The corner of your eye picks up the overdue notice on the kitchen table. Shortness of breath sets in, your palms are sweaty, and your heart beats through your chest into your throat and ears. The terrifying urge to pass out at any moment starts to take over. If you’ve felt like this over your finances, you’re not alone.
In today’s world, there’s a lot to process. Between the war in Ukraine, supply chain issues, and high inflation, it’s enough to make anyone anxious. It can feel like a full-blown red alert when debt is piled on top. Try to focus on what is in your control and exercise these five practical ways to redirect that nervous energy into productive paths.
Own the Reality
Long-term stress can create a sense of denial. As the debt piles up, the out-of-control feeling can take over, and mentally we tell ourselves, “Why bother?” This thought process can lead to uncontrolled spending and exacerbate the problem.
Another aspect of stress related to excessive debt is to blame. Parents, low-paying jobs, financial institutions, there are many things we can pass the blame onto, but the reality is we did it to ourselves. Being in debt doesn’t make you a bad person. If you can find it in yourself to push past the self-deprecation and accept your financial situation, it may help you get to the root of the issue.
Your high debt ratio began because you didn’t have a budget or didn’t stick to one. Prioritizing your money is crucial to financial health. If you’ve never budgeted before or have never made one that balances out in your favor, there are a few simple steps to consider for success.
Make a list of your incoming and outgoing money. Typically, income is pretty simple and easy to track. Outgoing can be another story. It’s essential to separate fixed expenses from variable expenses. Fixed expenses are outgoing funds that rarely change, like rent, utilities, insurance, or student loans. Variable expenses can change each week or month like groceries, clothes, eating out, or entertainment. Out of the two, the most controllable one is a variable expenditure.
While making your list, the variable expenses might be all over. Looking at your bank statements, there might be no rhyme or reason for your spending habits. A good practice is to track your expenses closely. Many free budgeting apps like Mint, PocketGuard, or Simplif by Quicken can help identify blind spots.
One golden rule to keep your budget on track is to pay yourself first. All too often, in the panic to create and stick to a budget, we don’t build in “fun money.” Eventually, that leads to burnout and binge spending. Give yourself some grace and set aside something every paycheck to allow for entertainment funds. It’ll keep you closer to your budget and give you that much-needed mental break.
Control the Urge
Nothing derails an excellent financial plan more than impulse buying. Unplanned purchases that look good at the moment are usually bad after the fact. To recognize this behavior, understand that it comes from an emotional space. We’re looking for a way to feel better, and that new “shiny object” appears to be the fix. When we’re honest with ourselves, we realize that impulse purchases only drive us further into debt and make us more anxious.
When you shop, do it with a plan. Make a personal rule that anything not on the list to buy is off the table. A great practice is to shop with cash. Take out the money you budgeted and if there isn’t enough to pay for everything in your cart, put it back on the shelf.
Facing the facts about your financial situation is complex. Every case is different, and you might be in a position that feels like there is no way forward. Under stress, we don’t think clearly, and it can make progress impossible. Partnering with professionals like Advocate Debt Relief can make all the difference. We can help you draft a financial plan that works and help you discover options you might not have seen yourself.
We all deserve a win in life; celebrate yours along the way. Remember that fixing your finances is a journey. There will be ups and downs. One way to stay focused is to share your financial successes with a loved one or close friend. They’ll support your positive efforts, and you might inspire them to make economic improvements.
Money can always be made, but that can’t happen without your health. Taking a few steps to shift the situation in your favor can relieve that pressure valve inside your mind. Because when we feel confident and good about ourselves, we make better decisions that can lead to our financial success.