Coping with… Debt

Personal debt is a significant source of stress and depression. It often causes arguments, prevents the purchase of necessities, and leads to difficulty paying monthly bills. All these problems are magnified as it continues to stack up. When payments don’t seem to reduce the principal, feelings of helplessness and hopelessness grow.

While there are many strategies for reducing debt and digging out of a deep financial hole, one of the most important is simply to take control of your emotions. When you believe it is impossible to get out of debt and the struggle feels hopeless, those feelings often manifest into reality and your prophecy becomes self-fulfilling. It’s easy to feel trapped in a self-destructive cycle. The most important change you can make is how you feel about yourself and think about debt. As soon as you harness your emotions and believe you can reverse the cycle, your brain immediately begins seeking solutions. Start now. It doesn’t matter where your debt came from or how long you’ve had it. Decide now that it will not control you anymore, take responsibility for your future, break the cycle, and begin to overcome it.

Here are a few actions you can take to regain control.

• First, don’t be afraid to contact creditors to request an interest rate reduction. If you’re struggling to make payments, be honest and explain your situation. Creditors prefer to accept smaller payments over default options.
• Second, create a budget and stick to it. If you get a raise, keep your budget the same, and use the extra money to reduce your debt. If you receive any extra money – bonus checks, tax returns, monetary gifts – pay down one of your bills.
• Third, take a good look at your debt. It is usually best to pay off credit lines with the highest interest rates and balances first. However, in some cases, you may have a bill with a lower rate that happens to have a lower balance and can be eliminated sooner. Once paid off, it improves your monthly cash flow, which can then be used to tackle other debts more quickly by sending larger payments. Remember, larger payments reduce principal more effectively. While other actions may be implemented later, these methods will help you get back on track.

Stay committed and you will make progress. Helplessness will give way to hope, and in time, you will prevail.

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