Debt and Stress: Ways to Attack Debt Anxiety

debt anxiety
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When discussing stress in our lives, we simply categorize this as our body’s response to situations as a completely negative and one that needs to be eliminated. It is, however, important to note that stress can be a good thing. It’s our body’s natural reaction to protecting us from negative situations that we are experiencing.

For example, if we are in a dangerous situation, our body’s mechanisms kick into gear. This is known as the “fight or flight” trigger or also known as the stress response. This response by our body helps us to work through the situation, maintain our awareness, our energy and help us to remain focus so that we can escape that difficult situation.

It probably won’t surprise you that for many years now, research has shown that individuals in debt have elevated rates of mental health problems including severe anxiety and depression. What you may not know is that according to the healthcare community, depression and anxiety can be catalysts for other health issues including:

  • Alcohol Abuse
  • Drug Abuse
  • Excessive Sleep
  •  Gastrointestinal Problems
  • Headaches
  •  Heart Disease
  • High Blood Pressure
  • Insomnia
  •  Panic Attacks
  • Weight Gain
  • And more

With the number of issues in the world that we feel anxious about that isn’t in our immediate control; it’s a good idea to be more proactive in eliminating the things we can control. For many people across the globe, debt anxiety is a regular part of daily life. But, unlike other anxiety inducers, it doesn’t have to be.

While there are a number of relaxations techniques, supplements and even prescriptions that can attack the symptoms of anxiety and depression, any good doctor will tell you that dealing with and removing as many stressors as possible is the only way to reduce your stress-related issues effectively.

Attacking debt anxiety

When it comes to dealing with debt anxiety, there a lot of actions you can take to at least get the anxiety part under control even if the debt part takes a little longer. For many people, just putting a plan into action lowers their level of anxiety, because they’ve taken action.

Accept the reality of your debt

So many people today, if asked what their total indebtedness is, would be hard-pressed to give you a fairly accurate amount. Therefore, it is important to take a deep breath and then list one by one what your debts are, to whom this money is owed and what is the balance.

This step can be very painful and agonizing, but it is an important step in confronting your indebtedness and confronting your stress with the truth.

When dealing with anxiety and depression, it’s very easy to become overwhelmed, and the desire to ignore the cause is extremely tempting. While it may elevate your anxiety levels briefly, it’s important to take a hard look at all your debt. Only after becoming aware of the full extent can you start to make a plan and take action to deal with it.

Start by making a list of all your sources of debt. These could include:

  • Credit Card Balances
  • Auto Loan Balances
  • Student Loan Balances
  • Other Loan Balances
  • Overdue Due Utility Bills

For most people, credit card balances are the root of debt anxiety, but its good to know the full scope of where your money is going (or needs to go) so you can plan accordingly.

Next, add to the list the monthly payments each account requires as well as the APR percentages.

It is important to bring those documents out, and one by one face them head-on.

Once you have all your debt information put together, you’ll be able to formulate a plan. By doing so, you are physically and mentally saying to yourself and your creditors that you are in charge and are not in “bondage” to your debt.

debt snowball
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Select a “debt-reduction” method

Now that you know exactly what you are up against, you can choose the best plan of attack to begin reducing your debt. There are two primary methods recommended by financial professionals in attacking your debt problem, and they are both very similar.

The snowball method

Using your list of debt balances, re-order the accounts with the smallest balance at the top and increasing from there. With the snowball debt reduction method, you will make the minimum payments on all the accounts except the top one with the lowest balance. That payment you will increase as much as you can and not starve or end up on the street.

Once the first debt is paid off, you’ll take the amount you were paying on that debt and ADD IT to the minimum payment of the next debt in line.

For example, if you have 3 credit cards/store cards with balances of $5000, $2000, and $500 and your minimum payments are $100, $75 and $25 respectively. Your list could look something like this:

Store 1$500 balance$25 minimum payment
Store 2$2000 balance$75 minimum payment
Visa$5000 balance$100 minimum payment

(Please note, these numbers are purely for this example and do not reflect typical payments)

Since store 1 has the smallest balance, you’ll want to increase the amount of your monthly payment. For this example, we’ll use $50. So your updated list will be:

Store 1$500 balance$50 Increased payment
Store 2$2000 balance$75 minimum payment
Visa$5000 balance$100 minimum payment

Once you start, continue making your payment according to this plan, adding extra payments to Store one as you can afford it to pay it down even faster.

Once you’ve paid off Store 1’s balance, the trick is to not use that money on new items but to add it to the next card. Your next list will look something like this:

Store 2$2000 balance$75 minimum payment + $50 from Store 1 Payment = $125 New payment
Visa$5000 balance$100 minimum payment

So, once the first two cards are paid off, you’re payments to the final card will be $225.

This method allows you to set a budget and stick to it while still moving forward in reducing your debt.

The other thing you’ll need to make sure of for this plan to be effective is to STOP using the cards. Once each card is paid off you might want to consider closing the account to avoid the temptation of using them in the future.

The debt stacking method

Debt stacking is the same payment procedure as the snowball method, the only difference being that you add the extra payments to the balance with the higher interest rate, not the lowest balance.

If you choose this method, your list will look something like this:

Store 2$2000 balance$100 increased payment24.9% APR
Visa$5000 balance$100 minimum payment17.9% APR
Store$500 balance$25 minimum payment11.9% APR

As you can see, the card with the middle balance gets moved to the top since it has the highest interest rate and the additional $25 per month has been added to its minimum payment.

Both methods work well for debt reduction and for many consumers the Stacking method might save you the most on accrued interest.

However, when it comes to the goal of reducing debt anxiety, very often seeing quicker results will have a more positive effect on your state of mind. In that case, you will see more concrete proof of your efforts by using the Snowball method as it will take much less time to pay off a $500 balance than a $2000 balance.

In the end, it’s up to you to decide which will lower your anxiety levels quicker.

debt anxiety 2
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Practice “mindful spending”

To keep yourself from sinking further into debt, I’ve already mentioned that you’ll need to stop using the cards you are trying to pay off. You will also want to avoid opening new accounts and carefully consider each transaction you make with cash.

The first of these, avoiding opening new account can be difficult, especially since so many stores offer discounts when you sign up for a new charge account. Unfortunately, those types of accounts also usually have off the chart APRs.

When faced with this dilemmas, try to take a moment to consider how much you will be saving on that one transaction compared to how much more you might spend if you get a new card.

If your history has shown that you’ll start spending more than you can afford once that shiny new card hits your wallet, it’s probably best to trade that immediate discount for better peace of mind later.

The second concept, carefully considering each transaction you make with cash, will help you begin to discipline yourself on your spending and identify what purchases are actual needs and what purchases may be tied to your emotions.

One may be surprised that if they, on a daily basis, bought a coffee and a bagel they might possibly spend $7 a day. If you do the math this may be 5 days a week for 20 days. That total will amount to be $700 a month. This example may be extreme, but the point is to apply part or a greater percentage of these expenses toward one’s debt.

We’ve all been guilty of comfort shopping from time to time, but in the case of debt anxiety, that fleeting feeling of joy will be followed by an even greater feeling of anxiety when you realize you’ve just added to your debt.

Again, to reiterate, you are taking your life back from the burden of debt and the associated debt anxiety that comes with being in debt.

Finally, as this process evolves, and your indebtedness is decreased along with your debt anxiety, it is important to go down a different road.

Healthy life = happy life…other ways to reduce anxiety

Remember that the situations that we find ourselves, both positive and negative, of being our own doing. These situations are opportunities to enhance our own lives and make us better people and instruct others as well. Often, a bad situation is described as digging a hole for oneself.

It is important to remember that you dug this hole one shovelful at a time and it will take one shovelful at a time to get you out.

Portia Nelson penned an illustration of life’s challenges by comparing life’s journey to walking down a street. To paraphrase her powerful illustration, she talks about walking down a street and falling into a deep hole, and it takes forever to find her way out. Once she gets out of the hole, she walks again down the same street and once again falls because of it being a habit, or she pretends the hole is not there. Eventually, the powerful illustration concludes with Ms. Nelson saying she chooses to walk down another street.

Debt anxiety caused by indebtedness is a reality for so many Americans. However, it is important not to dwell on the past but focus in on the present and the stress-free future that awaits the individual.

This can be accomplished by taking baby steps in the present moment that eventually will lead to giant steps, and anxious free living as one walks down a different road that free of debt and stress.

Like so many other aspects of good health, a decent diet and a little exercise will greatly reduce the symptoms that anxiety can produce.

This doesn’t mean you have to completely change your lifestyle overnight. Make small changes over several weeks like adding more green veggies to your meals, reducing the number of sugary drinks you consume and drinking more water will make a difference over time.

Other activities like parking at the back of the lot and walking to your work building or the store, taking the stairs, or walking around the block several times a week will increase serotonin and other compounds the brain uses to make the body feel good.

BA in Accountancy, he entered the entrepreneurial world by starting his first online marketing business in 2004. Passionate about personal finance, the stock market and a digital marketing addict. I also love to read books on entrepreneurship and technology and always on the lookout for new opportunities. I'm an avid golfer and currently a 15 handicapper.

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