The psychological benefits of settling your debts 

If you’ve ever created a to-do list, you may have experienced a quick feeling of joy when finishing a task and crossing it off your list. The satisfaction of finishing your laundry, for example, can be small, but completing even mundane tasks can motivate you to try to accomplish more. Who knows, debt settlement could end up being a big dopamine rush for you after getting smaller tasks out of the way.

The psychological benefits of settling your debts—either by yourself or by hiring a debt settlement company to do the work for you—could help you reach other goals.

What it means to settle your debts

Debt settlement is a way to get rid of credit card debts and other unsecured loans, often by offering a lump sum that’s less than the full amount due. A creditor might agree to accept less than they are owed if you’re experiencing a financial emergency or hardship that leaves you unable to fully repay your debt. 

Some people negotiate debt settlement on their own, while others hire a professional debt settlement company to do the legwork for them. Either way, the goal is for your debts to be settled, giving you the freedom of putting them behind you and moving on with your life.

Getting rid of your debt could also help you psychologically, such as that dopamine rush we mentioned earlier. 

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Your dopamine levels may rise

Reaching your goals can release dopamine, which is known as the reward molecule in the brain. Neuroscientists have found that dopamine levels rise when someone reaches their goals, even small ones such as making your bed in the morning.

One way to feel better and motivate yourself to do more is to break a big project like dealing with debt into smaller chunks that you can cross off a task list. You may feel a dopamine hit after a small achievement, which can push you to do more. The closer a reward is, the more motivation you may have to work toward it.

For example, actionable tasks that move you toward resolving your debt long before you seek help from a professional can include:

• Make a list of your debts. This could be a painful eye-opening, but it’s hard to slay a dragon with a blindfold on.

• Pay off your smallest debt.

• Pay off debts from the highest annual percentage rate to the lowest, known as the debt avalanche method, as a way to save interest charges.

• Get a debt consolidation loan to pay off other debts. A personal loan could be used to pay off credit card debt.

• Get copies of your credit reports to check if they’re accurate.

• Add up all your debts and figure out how much you can afford each month to pay them off. Create a budget and use a spreadsheet to track how much you’re paying off monthly.

Less stress by settling debts

Less stress can help you in many ways. Lower blood pressure, better sleep, lower anxiety, and improved cognitive functioning are all effects of lowering the amount of stress in your life. 

Settling your debts, or even just reducing some of your debt, can improve your psychological functioning.

Not having enough money can create “bandwidth taxes” that sap mental resources, studies have found, according to the National Library of Medicine. Chronic debt is endemic to poverty, with one in four U.S. families in the lowest income category spending more than 40% of their household income on servicing debt.

Having more creditors has a psychological cost: When more accounts are in the red, you could be more likely to consider each debt as a separate mental account. The result could be overwhelming. 

This is why it could make more sense psychologically to pay off smaller debts entirely when you can, even when it makes more sense financially to pay off the debts with higher interest rates first. At least you’re eliminating a debt, even if it doesn’t save you as much in interest than paying off another debt would.

You may not feel so overwhelmed

Your relationship with money is a personal thing, and maybe it doesn’t overwhelm you. But eliminating your financial burdens through debt settlement on your own or with the help of a reputable debt settlement company could lift a huge burden from your life.

Along with less stress, getting rid of your debt could improve your self-esteem, confidence, and make you feel like you have more control over your life. Instead of worrying about debts that never seem to end, you could move forward to a better financial future. 

Or you may have simpler benefits. You may sleep better, walk with more confidence, and just be happier overall. Those are all good reasons to get rid of debt.