The key to dealing with your debt stress is knowing where to start.
Debt causes stress — a lot of it. More than 40 percent of Americans are stressed about their immediate financial future. Much of this debt isn’t due to reckless behaviors. Natural disasters like the global pandemic or the recent winter storms in Texas (where some residents have seen their electric bills surge more than 10,000 percent in one month) have forced many to deplete their savings and rely on credit cards to survive.
“While financial stress can impact various areas of an individual’s life, one area where we see a strong link, especially today — given the pandemic — is mental health,” said Vishal Jain, head of financial wellness strategy and development at Prudential Financial. “Financial pressure is associated with a feeling of being unable to make ends meet, which can lead to a number of mental health issues, including depression, anxiety, low self-esteem, and even suicide. The workplace can serve as a point of intervention by providing wellness programs that can reduce mental health stigma, identify workers at risk and connect them to resources and support systems that can help workers manage their mental health, and reduce financial stress.”
One of the biggest misconceptions people have about debt is that you have to be in way over your head before seeking guidance. “Whether its consumer debt, student loan balances, or keeping up with housing costs, getting guidance can help reduce stress,” says Kristen Holt, president and CEO of GreenPath Financial Wellness, a national nonprofit financial counseling organization. “Having an action plan from a trusted, nonprofit resource can propel people toward financial health, with clear steps to make progress.”
A financial counseling session like those offered by GreenPath is a chance to work one-on-one with a certified counselor to understand your full financial situation and get an action plan; personalized financial counseling is 100 percent confidential, and delivered to people free, with no charges.
GreenPath offers a wide range of online financial wellness tools. These include financial calculators to help you understand your current situation, an online financial health assessment to clarify your overall financial health, a virtual financial coach for an AI-powered counseling session, as well as a library of online resources. People also benefit from one-on-one, personalized confidential counseling, and debt management plans delivered by certified financial counselors. “Being able to make healthy financial choices is about having good information at your fingertips,” Holt says. “Much of that education is available online, as well as via connection with financial counselors, in all it’s important to tap into trusted resources.”
Where to start
For many, financial stress can be overwhelming. It can also creep up on you, with a gradual increase in credit card balances, for example, due to high-interest rates and low monthly minimum payments. “The average credit card interest rate is over 16 percent according to Creditcards.com,” notes Holt. “A recent study has shown that 51 percent of adults have added to their current debt as a result of the pandemic. A high balance and accruing interest makes it more difficult to get out of debt.”
Starting the path to financial wellness begins with some basic steps. First, monitor your bills to be aware of accruing interest and annual fees — and check your credit report to ensure accuracy. Try to use only low-interest credit cards — and call your card issuer to ask about getting your rates lowered as a hardship option. Review your income and expenses and create a basic budget. Contacting an organization like GreenPath to set up a personalized counseling session is also one of the best things you can do.
It’s tempting to ignore bills if you can’t pay them, but that isn’t the best approach, according to Holt. “Don’t delay speaking to your creditors to see what hardship assistance programs are available,” she advises. “Having a clear strategy for handling your credit card debt can help you feel more in control of the situation and reduce stress.”
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