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Money-related issues can lead to serious stress and anxiety, especially if you have a large debt load and no means to pay. What can you do in order to eliminate tension caused by a financial dilemma? Consider the following tips:

1. Create a financial plan.

It’s very important to be aware of your financial status. Many people find themselves stuck with a high debt load because they did not have a plan to start with. It is so easy to spend more than what your budget permits if you are not conscious of your finances.

For example, acquiring a credit card is a great way to build up a credit history. Nevertheless, if you’re going to apply for too many credit cards than you can handle, then you can get yourself in trouble pretty easily. In the same way, acquiring a mortgage loan can be one of the great highlights of our life. But if we bought a house that was at the top of our price range, then we can end up being “house rich, cash poor”.

2. Know the difference between good debt and bad debt.

Acquiring debt is not always as bad as it seems. Things like mortgage loans are considered “good debt”. You went into debt for something that “hopefully” will become more valuable the longer you have it.

Credit card debt is considered bad debt. Yes, you purchased some great items, but are they increasing in value? Will you make money with them or will you just be spending money on them?

3. Start doing SOMETHING

If you are dealing with multiple debts, it may not be possible for you to pay all your creditors at once. Nevertheless, don’t let the lack of cash discourage you from taking charge of the situation. Just get started!

Don’t lie in bed every night thinking about what an impossible situation you are in. Create a plan of action and even if you just do one thing a day or a week towards improving your financial situation. You did SOMETHING and you will not only mentally feel better having taken some action, but you will start to see results as you improve your financial situation.

4. Speak with your creditors.

Hiding from your creditors will not solve anything. Ignoring the problem will only make it worse. The best thing you can do is negotiate your debts with each creditor. Ask them if you can get a lower rate if some of the fees can be waived and if you can change your payment due date to one that fits better with how you get paid.

BE BOLD it may be asking a lot, but you will be surprised at how many creditors would rather keep you paying then have to hire a collection agency to go after you. Many creditors are willing to modify their terms to help a borrower in the middle of financial crisis.

Tip: If you get a creditor that won’t “play ball” first try calling back and getting another rep. Sometimes it’s just their customer service rep having a bad day and being unwilling to help you. Call back and try to get a supervisor. If that doesn’t work, use the “B Word” Nothing gets negotiations moving again like mentioning you are trying to avoid having to file bankruptcy and don’t want to have to include this debt in a chapter 7 bankruptcy! (Chapter 7 is the bankruptcy where you walk away from your debts and don’t pay anything towards them, while Chapter 13 is a court-mandated repayment plan) Only use the bankruptcy threat as a last resort!

5. Cut down your expenses



If money is the problem, then you should find practical ways to lighten up the situation. Its hard to have to say no to Friday nights out with friends. Or going out to dinner and a movie. But just think of it as a short-term measure until your finances get straightened out. Telling yourself that you will NEVER be able to afford to go out and have fun is stressful in itself! Try it for a month. I bet once you see how much money you save, you will choose the activities you want to attend a lot more carefully. Take this time to learn from this experience. Think about what got you into the situation and avoid it in the future.

6. Think about ways to make money

While you are taking a break from all the activities that caused you to go into debt, how about looking for part-time work? Not only will it take your mind off your problems, but all the money you earn can go towards paying off your debt. After my sister’s divorce, she went to work for a cleaning company that specialized in cleaning schools, banks, and office buildings. Not only did she make some much-needed money but 2 years later she started her own janitorial services company.

7. Try to see the positive side of things.

No matter how bad your financial situation is at the moment, maintaining a positive point of view will help to reduce the levels of stress you might be feeling, and will, more importantly, keep you motivated as well. For example, you might be facing bad debt today but the fact that you still have a job should make you feel much better. Did you lose your job because of the recession? If yes, don’t lose hope. Recognizing your personal strengths will help you stay focused as you search for new employment.

