breaking down every step of a large work project is helpful to alleviate stress and ensure the small strides are taken to achieve the big-picture goal, the only way to get out of debt (and feel good while doing it) is to know exactly the work that lie ahead.
Sit down, sharpen your pencils (or plug in your laptop) and start going through your debt line by line. Detail everything from student loans to credit card debt, medical debt—every single dollar you currently owe. Next to each debt, list various details like interest rate, monthly due dates and your minimum monthly payment. This way you’ll be able to estimate whether your debt is at a point where you can no longer make progress on it, or if figuring out a way to contribute just a little bit more monthly will work your way out of the hole.
Collecting these details in one location instead of living with estimates bouncing around in your head will provide a sense of relief.
Automate Your Financial Life
You’ve done the difficult part in gathering all your account details in once place, now it’s time to do the joyous process of making sure you no longer have to worry about them. When we’re stressed-out with money (or really, anything in life) it’s hard for us to take a step back and put effort into our foundational tactics. Anything that doesn’t immediately help solve a problem doesn’t feel like a priority. But that’s backward. In the case of improving financial hygiene, deciding how much to pay each of your balances each month, how to budget for your various needs and how much—if any—to contribute to your savings is exhausting. Make the process easier on yourself (and ensure you’ll stick to the plan) by automating your financial life.
After completing step 1 and factoring in your income, you should have a better idea of how much you can allocate to each of debts. You want to obviously pay more than the minimum to make progress, but don’t stretch yourself too thin. Prioritize paying the most on your balances that carry the highest interest rate and go from there.
If your debt isn’t taking up all your income after bills, automate a monthly payment to a savings account, too. And don’t stress yourself out by searching for a bank with a good fee; unless you’re rolling in dough, the difference between .5% and 2% is so miniscule over the course of the year that you’re better off saving your time and opting for a bank that you trust.
Seek Emotional Support
Even the strongest individuals can feel helpless when facing debt. A big reason for this is people carry the burden of debt alone instead of seeking emotional support. If you don’t want to turn to friends and family for condolement, consider support groups like Debtors Anonymous. Like any support program, DA allows you to come to terms with how you got into debt, make amends with yourself and anyone you might have hurt in the process to reform yourself for a new financial life. At minimum, joining a financial support group will show you that you’re not alone in your troubles. It will also reinforce that there’s a way out when you hear other members’ success stories.
Don’t Feel Ashamed for Seeking a Solution
Of any rule to blindly accept in life, it’s that we should never feel ashamed asking for help or attempting to solve our problems. The same is doubly true for serious financial woes. If, after laying all your financial details out and matching it against your income, you find that your debt will continue spiraling out of control no matter what budget cuts you make, you need to consider other strategies. The debt relief landscape is vast and confusing, but essentially your options range from mild (taking it upon yourself to negotiate for lower interest rates, loan consolidation or even a short grace period), moderate (seeking debt management or debt consolidation program through a company), and severe (engaging in debt settlement or bankruptcy).
Option one won’t hurt your credit, option two will slightly hurt your credit, and option three will severely hurt your credit. Only consider option three if you can no longer make any progress on your debt; there’s no reason to destroy your credit if you have other options. If you do decide on option two or three, make sure you properly research companies as not all debt relief providers operate the same way.
For example, searching for Freedom Debt Relief reviews will show all sorts of variables such as the minimum amount of debt they work with, number of debtors helped, percentage fees charged, amount of time in business—and most importantly, a contextual breakdown of how the company has helped debtors in the past.
Hopefully your debt, while driving you mad, hasn’t reached a point of no-return. But in any case, know that there’s a way out. Positivity is on the horizon if you can adopt the above tactics into your debt strategy.