Manage Your Debt; Manage Your Well-Being

This is a guest article by Lucy Wyndham

Debt causes worry and poor well-being for many consumers daily. In DebtSafe’s wellness survey, 71 percent of South Africans said that financial stress had influenced their overall health, and 87 percent of them felt tired, worried and depressed due to their debt. In fact, debt continues to be a leading trigger of depression in the country today. This feeling is not specific to South Africa either. Around the globe, consumer health is feeling the effects of rising debt balances. Anxiety levels are higher than before, and consumers are losing sleep over money-related issues, debt included. As debt levels climb higher, well-being continues to be impacted both emotionally and physically. With the links between the two being repeatedly proven, taking the time and responsibility to properly manage your debt means you can positively affect your psychological health and vice versa.

Formulate A Plan

When debt piles up, a common feeling is the loss of control. By formulating a debt plan, you are giving yourself some of that control back. While there is no guarantee that your repayment plan will work out exactly as planned, a plan will provide some direction, and if done correctly, anticipate the need for contingencies. Start by analysing your debts according to their interest rates, timeline and requirements. From this, you can determine the best repayment method for your situation like the debt snowball repayment method. 

A key part of your plan is carving out the money to repay these debts, which you can do by incorporating your budget and cost-cutting, or seeking ways to earn extra money like asking for a raise at work or exploring passive income streams. If you find yourself confused about any element in your debt repayment plan or simply wanting an expert opinion, feel free to speak to a financial or debt adviser, who can lay out your options for repayment and help you formulate the plan. Alternatively, there are a host of mobile personal finance apps available that can help with tasks, including debt ranking, budget creations and income investment.

Split Your Financial Rebuilding Into Manageable Blocks

One of the most common reasons people feel overwhelmed and fail to deal with their debt is that they attempt to tackle all of it at once. When viewed in its entirety, and especially if you have amassed sizeable debt, it can seem daunting and unbearable. This can lead to feelings of inadequacy, sadness, anxiety, and in some cases, depression. Once you have formulated a debt repayment plan, split it into small manageable sub-plans, either by goal achievement or timeline. This does two things: it acts as a checkpoint in your debt journey, and it also can act as motivation as you deal with your debt. As you progress in your debt journey, you can enjoy the feeling of accomplishment and getting close to your financial goals. If you have multiple debt accounts, you may want to use this as the marker - i.e. marking when you have repaid one credit card or loan. 

Create A Budget And Include Space For Personal Care

Having a budget helps you to identify where your money is going and plan for your income, which means better control of your money. In McKinsey’s recent survey of South African consumers, more than half are living paycheck to paycheck, while most of them are holding back on their spending. This makes sense, since 7 in 10 of them are most worried about losing their employment income and feeling unprepared for this eventuality. 

Creating a budget allows you to cut your unnecessary costs and provide for what is necessary and essential to your peace of mind. For example, establishing a rainy day fund can ease the worry of job loss or work as a fallback plan should you end up spending more than you planned to when drafting your budget. However, when drafting your budget, don’t get too carried away with the cost-minimising measures, and be sure to leave space each month for self-care, whether it is a monthly gym fee, yoga and meditation classes, or regular sessions with a stress counsellor. A better balanced mental state allows for a clearer mind and better decision making, including when it comes to your debt.

Share Your Worries With A Professional

Finally, don’t underestimate the power of sharing your fears and worries with someone. Voicing your troubles, including those about money, can help you feel relief and provide you with a sounding board for advice. You can choose to speak to a family member or friend, a certified therapist, or a financial counsellor. With a financial expert, they may be able to provide options for your specific financial situation, such as debt consolidation. A therapist, on the other hand, will help you navigate the emotional feelings you are experiencing as a result of your financial situation and how best to handle them. Once you are armed with the right tools to handle negative emotions, there is less chance of your judgement being clouded. 

Don’t forget the importance of a contingency fund. Knowing that you are protected in the event of a change can provide peace of mind and significantly reduce feelings of stress. The feeling of uncertainty can evoke negative emotions, including fear and anxiety, which in turn can trigger poor emotional, mental and physical well-being. With such strong links between personal finance and our well-being, taking care of debt means indirectly taking care of our health and happiness.

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