Financial stress can arise for many reasons, but the most common one is when you’re in debt and feel overwhelmed. It’s as if no matter what you do, you can barely keep your head above water.
Mistakes you made in the past regarding your finances may weigh heavily on your mind. The never-ending bills and calls from the creditors can cause even more anxiety. Since your salary is fixed, it may seem like there’s only so much you can do.
During times of financial stress, it may seem like you can’t catch a break. Millions of people have sunk into depression and many have even committed suicide when they saw no way out.
All of this can be prevented by adopting a few measures.
Put it all down on paper
Make a list of all your debt, commitment and obligations. Instead of rolling the numbers around in your mind and making things seem worse than they are, what you want are numbers in black and white.
You must know exactly how much credit card debt, etc. you have, what’s the interest rate and so on. Have as much details on the paper as you can, but keep it all organized.
What’s your income?
The next step will be to calculate your disposable income. This is the money you have left after taxes. It’s the money you’ll live on and also use to pay off your debt.
Avoid feeling guilty
It’s important to know that while your spending may have been uncontrollable before, you’re now willing to make things right. Hate the debt, not yourself.
Realize that constant worrying and stress is only exacerbating the problem and making you a prisoner in your own world. This is a financial problem and must be approached in a logical and systematic fashion.
Make a list of the creditors. Call them up and negotiate lower interest rates where possible. Show that you’re willing to pay them and they’ll be more amenable to your suggestions.
If you owe money to friends or relatives, tell them that you’ll pay them consistently even if it’s not a large sum. If you owe someone $500, paying them even $50 every 2 weeks will make them feel better. It shows sincerity on your part, and while it may take time, at least you’re making a dent in the debt. As you settle off bill by bill, you’ll be able to pay more to the remaining creditors.
You may either go with the ‘debt snowball’ method where you pay up the smallest bills first, or you may go with the ‘debt avalanche’ method where you pay off the debt with the highest interest rate first.
Whatever the case, you must actively work towards clearing your debt. As you do that, you’ll find your financial stress decreasing because you’re gaining control of the situation.
You may need to adopt a spartan approach for a couple of months and trim your expenses considerably just so you have more money to clear your debts faster.
Only spend on what you need and sacrifice your wants for the time being. Have a budget and stick to it.
Biting the bullet may not be pleasant, but 3 to 6 months of this and you’ll be amazed at how much better your financial situation gets.
Taking on a second or even a third job may seem extreme, but should be considered. Extreme situations call for extreme measures. With the added income, paying off your debt while also putting aside some money in your savings will become much easier.
Tough times don’t last, tough people do. You won’t need to work 2 or 3 jobs for years. Even 6 months of working 2 jobs will alleviate the financial hardship you’re facing much faster. Once you get a grip on your finances, you can go back to working one job. It all depends on you.
Finally, always remember that financial stress is a symptom of poor financial health. Pay attention to your finances and don’t let your expenses exceed your income. No matter how bad a situation may seem, with discipline, time and determination, you can come out of debt and even build wealth if you stay focused and improve your skills.
“A hundred load of worry will not pay an ounce of debt.”George Herbert