5 Ways to Get Rid of Debt Stress

If you're feeling stressed or anxious about your debt, you're not alone. Studies have shown that over half of U.S. adults in debt say they regularly deal with debt stress.

While debt stress may be common, taking control of your finances could help you banish it. Here are a few tips for managing your debt and getting rid of debt stress.

Understanding Debt Stress

Debt stress is anxiety, fear, or worry caused by debt. You may be worried about paying off existing debt, taking on future debt, or both.

Stress from debt can negatively impact your mental and physical health. Spotting these symptoms early could help you take action before your debt stress becomes more severe. The sooner you address your debt stress, the easier it can be to manage.

Signs of debt stress

You may experience physical, emotional, or behavioral changes as a result of debt stress. Here are some common signs you may need to take action.

Physical signs of debt stress:

• Problems sleeping

• Headaches

• Fatigue

• Nausea

• Lack of appetite

• Increased blood pressure

• Respiratory problems

• Panic attacks

Emotional signs of debt stress:

• Feeling overwhelmed when thinking about money

• Experiencing depression or anxiety

• Feeling sad or sick when reminded of debt or bills

Behavioral signs of debt stress:

• Avoiding friends, family, or loved ones

• Inability to focus on work or other tasks

• Loss of interest in hobbies you used to enjoy

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When Debt Stress Becomes Overwhelming: Getting Professional Help

Identifying signs of debt stress early could help prevent your symptoms from becoming worse. However, you may need to seek help from a professional if your debt stress symptoms last more than a few weeks or are impacting your ability to live your life.

For example, seek out a medical professional if you are suffering frequent panic attacks, prolonged insomnia, or feelings that life isn't worth living.

You can work with both medical professionals and financial professionals to attack your debt stress from both angles. Combining mental health counseling with financial planning or debt coaching could help you find relief and work towards a better future.

Who to contact in a mental health crisis

The National Alliance on Mental Illness (NAMI) runs the National Suicide Hotline, which can be contacted by dialing 988 or calling 800-2730-TALK (8255).

You can also contact the Crisis Text Line by texting HOME to 741741 or by visiting the website https://www.crisistextline.org to start a live chat or WhatsApp with a volunteer Crisis Counselor.

Other resources

You can look for financial support groups in your local area, or go through Debtors Anonymous, which can help you find support through meetings and informational resources.

For more hands-on financial help, reach out to local banks and credit unions to see if they offer free or low-cost financial counseling and/or educational resources to help you get control of your debt. 

The National Foundation for Credit Counseling may also be an affordable option if you want to set up a debt management plan for structured guidance on how to pay off your debt. These plans work best when you can afford your debts but need help figuring out the best way to tackle them.

How to Cope With Debt Stress

Focus on these moves to address your negative debt feelings.

1. Upgrade your financial skills

Knowledge is power, especially when it comes to taking charge of your finances and debt. Happily, you have a ton of great financial education resources right at your fingertips. 

Most banks offer financial education resources to help you learn key skills like budgeting, saving, and using credit. You can also find a lot of quality information online, though it’s good to make sure you're looking at reputable sources. 

Tip: Social media isn't always the best place for sound financial advice.

You could also hire a professional to help you learn money management skills. An Accredited Financial Counselor (AFC) or Certified Financial Planner (CFP) can be a helpful resource who will keep your needs at the forefront. 

2. Organize your finances and build a budget

Everything is more stressful when you can’t see exactly what's going on. A great first step in tackling your debt stress is to review and organize your finances so you can see the big picture.

Once you know where you stand, it's time to get everything under control. This starts with building a budget.

A good budget helps you figure out your financial priorities and goals, and shows you how to reach them. Think of a budget as your guide for getting rid of debt stress forever.

 What tools you use are up to you. Here are a few options:

• Use a notebook or a journal. This is a good option for people who focus better without a screen in front of them, or who like the tactile nature of writing things down. The ability to color-code a journal can also help more visual organizers.

• Create a digital spreadsheet. A spreadsheet can be an excellent way to organize finances, and built-in tools like calculators and data sorting can be helpful additions.

• Download a mobile budgeting app. Lots of great budgeting apps are available for smartphones and tablets. Many can interface with your bank and credit accounts to automatically import and categorize your transactions.

3. Set aside an emergency fund

It's not always the current problem that causes your debt stress—sometimes it's the thought of the next one. More than half of Americans wouldn't pay for an emergency expense from savings, but would rely on cutting expenses, using credit cards, or borrowing money.

Most experts recommend saving an emergency fund for just such occasions. How much you should have varies by who you ask, but even a few hundred dollars set aside for an unexpected car repair or vet visit could help relieve a lot of potential debt stress.

There's also an app for that: You can find mobile apps for saving money that offer automated savings tools for set-it-and-forget-it solutions to building up your emergency fund or other savings.

4. Create a debt repayment plan

Paying off your debt could eliminate most or sometimes all of your debt stress. With your budget in hand, decide on a debt repayment method that fits your budget and needs:

• Debt snowball: Focus extra money on paying off the smallest outstanding balance first, then the next smallest balance (while you continue making minimum payments on the rest). With the snowball method, you might pay off the low-balance items in a short time, and feel inspired to keep chipping away at your debt. 

• Debt avalanche: Focus on paying off the debt with the highest interest rate first and work your way down to the lower-interest debts (while making minimum payments on everything else). The avalanche method could save you interest costs over time, but if your highest-interest debt balance is large, it could take a while before you reach your first milestone.

• Max to min: Pay off your maxed-out credit cards first to lower your credit utilization (how much of your total credit you're using). Keep making your minimum payments on your other cards. Like with the debt avalanche, it might take a while to pay off your first debt, but your credit score could bounce back sooner than other methods.

No matter which method you choose, always make at least your minimum payment on time every month to keep your accounts in good standing.

How to choose a debt repayment method: Step-by-step guide

Not sure how to choose the right method for you? Try these steps:

• Lay it all out. List your debts, including amounts owed, minimum payments required, and interest rates. Also add in your monthly income and other expenses.

• Decide how much you can dedicate to debt payments each month. This includes making at least minimum payments on each debt, plus whatever else you can afford to put toward your debts.

• Consider your goals. Each method has its pros and cons. Would you rather make progress quickly, save more money on interest fees, or see credit score improvements sooner?

• Explore your options. Sketch out each method on paper or using an online debt repayment calculator to see what the different options would look like in practice. This could help you understand the costs and timeline of each method.

• Choose a strategy. Pick the option that best suits your goals and financial situation. Remember that there is no right or wrong answer for everyone, so choose the method that best works for you. You're also not stuck with one method forever; you can switch it up at any time.

How to stay motivated during debt repayment

We're all motivated by different things, so the best way to keep your enthusiasm for debt repayment will depend on what drives you. Visual folks may like having a chart or graph that shows their progress.

If you're the type of person who likes crossing things off a list, then the snowball method could be a good way to stay motivated. You'll pay smaller debts first, letting you cross them off your list more quickly.

Or perhaps you do best when you have someone to whom you're accountable. Enlisting a friend or loved one to check in on your progress could help you stay motivated and on track.

5. Talk to your lenders

If you're facing financial hardship from losing a job or other life events, speak with your lenders. See if you can get a more favorable repayment plan until you sort things out. 

Your lenders may offer hardship programs with benefits like lower monthly payments or a reduced interest rate for a time. This could help you stay ahead of your debt, and even pay it off faster.

Protecting Your Relationships During Debt Stress

Anything that impacts your mental and physical well-being could also affect your relationships, particularly with friends and loved ones. Here are a few tips to keep your debt stress from negatively impacting your relationships:

• Communicate openly and honestly. Be upfront about your struggles, but keep things solution-oriented instead of focusing on only problems.

• Explore budget-friendly options for spending time together. You don't need to spend money or take on more debt to share memorable experiences with those you love. Taking walks, enjoying scenic picnics, or attending local free events can all be great ways to share quality time without breaking the bank.

• Set healthy boundaries. Financial accountability can be good for some people, but too much talk about finance may be a trigger for others. Additionally, be clear about when you can help out financially—and when you can't. 

• Reach out when you need emotional support, but don't let your finances be the center of every conversation. Even the best of friends may become frustrated if your relationship becomes solely about your debts.

The people who love you want you to succeed, but every relationship requires give and take. Make sure to keep that balance in mind.

Lifestyle Habits to Combat Debt Stress

The best long-term strategy for dealing with debt stress is to take charge of your finances and start eliminating debt. However, you could also make some lifestyle changes that may help make the debt stress more manageable in the meantime.

• Maintain a daily routine. Having a consistent sleep, eat, and work schedule could help provide a sense of order and make it easier to avoid feeling overwhelmed.

• Exercise regularly. Physical activity could have huge positive benefits to your mental health, including dealing with debt stress. Look for free or low-cost options for staying active, such as walking or running, using online exercise or yoga videos, or taking advantage of community fitness programs.

• Get a good night's sleep every night. Limit caffeine and food in the hours before bed. Try meditation or other relaxation techniques to combat insomnia due to debt stress.

• Avoid unhealthy coping mechanisms. Don't overindulge in food, alcohol, or drugs to deal with debt stress. Shopping or other high-cost hobbies could also do more harm than good.

Tips for Managing Your Debt to Reduce Debt Stress

There are a lot of financial tools and products you could use to simplify, consolidate, or reduce your debt. Consider these options.

Debt resolution or debt settlement

If you’re struggling to repay debt, consider debt resolution. Debt resolution (which is also called debt settlement) is negotiating with your lenders and asking them to accept less than the full amount owed. 

You can negotiate with banks and credit card companies on your own, or get help from a professional debt settlement company. They can negotiate with your lenders on your behalf. 

This method is worth considering if you’re already delinquent on some or all of your debts. Creditors usually won’t negotiate if you’re current on payments, because they have no reason to believe you can’t keep making them. 

If you had every intention of paying off your debts but now you can’t, debt resolution might help you. There are some pros and cons to debt resolution, so it’s best to talk to a debt consultant about your specific situation.

Debt consolidation loan

A debt consolidation loan is when you use one large loan to pay off multiple smaller debts. 

Consolidation could help relieve debt stress by putting all of your debt in one place, giving you just one monthly bill and due date to manage. You may also qualify for a lower interest rate on the new loan, which reduces your monthly payment and overall cost to repay your debt.

You may also decide to get a longer repayment term on your consolidation loan. This could lower your monthly payment, but it means you make payments for longer, and it may cost more in the end.

Credit card balance transfer

A credit card balance transfer is when you move credit card debt from one card account to another. This can be a strategy for consolidating debt, but it's primarily used to reduce interest rates. 

Balance transfers are especially useful if you qualify for a card with an offer for a reduced APR (annual percentage rate) on transferred balances. Some balance transfer offers go as low as 0% APR for a set period.

You could use a balance transfer offer to pay off debt faster, or to park some debt at no or low interest while you focus on paying off more expensive debt. Just watch out for the balance transfer fee—most credit cards charge 3% to 5% of the total transferred balance for each transfer.

Home equity loan or line of credit

Your home equity is the market value of your home minus your mortgage balance. For example, if your home’s value is $250,000 and you have a mortgage balance of $150,000, your equity is $100,000.

Some lenders let you borrow against your home equity in the form of a home equity loan or line of credit, which could then be used to consolidate debt. Home equity loans also typically have lower interest rates than credit cards or personal loans.

How much you can borrow depends on your equity and your qualifications (income, credit, existing debt, etc.). It’s possible to borrow up to 100% of your home’s value, but it’s more common for lenders to limit you to about 80-85%. That includes the amount you owe on your current mortgage (if you still have one) plus the new home equity loan that you want. The potential downside is that your home is the security for the loan, meaning it's on the hook if you can't repay your home equity loan according to the terms.