Despite headlines that point to "green shoots" and other markers of economic recovery, we are all still feeling the recession's pinch. Many are trying to hold onto the jobs they have. Others are looking for new ones. And pretty much everyone is trying to stretch their limited cash supply. Most of us are also juggling some kind of debt, whether it's a mortgage, student loans, credit cards or all three.
Debt isn't always a bad thing. A mortgage can help you build equity in your home, and those student loans are often a necessity if it means you land a better paying job down the line. Both are investments worth making, and both come with fairly low interest rates. But when you have more debt than you feel you can handle, particularly when it's high interest rate credit card debt, it can weigh on your mood, your health and even your relationships.
But it doesn't have to feel like the end of the world. You can dig yourself out of the hole, and just as importantly, learn to manage the intrinsic stress. "Focus on taking that next step," says Gerri Detweiler, author of the new e-book "Reduce Debt, Reduce Stress." "With financial problems, there's no easy way out, but there are steps you can take and as long as you keep moving, you're going to move in a better emotional direction."
-- Tackle the problem. You have to start by knowing what, exactly, the problem is. Yes, of course it's debt, but how much debt do you have, and how much money can you put toward paying it down each month? Add up your credit card balances, then track your expenses for about a month, taking stock of every dollar that goes out of your wallet. Once you do this, it will be easy to see what can be eliminated. (Very often, it's things you didn't even recognize as an expense, like that sandwich at lunch or your random stops at the newsstand for a magazine.) Put that extra money toward the card with the highest interest rate, while paying the minimums on the others. Once that card is paid off, you can shift your focus to the next highest, and then the next, until you're out of debt once and for all.
-- Know when to seek help. It's possible that your debt load is so extensive that you just can't manage it on your own. Your monthly income simply will not allow you to make the payments on your cards while still keeping up with your other expenses and putting food on the table. If that's the case, don't just tread water -- explore your options. "There isn't one solution that fits everyone. Credit counseling agencies will recommend credit counseling, bankruptcy attorneys will recommend bankruptcy. It's important to understand what your options are," explains Detweiler. My suggestion? Start with a credit counseling agency, which you can find through the National Foundation for Credit Counseling. A good credit card counselor will put you on a debt-management plan that will have you out of debt in three to five years. NFCC just recently launched a new program, called "Call to Action," that provides even more relief in the form of lower interest rates for consumers who are really struggling.
If a credit counselor can't help you -- and typically they can't if your income doesn't support repayment in under five years -- then consider bankruptcy or a debt settlement. When it comes to the latter, be wary of scams. If you have just one or two credit cards, it's entirely possible to settle your debts on your own and avoid the high fees charged by debt settlement firms.
-- Talk it out. Now you're making progress, but that doesn't mean you're no longer feeling weighed down by your debt. Hiding it, though, is only going to create bigger problems. So set up a system of open communication, and start with your family. Dr. Kathleen Hall, founder of The Stress Institute, suggests setting up a time each week to sit down together -- kids included -- and talk about the finances. "Children mirror their parent's stress, so they're carrying this around and because they don't want to put another load on you, they bury it inside. But they'll act out, and it can show up in their grades." Be open and honest about how you're feeling without scaring them, and challenge them to find creative ways to help the family save money. One child can be in charge of making sure the lights are off when no one is in the room, another can help you look for and clip coupons.
At a separate time, meet weekly with just your spouse to discuss your progress, work on your plan of attack, and just generally communicate about how you're feeling. Having a friend to talk to outside of the family helps as well.
-- Find serenity. Every day, do something that makes you feel calm, says Hall. It could be meditation or yoga or even just laughing. Do it for five minutes, ten minutes or more. But putting in the time, no matter how much you have, will clear your mind and "reset" your brain. Make an effort to fit in some heart-pumping exercise as well. (No, you don't need a gym membership. A run, some jumping jacks or a walk will do just fine.) Finally, memorize a positive mantra that you can repeat to yourself when you're feeling down. Saying "I am strong" or "I am resilient" over and over can help to reduce your heavy load of stress. With reporting by Arielle McGowen