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How To How Deal with Financial Debt

LIFESTYLE
MENTAL HEALTH
21 May 2021

How To How to Deal with Financial Debt

This article tackles how dealing with financial debt can greatly improve your mental health and quality of life.

A lack of financial freedom, or a situation where one is burdened by debt, is definitely not the ideal scenario we all picture when we are growing up. We aspire to the ability to pursue the things and experiences we dream of without being hindered by the obligation to pay.

According to recent statistics, people experiencing mental health problems often attribute much of their anxiety and stress to economic disparity or the financial debt. Such situations can leave an individual feeling helpless and constrained by their situation in life. 

Luckily, we have listed a few simple but effective ways to manage your debt and, with time and a little discipline, eradicate it: 

Know What You Owe

You would be surprised by how many people are unaware of how much they truly owe. When you are paying money to different institutions, it can be quite tedious and confusing but not doing so can lead to you forgetting to make payments. 

Another benefit of keeping track of all the payments you are making, and the outstanding balances you have so far, is that it lets you see and track the progress you are making. This goes a long way to improving your mood and making you feel like you are in control of your finances -- which you are. 

Use software that allows you to list down your debt and deduct it from your monthly income periodically. This also gives you a better handle of how many payments you can make without sacrificing comfort. 

Create a Plan

If you have a monthly planner, place the debts you have right into the dates where you receive income or any other salary. This gives you a chance to pay off the outstanding debts before temptations come in to divert your funds. 

If you do not have a monthly planner, consider getting one started with a list of your monthly payments including any other expenses, and the target time they'll be paid off completely. This gives you a chance to track your progress over time and celebrate little milestones. Doing so can keep you motivated and give you a real sense of accomplishment for being so responsible. 

Pay On-Time

Part of why having a planner is important is that it avoids you being late with payments. Late payments can lead to late fees and extra charges which can take a great toll on your monthly budget. On top of that, failing to pay your bill on time can allow the debt to accumulate. 

Once the company demands immediate payment due to continuous non-payment, you'll find your debt too large to hand -- this leads to a vicious cycle of having to take on more debt to pay off pending debt. 

A simple, cost-effective way to make sure you pay your bills at the right time is by using the calendar system built within your smartphones. Numerous apps and budget software also allow you to incorporate the timely payment of debt into your overall budget. 

Even Paying the Minimum Reduces your Debt

Sometimes the best way to manage debt alongside limited income is to make the minimum possible payments. Though this is slow, understand that it is better than not paying at all -- which in the long run can cost you much more. The latter route is more likely to cause your account to either go in default or at least make it harder for you to catch up. 

Stick to your budget and pay the minimum that keeps your account in good standing. Even if you pay the minimum, at least you're chipping away at the debt and making it a little smaller. Make enough minimum payments, and you'll start to notice the end of your payments insight. 

Build an Emergency Fund

Having a fund for emergencies is still one of the best decisions any financially conscious person can make. We can never tell what unforeseen events might happen, events that will require a whole lot of funds. Many people without an emergency fund often go into debt to make the payments necessary to address the situation. 

Having some money, at least 500 to 1000 dollars in size, is enough to get you by in times of strife or through emergencies. 

When in Doubt, Ask For Help

Countless people admit to needing financial help and are better off because of their asking for aid, either through counseling or third-party aid. What matters first and foremost is that you are aware of your current financial situation and can admit to yourself and to those you owe that you are unable to meet the obligations.

This is nothing to be ashamed of and opens up more avenues for you to pursue in order to get back to financial health. You can always seek credit counseling or take other routes of debt management like debt consolidation, settlement, and filing for bankruptcy.

Your mental health will benefit from the admission of your vulnerability and you'll see your financial situation improve as you slowly rebuild it with a plan that suits you best. 

Conclusion

Debts are, unfortunately, a fact of life in the modern world. They are the price we pay for many of the modern conveniences we enjoy and are not likely to go anywhere anytime soon. 

But as an individual, you have the power to decide how much debt you can handle and how you can pay it off. You need not feel stressed or imprisoned by debt -- instead, believe that you can meet the demands in your life and prove yourself a responsible and trustworthy payor of your obligations. 

This has the double benefit of increasing your credit score and boosting your confidence levels. Borrowing money and paying bills are just another part of money management that, when dealt with smartly, can benefit you in ways you never realized. 

Words by Gabriel Fredesman Turro

21 May 2021
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