One of the most stressful things you can suffer is the stress related to your debts. You could actually be lying awake nights worrying about how you’re going to keep from losing your car because of late payments or just how you’ll pay this month’s utility bills. If you live in a constant state of fear over your debts it can affect you both emotionally and physically. Debt is a serious issue because unlike some things in life it just basically never goes away. Stress related to debt can occur if you become underemployed or unemployed or just because you did a poor job of managing your finances. For example, maybe you had the habit of spending more than you earned and so your credit card bills have become so huge they’ve damaged your credit rating.
How to manage debt-related stress
Managing stress is easy, right? All you need to do is take a deep breath and then tell yourself to relax and not stress out. Of course, that’s not really the solution because if it were that simple you wouldn’t be stressing out over your debts.
Unfortunately, the only guaranteed way to get rid of debt-related stress is to get rid of the debt. This is the time when you need to steal yourself and look for a solution to your problem. You want to pay down your debt – you do want to pay it down, right – and this could mean getting a debt consolidation loan from friends, family or some lending institution.
Just putting together a plan for getting out of debt is the best way to get rid of those sinking feelings in the pit of your stomach. When you don’t have a plan – or strategy for rectifying your debt problems – you will likely feel unprepared and overwhelmed and this can lead to depression and anxiety that you don’t really have time to deal with now.
Budgeting is a powerful tool
It’s just about impossible to pay off debt without first creating a budget. It’s also a powerful tool for reducing the anxiety and depression mentioned above. The good news is that it doesn’t take a lot of work to create a budget. Where it requires work and commitment is staying on it.
You will need to start by tracking your monthly expenses and then comparing them to your net income or take home pay. Next, you will need to evaluate your spending habits and decide if you need to bring in more money every month or if the answer would be to decrease your spending in areas where you could cut back.
Say “Hello, debt settlement”
If you feel that budgeting wouldn’t help and that your debts are just totally out of control, there is a solution called debt settlement. This is where you hire a company to negotiate with your lenders to get your unsecured debts reduced. The way most debt settlement companies work is that you will have an agreement spelling out the amount of money you’ll need to transfer each month to an escrow-type account that you control. When there is enough money in your account to settle one of your debts, you will be contacted by the settlement firm and asked to release enough money to cover it. This will continue until all of your debts have been settled, which generally takes from 24 to 48 months.
Your unsecured debts will be consolidated
Debt settlement is actually a form of debt consolidation because you’ll have only the one aforementioned payment to make a month in place of the multiple payments you’re currently making. Plus, that payment should be for a good deal less than the total of the payments you’re currently making – because your debts have been reduced substantially. In fact, most good debt settlement companies are able to get their customers’ debts reduced by 27% to 30% – even after their fees.
There’s a cost
Most good debt settlement companies charge a straight fee that can be from 15% to 25%, depending on the amount of debt being settled. While this may seem somewhat steep it’s important to keep in mind the services that is providing. It’s doing all the negotiating for you, it’s relieved you of the burden of making lump sum payments to settle your debts and it’s doing all the bookkeeping for you.
Why debt settlement equals stress relief
Debt settlement is an excellent way to get relief from the stress related to your debts because you’ll be turning all of your unsecured debt problems over to the debt settlement company. Of course, this is true only if the majority of your debts are unsecured debts such as medical debts and credit card debts, as well as any other form of credit where you didn’t have to provide an asset to secure it. In comparison, auto loans and mortgages are secured debts and cannot be settled nor can some forms of unsecured debts including spousal support, family support, alimony, past due taxes and student loans. But if all or most of your debts are unsecured, then debt settlement would absolutely equal stress relief.