11 Apr

7 Tips to Deal With Debt Stress


Six out of 10 Americans say money is a “significant form of stress” for them.  But, if you’re willing to do the work, debt stress relief is possible — even if your debt lingers.

This paragraph was the opening statement of an article in an online magazine, Better, published by NBC News and written by Vivian Manning-Schaffel

The article has some great points so we’re going to cover the key points in this blog, and you can find the link to the whole article, including a video, at the bottom of the page.

What makes the these figures an astonishing revelation, is that the statistics are the same for NZ and Australia!

And it’s little wonder this is true judging from a recent article in noted.co.nz, which says, “NZ’s household debt levels are reaching terrifying heights.”

Debt stress is relentless

One of the worst things about debt stress is that it’s pervasive and can be all consuming. Moira Somers, a Canadian psychologist and professor, “it’s always there.  When people are in financial struggle, it puts a cognitive tax on them.  Any kind of stress makes us hyper-focused until we can find solutions and implement them.  When the problem doesn’t end with one behaviour change, our minds just constantly churn away at the problem.

This can eventually lead to a feeling of hopelessness.  “You feel like it’s impossible for things to ever get better or there’s nothing you can do to improve the situation, so psychologically and emotionally you kind of curl up in a foetal position and hide in a corner,” says Brad Klontz, CFP,  associate professor of Practice in Financial Psychology at Creighton University Heider College of Business,

Yet, if you’re willing to do the work, debt stress relief is possible — even if your debt lingers. Amanda Clayman, financial therapist and Prudential’s Financial Wellness Advocate, says, “Getting out of debt takes time, and sustained effort, so we will likely have to tolerate the stress for a while. In a sense, debt stress is more ‘noise’ than ‘signal,’ so we have to learn ways to manage it.”

How can we best manage stress caused by the debt we carry?

  1. Ditch denial

Financial denial is when you stop paying attention to your finances, you don’t track them and you don’t open your statements.

Consolidating your debt with loans can feel great but it’s only a band-aid unless you deal with why you got into debt in the first place.

“Any breathing room consolidation affords, makes people feel like they’ve got room to start spending again and, within a very short period of time, they’re often back where they started because they still haven’t dealt with the fact that their income isn’t enough to match the payments,” Somers says.

  1. Face the shame

Klontz says this starts with reflecting upon your learned behaviour around money.  “You blame your parents — I’m joking but I’m actually not,” Klontz says. “Debt doesn’t mean you’re lazy, crazy and stupid.

  1. Accept the blame

Accepting the blame for your debt is empowering and can ultimately lead to your success.  “Please try to blame yourself for as much of your situation as possible, so you can get to the root of why you’re in debt.”

  1. Seek support

Ultimately, the only remedy for debt stress starts with facing the financial music and taking full account and responsibility for your debt.  Enlist the help of a trusted financial advisor, or a financial therapist, to help you put together a money plan (not a budget).

  1. Take pride in your progress

Sharing the progress you make toward debt elimination with loved ones can also help destigmatize your situation.

  1. Keep debt in perspective

Look at the absolute worst-case scenarios and sometimes, the worst-case scenario isn’t really that bad.  You can die from this stress, so is it really worth dying over?  “Your self-worth is not your net worth.”

  1. Realise money isn’t the be-all and end-all

Even in the midst of financial stress — it’s important to be grateful for other things in your life to stay grounded and hopeful.  “Always remember there are other resources in life than money, other sources of joy and meaning,” Somers says.

It also helps to balance debt repayment with other priorities, including self-care.  “Too often, people think they can only feel better once the debt is paid off.  But the better approach is to help yourself feel secure that your needs will be met even as you work to get to a zero balance.”  Give yourself credit for the progress you’re making.

For every milestone, find money in your money plan and treat yourself to something you enjoy as a reward for the success.

To read the full article, click this link here.

If you have any questions around this or you would like to discover new ways to change the way you think about your money, then drop me an email or click on this link to find a day and time that suits you to have a chat with me.  Best of all – it’s free!