5 Tips For Explaining and Dealing With Debt
Debt. No one likes to talk about it, from individuals all the way up to national economies. But sweeping debt under the rug doesn’t make it go away. Debt is an affliction that very few of us live without, and most of us live with a lot.
In the United States…
- Average credit card debt is†$15,191
- Average mortgage debt is†$154,365
- Average student loan debt is†$33,607
And it’s not just the U.S. In late 2013, household debt in the U.K. reached a record-breaking†£1.43 trillion, including mortgage debt. In Canada 1 in 20 people fear that they’ll never pay off their credit card debt.
All that debt isn’t just hard on us financially. Studies have shown that ongoing debt takes a toll on our emotional health as well.†Former financial reporter and author of†Zero Debt: The Ultimate Guide to Financial Freedom Lynette Khalfani-Cox knows firsthand the havoc debt can wreak on your life. “I was living above my means,” she says. “It’s a tremendous burden. The true cost of debt and financial problems isn’t just the interest rate you’re paying to Mastercard or Visa. The true cost is the toll that it’s taking on your life and your relationships.”
Since debt is a problem for everyone, isn’t it time we opened up about it? What are some good ways to talk about it, to ourselves, partners, families and friends? More importantly, what are good strategies for reducing debt and the stress that goes along with it? We’ve got a few ideas…
1. Be Honest About Why
Did you make some stupid decisions as a teenager? Bought a car you couldn’t really afford? Got caught up in the sub-prime scams? Trust me, you’re not the only one. Denying it only makes things worse. So yeah, you have some financial regrets that you’re paying for now, big deal. Own it, don’t let it own you. Once you acknowledge the why, it’ll be much easier to find solutions and avoid the same mistakes in the future.
2. Don‘t Look at the Whole Pile
If I tried to wrap my mind around all my debt at once–car, student loans, credit cards–it might explode. It would definitely make me feel completely overwhelmed and I might crawl under the bed. Instead, I prioritize. Ask any financial expert and they’ll tell you that credit card debt is the most destructive, so that goes to the top of the pile. And even then, when I decided to really start tackling my credit card debt, I chose the worst one, and focused all my financial energy on paying it into oblivion first, while just making the minimum on the others. Much easier to digest, and you’ll see progress faster, which keeps you motivated.
3. Be Willing to Ask for Help
Managing personal finances, especially if income is limited, is a tricky affair. And if you weren’t really sure about how it all works before you got into debt, those nagging bills won’t make it any easier. If you feel like you’re spinning your wheels, don’t be afraid to ask for help. There are professionals that provide debt advice for a living, and trust me, they’ve seen it all. You don’t have to be embarrassed about your pile of debt, no matter how you acquired it. Just telling someone else what you’re struggling with will be a huge relief. From that point on, they’ll be your partner, giving strategic advice about how to dig your way out.
4. Stay Positive
When your debt reaches five figures (or even more) you may feel like small achievements don’t matter, but they do. All progress is progress, and you should look for a way to stay positive about forward movement when it comes to debt. Make a big thermometer chart for the credit card or medical bill you’re tackling, and fill it in every time you pay of small amounts. Give yourself a gold star when you make payments on time, etc. Achievements like this are addictive, and hey, it’s better than moping around about it.
5. Stay Active
Like I mentioned before, debt-related stress can literally make you sick. This is no good, especially when getting rid of it depends on getting to work every day! “Physical exercise releases chemicals in our brain which make us feel happier. So if you feel that your money worries are getting on top of you it might be a good idea to go for a jog or even a brisk walk,” explains Money Aware.
How do you cope with debt? How have you overcome debt in the past? Share your best tips in the comment section below.
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