For some types of stress, a long, hot shower might relieve some of the symptoms of that stress; if only dealing with financial stress was that easy. Financial stress is a very real ailment that usually results in anxiety and depression. When your health is affected then your social, emotional, work, and home life can also be negatively affected. It’s no wonder since our lives are based heavily on our finances or lack of. If you’re having trouble paying your bills, loans, or credit, this could lead to financial stress.
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Almost everyone will have a financial crisis every now and then, from a late bill to an unexpected expense. This differs from financial stress, which strains almost all aspects of your life and requires a restructure of your finances. You have to be prepared to combat financial stress, should it happen to you, and here’s how to address it.
Deal With the Problem
The worst thing you can do is ignore the problem. Rest assured; your financial issues won’t disappear simply because you ignore them. You have to confront the problem head-on.
To begin with, you can do this first by tracking what got you in a financial crisis. Some circumstances are out of your hands, but others are manageable. Debt is a cycle, and understanding the cycle will help you get out of debt. Borrowing and receiving loans are viewed as a common way of life. However, when you can’t pay back loans, you get into debt. When you get into debt, you borrow more money to pay back that debt, and so on.
As long as you’re spending more than you make, you will remain in the debt cycle. Recognize the pitfalls so you can deal with them.
Create a Budget
It’s important to make a budget that you can live with for a good amount of time. When you’re on a budget to get out of debt, there are only two entities to pay; yourself and the creditor(s) you are in debt to.
Paying yourself first means paying for your essentials which is basically food and shelter. Of course, if you have a family that’s going to need more focus and strictly abiding by the budget to make sure your family is still supported during this time.
A good thing to do is to pay off any smaller debts first. They are easier to pay, so get them out of the way as early on as you can. Then you can start focusing on the deeper debts.
Bankruptcy vs Consumer Proposal
This might sound too drastic for some people, but that’s probably because they only know the negative aspects of bankruptcy. For instance, claiming bankruptcy doesn’t mean losing everything you own. Also, debts like credit cards can be erased.
Debts are also handled differently depending on which country you live in. For example, in the U.S., Chapter 11 of the Bankruptcy Code regulates business bankruptcies, while bankruptcies in Canada are under the Companies’ Creditors Arrangement Act (CCAA). Chapter 11 is a lengthy, detailed code that holds specific requirements for those gone bankrupt. It is a court procedure, while the CCAA tends to be less rigid.
If you live in Canada, you have the choice of filing for bankruptcy or Consumer Proposal. In both cases, you need to do it through professional help. The advice given at BankruptcyCanada.com allows you to receive quick and practical solutions to get out debt. In a Consumer Proposal, you will be able to retain your assets and be provided a plan on when to pay back your debts.
When under financial stress, it’s a good time to put the credit cards away. You will spend less when you only have the cash to deal with and pay for your items.
You also have the option to use credit cards that have less interest in them. If you think you can pay off your debts in 2 years or less, a credit card with a low interest-rate might be worth it. Many of these cards will have good offers that can last up to 2 years.
If you’ve never created an emergency fund, it’s time to do so. Having one will relieve financial stress. Since it’s always tempting to spend money, you can create a separate emergency account separate from your normal bank account.
Generally, everyone needs to find practical ways to handle the stress of all kinds. Concerning financial stress, there are specific steps you need to take. These steps aren’t difficult but they need discipline and a better understanding of managing money. When you know where your money goes, you’ll be better able to handle money and avoid financial stress when possible.