Relieving Financial Stress

Credit helps us buy homes for our families, drive safe vehicles, lean on in times of emergency, and much more. Though credit is beneficial, it can be overwhelming, and sometimes it can be easy to get into debt. Getting out of debt isn't as easy. When keeping up with financial obligations becomes problematic, it’s time for a change. Learning healthy spending, saving, and budgeting habits will help improve your relationship with finances. 

Reasons for debt   

According to Experian, in 2021 the average American consumer loan debt was $96,371. According to CNN Money, 77 million people have credit accounts in collections. This includes auto loans, credit cards, and even medical bills. Accumulating debt happens for a number of reasons, but one of the main reasons is poor money management skills and savings practices. More than half of the country is not able to cover unexpected expenses. It would be nice if there was a way to forecast every financial emergency that may occur in our lives but, sadly we cannot. However, planning for a potential emergency is a way to protect ourselves from feeling too much financial pressure.  

Coming out of debt  

When debt begins to get overwhelming, payments can be late or missed to satisfy other payments. You may begin to prioritize what will be more important to pay and what can wait. Missed and late payments can affect your credit score, and this can cause financial stress, which is one of the first signs of escalating debt.  

When planning to relieve yourself of financial strain, you’ll want to first take a look at everything you owe. Make a list of all of your financial responsibilities to give you an idea of how much overall debt you have. Make sure you call and make arrangements for any items past due or close to becoming late. Don’t be afraid of having these conversations — this may help save some of your credit accounts and even your monthly spending.  

Look for any opportunity to save. This may mean cutting out some of those extra luxuries, like going out to dinner, until you are back on track. The more money you save, the more you can put toward debt or even a savings account. If increasing your income is a possibility, take advantage! Reduce your usage of credit cards, pay off what you can, and keep track of what you’re paying. It’s helpful and encouraging to see debt dissolving support. Ask for help when needed! If you’re not sure where to start or if what you have been doing doesn’t seem to be working, ask a professional. Your financial institution may have resources to help you. You also can look into what other resources may be available in your area.  

Staying prepared  

When debt starts to decrease and you’re on your way toward financial freedom, it’s important that continued healthy money management continues. That can look like: 

• Creating a budget that works for you and your family, and then re-evaluating that budget as life changes.
• Planning for unforeseen events by building up savings will help with financial comfort.
• Maintaining a positive relationship with your finances will also help nurture your credit score.
• When applying for credit accounts, make sure it’s affordable within your budget and that you are only adding more debt when necessary.

Remember you are not alone. Ask for help when you need it!  

Sources: 

https://www.firstrepublic.com/insights-education/average-american-debt

https://money.cnn.com/2014/07/29/pf/debt-collections/