Millions of Americans have dealt with more financial stress than usual over the last year due to the pandemic. Those who have lost their jobs, fallen ill, or had to take time off of work to care for sick family members have experienced major financial hardships. Losing income and accumulating credit card debt can be incredibly stressful. ACCC explains how to cope with financial stress.
Coping with Financial Stress
Identify the Problem
Everyone has different financial stressors in their lives. The first step is to identify exactly what yours are. For some people, it might be high interest credit card debt. For others, it may be student loans. What parts of your financial life stress you out the most? Once you identify the problem, you can make a plan to deal with it. Break it down into smaller steps. If your biggest worry is your credit card payments, call your credit card company and see if they can work out a payment plan with you. They might offer concessions like temporarily lowering your interest rate or deferring payments until you get back on your feet. It’s important to do this before you miss a payment. A late or missed payment can hurt your credit score.
Track Your Spending
Knowing where your money is going every month is vital to reducing financial stress. Track your spending for a month and see what’s happening. Write down every purchase you make. Do you notice you spend more than you thought you did? Things like take-out, online shopping, and unused subscriptions can add up. Cut back on your take-out and online shopping and cancel unused subscriptions. Use the money you save from these expenses to pay down that debt that stresses you out.
Don’t Make Rash Financial Decisions
Making rash financial decisions because you’re stressed and feel backed into a corner can lead to even worse money problems later. Sometimes people seek out payday loans or other predatory loans because they are desperate and think that these are their only options. The interest on these loans are extremely high, and consumers who take out these kinds of loans end up trapped in an endless cycle of debt. Before you make any major financial decision, do your research and ensure that it is a well-informed decision.
Seek Outside Help if Necessary
You might not be able to tackle every problem on your own, and that’s okay. There’s no shame in asking for help. Seeking help from a nonprofit credit counseling agency is a great way to lower your financial stress. When you call a credit counseling agency, a credit counselor will ask you about your income, expenses, assets, and liabilities and help you come up with a workable budget. From there, they will recommend the best way to deal with your debt. This could include enrolling you in a debt management plan or referring you to other legal services if needed.
If you’re struggling to pay off debt, ACCC can help. Sign up for a free credit counseling session with us today!