Health studies have concluded that debt can cause a person to feel so depressed that it will have a serious impact on their health. The more they continue to worry about their finances, the more likely that person will suffer physical, emotional, and/or mental issues. Ever since the 2008 recession, the economy has still struggled to recover. It certainly doesn’t help that people accumulate massive amounts of student loan debt and credit card debt, which only increases their debt depression and financial worries. If people have multiple debts to deal with like this, it makes the emotional burden feel even worse. The longer their depression over this continues, the more likely they’ll develop mental and physical problems. So, in what ways can stressed out people learn to handle their debt depression better? Well, the best way is to develop a plan to pay back all the money owed and clear the debt completely. Below are the 4 steps which you can follow to establish such a plan.
1) Conduct a Total Debt Assessment When you feel too overwhelmed about your debt, you might want to avoid looking at the complete situation. But if you ever want to pay off all your creditors, you need to focus on the total amount of money that you owe to them. For this reason, you need to gather a list which contains due dates, minimum payments, and account statuses. 2) Make a Budget that is Realistic When you create a quality budget, it is like creating a balance sheet. This document will show all the money you’re receiving, whether it’s from part-time jobs, full-time jobs, freelancing, and/or any other sources of income. Next to the income column will be a list of your regular monthly expenses. If any of these expenses fluctuate, like for groceries, then include the average amount in your budget. This list should be as comprehensive as possible, so you can assign every dollar to your expenses. Of course, there will need to be some flexibility in your budget, so you can enjoy yourself too. Otherwise, if you restrict yourself too much, you will become depressed having to stick to the same routine all the time. 3) Overpay on the Debt If you have extra money leftover after your bills are paid each month, put that money toward paying off your debt. When you start making bigger payments on your debt, it will make you feel like you’re in control of the situation because the debt is getting reduced faster.
4) Budget Reorganization If your monthly income does not cover all your monthly expenses, such as credit card and loan payments, you may need to adjust your budget slightly to pay these expenses. This will save you a lot of depression too. To conduct this type of reorganization of your budget, you can do the following: Make Additional Money If you can find a way to make more money, it will pay your debt faster and make you feel less depressed. You could to this by asking your boss for a raise, getting a second job, or establishing a business of your own. Debt-Consolidation Loan A debt-consolidation loan is a great way to pay off multiple creditors and debts at once. Then, instead of having to make many separate payments to different creditors, you can make one monthly payment on one loan only. This makes it easier to keep track of your debt and reduce the chances of you missing a payment.