Stress is known to be bad for your health and one common cause of stress can be personal money management. Struggling to pay your bills can lead to mental health and physical issues including depression, anxiety, sleep problems, heart disease, and high blood pressure, among others. When you get behind on payments and your debts start heading into collections, it’s easy to become overwhelmed with worry and doubt that you will ever be able to get your finances back on track.

Debt stress can lead to physical difficulties such as sleeplessness and changes in eating habits. It can affect your ability to concentrate and cause feelings of anxiety and depression.

While it can cause health problems and affect your personal and professional life, stress can be managed by planning and executing a strategy to regain control over your finances and your debt.

Here are some tips from Frederick & Company to help you handle the stress that may be coming from unmanageable debt problems:

1. Ask “Am I Going To Be Able to Pay Off All of These Debts?”

If you are facing financial stress, the first thing you need to do is ask the question: “Am I going to be able to pay off all of these debts?”It takes incredible bravery to ask this question. You might not be able to answer this question on your own and asking for support to get this question answered is the next important step. You will want to seek out a financial professional that helps you in an unbiased way – review this article on how to choose a financial advisor.

One strategy we can all relate to is postponing dealing with a tough situation but is important to keep toward a solution. Some problems will resolve themselves with time but with debt problems, the trouble just continues to grow over time. Ignoring your debts means that your financial situation will likely continue to deteriorate and your stress will only get worse.

Go through your debts and make a list of what you owe and to whom. Even if it’s a staggering amount, you have just taken the first step to reducing your debt stress. Be honest with yourself when it comes to how much you owe – add it up and look at the total owing. Sometimes the stress of not knowing is the worst of it and once you have looked at the number you can make a reasonable plan to reduce the amount owing.


2. Make a Plan to Pay Off Your Debt

Once you know how much you owe and who you owe it to, you can start making a plan to pay off your debt.

Having a plan and getting started will give you the motivation you need to continue. This will help ease your emotional and mental stress.

To create a debt payment plan, prioritize your debts. You can list your debts from the least owing to the most owing or the highest interest rates to the lowest interest rates.

There are a couple of different options when it comes to paying off your debts.

You can use the snowball method, where you start with the debt you owe the least and pay that off first.

This is helpful because you can quickly see progress and become motivated to continue.

You can also use the avalanche method, where you pay off the debts with the highest interest rates.

This method doesn’t provide results as quickly as the snowball method does, but it does help you pay off your debts more quickly which can keep you motivated to continue through the process of becoming debt free.

3. Create a Budget to Identify Spending Habits

One of the best ways to figure out a payment plan is to create a budget so you can set an intention about where you want to spend your money and then you can track your spending habits and free up some money to pay down your debts.

There is no shortage of resources out there to help you create a budget – here is a budgeting tool offered by the Government of Canada – as the saying goes, there is an app for that! The overall goal of budgeting is to create a routine, sustainable, and rational plan for using your hard-earned income to save and pay for living costs, including debt.

Routine meaning constant from month to month, sustainable meaning that all your expenses are accounted for in the budget, and rational meaning that the budget is created when no emotional or urgent issues are influencing your decisions.

Take an honest look at your spending habits by writing down what you spend. You’ll be able to identify your spending patterns, particularly in areas where you are spending due to stress.

When you do feel like shopping because of your emotional state, replace that behavior with healthier coping mechanisms.

Sometimes even seeing the amounts you are spending is enough to motivate you to stop.

Continue tracking your expenses and working on your unnecessary spending, and you will eventually find extra money that you can use to pay down your debts and relieve yourself of debt stress. It’s important to evaluate your progress and make changes as necessary.

4. Go Easy On Yourself

Did you know that the total consumer debt in Canada reached $2.36 trillion by the end of 2022? This number may feel staggering but it means that you are not alone. Unfortunately, there are many Canadians out there struggling with debt and feeling the stress of managing their debts on a monthly basis but looking for solutions means that you are on the right track to moving forward toward a future with less stress.

This stress is heightened when you become hard on yourself, which intensifies the cycle and your financial struggles. Trust the process and build in some milestones that you can use to:

  1. Celebrate your successes – it is very important to take advantage of these opportunities to recognize yourself and what you have achieved. This gives you the juice to keep on going!
  2. Course correct so you can still meet your goal – if you are not on track to meet your goal this is important to know so you can adjust your strategy to keep on track

Pivot to another strategy – if this strategy isn’t working for you it is important to be able to assess this before committing a lot of time to this process. You have numerous options that can help you manage your debts. Once you come up with a plan to tackle your debt and follow it, keep your mind off your finances by engaging in relaxation and enjoyable activities.

5. Get Debt Help from a Professional

No matter your financial struggles, you don’t have to face them alone.

You can always seek the help of a Licensed Insolvency Trustee (LIT) to help you find solutions that work for your unique situation. A Licensed Insolvency Trustee should review all your options so you shouldn’t have to worry about a sales pitch, just information that will help confirm that you are on the right track or allow you to understand other options that might work better for you. When you have all the various options in front of you, you are in a better position to:

  1. Confirm you are on the right track;
  2. Provide you with important information that will allow you to understand when, if needed, you may want to reassess your situation; or,
  3. Allow you to pivot to a different financial option that might work better, saving you time and money through trial and error.

For instance, you may be eligible to file a consumer proposal.

Consumer proposals are an offer that you make to your creditors to settle your unsecured debts by paying off a portion of your total debt.

This involves creating a predictable and affordable monthly payment schedule based on your income, but you can also propose to pay off the debt in one lump sum.

After a consumer proposal is complete, you can be debt free.

However, it’s important to understand that whatever payment schedule is agreed upon, you must follow it and make your payments on time.

We Can Help You Handle Your Debt Stress

Frederick & Company is dedicated to helping you get back in the black by exploring your options and finding solutions that work for your unique situation.

Let’s get started by booking a no-obligation consultation today.