How To Eliminate Your Debt Stress
Thursday, March 5th, 2009 Subscribe To Our Feed
Our economy runs on debt. Without debt our economy would collapse. But debt can create extreme stress and anxiety if you owe a great deal and are having difficulty paying it back.
There are various types of debt - student credit card debt, housing debt, and so on. Some debt is fine. As long as your monthly salary or other income can cover your mortgage, your credit card bills, and other debts comfortably, you are in control of your debt situation and are generally stress free. Unfortunately, however, many Americans are one financial emergency away from financial disaster.
Many things can set off a financial emergency. You could experience an unexpected job loss and have difficulty finding another job. A major illness in the family or a medical emergency can clear out your bank account in no time at all. A divorce can burden you with child support and alimony leaving you with little income left. As a nation, we are going through one of the worst economic times in American history. In this environment, it doesn’t take much to push the average worker’s economic situation over the brink.
And as one month turns into two, and two months turn into three, you begin to get calls from your utility companies. Your phone company is threatening to cut off your service. Your gas company wants to shut down your heat. And your mortgage company is threatening foreclosure.
The reason that most people with debt feel stress is that they believe that they have no options except to pay the bills that show up in their mailbox. Of course everyone should pay their bills and most of us want to. But sometimes, life intercedes and you simply don’t have the money. In these situations there are a couple of easy rules for you to follow that will help lift some of the stress and anxiety from your shoulders.
The first thing that you should do is to relax and start to think things through clearly. Until you relax, you’ll be making potentially critical financial decisions under stress, which is never the right way to make any decision. Your debts are not going to change whether you’re anxious or not, so you may as well relax.
Number two, organize your bills into four priority piles, and pay them in this order -
1) Essential medical, food, and housing debts. These are necessary expenses that you need to survive. This may also include your automobile related bills if you need your automobile to get to work in order to bring in income.
2) Federal tax and other local government bills and fees. The federal government has many powers to go after your assets and can generally make your life miserable. After you pay your critical survival bills, these should be next on your list.
3) Utility bills - although you have to pay these bills as well, you don’t necessarily have to pay them all at once. You can make partial payments to these services and still keep your utilities turned on.
4) All other bills - this includes credit card bills and any other non-secured loans that you have. These are all loans that you can make minimum payments on. Your credit may be affected but at least you won’t lose any of your essentials. In addition, these creditors are the most amenable to debt settlement negotiations.
Initially, when you look at the pile of debt that you owe, it can be paralyzing and stressful. But stress is only a state of mind. When it comes to financial matters, there are always options available to you. Once you realize this, your mind becomes amazingly clear. You will not only become stress free, but you will be in a better state of mind to come up with a plan to get rid of your debts and enable you to live a normal life again.
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