Last Updated on Mar 11, 2020 by James W
One of the best approaches to take when you are trying to find a way out of your debt situation is to apply a decent dose of reality to your situation and accept that you have a problem that needs fixing.
You might well be a good candidate for credit counseling so that you talk through your various options but the fundamental thing to take on board is that your debt problems will not disappear without a positive attitude and some decisive action to find a path to a more secure financial future.
Here are some pointers on how to contend with the emotional as well as the practical aspects of being in debt.
Being in debt can take its toll on your mental health
Having debts can be a highly stressful situation and the constant pressure of being chased for payments and trying to make ends meet can have an impact on your emotional wellbeing.
One part of dealing with the reality of debt is the ability to understand how it can impact your mental state. Once you can find a way to keep those pressures under control it should help you to think more clearly and plan a way to put things right.
The first point to make here is that the average person has some level of debt and almost 40% of us tend to carry a credit card balance forward from the previous month, so you are not alone or unique in having to contend with owing money.
Some people seem to be better equipped to cope with the pressures of being in debt than others and there are a number of people who struggle to such an extent that they end up suffering from anxiety and depression.
If you are experiencing emotional problems as a result of your debt situation you should seek some help as you need to be in the right state of mind to be able to think clearly and work at a way out of being in debt.
Get the full picture
In terms of resolving your situation, the only way you are going to realistically create a viable plan for clearing your debts is to gain a full understanding of exactly how much you owe and who you owe it to.
There is absolutely no point living in denial or ignoring your situation in the hope that it will all go away, as that is not going to happen.
You should aim to make a list of all of your debts and it would also be a good idea to get a copy of your credit report as that will show what your financial position is in black and white.
Prioritize your debts
It does make sense to prioritize your debts and if you are working with someone like a credit counsellor they will probably help you to formulate a plan as to who to pay as a priority and how to repay what you owe in the most efficient way possible.
If you are going it alone and want to put together a repayment plan, a good strategy would be to work out which debts attract the highest rate of interest and then work on clearing the most expensive ones first.
Paying debts off in this way should save you money in interest charges and could help you to repay your debts quicker.
Create a budget
Although it isn’t very productive to labor too long on past mistakes that led you into debt it is wise to have a sense of realism and understanding about where you went wrong with your financial planning so that you can avoid making the same mistake again.
Good financial management and budgeting go hand in hand and if you are going to find a positive way forward with your financial situation it is essential that you commit to creating a monthly budget.
Operating a household budget is a good discipline as it forces you to account for every amount you spend and shows you exactly where your cash is going so that you can make some changes where needed in order to keep on track.
Having a monthly budget will help you plan your money more efficiently and it could also show you how to pay off your debts at a faster rate.
Reach out for help if you need it
It can be a blow to your pride and confidence when you finally decide to accept the reality of your debt situation but it could be argued that it is a better attribute to stand up and have the resolve to put your hurt pride to one side in favor of seeking a resolution.
Struggling to pay your bills each month and getting hounded by debt collectors through phone calls and letters is bound to wear you down over a period of time and if you can’t seem to see a way out of the situation it could well be an opportune moment to reach out for help.
There are several options available to you once you have recognized that you need some professional guidance with your debts.
It is difficult to say which option would be best for you as your financial circumstances will be unique to you. You might be able to put together a repayment program with your creditors if you go through an agency that can help you with that or you might have an option to consolidate your debts.
It is fair to say that each option has pros and cons and you need to think carefully about what works for you before signing up to an agreement or taking some other form of decisive action.
The first step to getting your finances into better shape and finding a way out of your debt situation is accepting the reality of where you are right now, once you do that, you will be in better shape to take control and plan a way forward.