Letting Your Debt Stress Go

In Credit Repair of CreditGuru (February 19, 2009 4:38 am)

America is a debt society. We run on debt. Without it, our economy would collapse. But if you are in serious debt, it can cause you great stress and anxiety.

There are various types of debt - student credit card debt payments, housing debt, and so on. Some debt is fine. As long as your monthly salary or other income can cover your mortgage, your credit card bills, and other debts comfortably, you are in control of your debt situation and are generally stress free. Unfortunately, however, many Americans are one financial emergency away from financial disaster.

A financial emergency can be triggered by many things. An unexpected job loss and inability to find a replacement job can put you deep into debt inside of a month. A sudden major illness or medical emergency can wipe out your savings in a flash. A divorce settlement can stretch your income to the breaking point. With the economy and job market the way it is right now, it wouldn’t take much to push the average worker’s economic situation into utter chaos.

And as the months go by and you increasingly have trouble coming up with the money to pay your utility bills. Your phone company is threatening to cut off your service. Your gas company wants to shut down your heat. And your mortgage company is threatening foreclosure.

Most people will be stressed under these conditions because they believe that they have no options available to them except to somehow pay the bills that show up in the mail. Of course everyone should pay their bills and most of us want to. But sometimes, life intercedes and  you simply don’t have the money. In these situations there are a couple of easy rules for you to follow that will help lift some of the stress and anxiety from your shoulders.

First, relax. Sit down and relax. Yes, it sounds easy, but until you relax, you’ll be making potentially critical financial decisions under stress, which is never the right way to make any decision. Your debts are not going to change whether you’re anxious or relaxed, so you may as well relax.

Secondly, sort your bills into four priority piles, and pay them in this order -

1) Essential medical, food, and  housing debts. These are necessary expenses that you need to survive. This may also include your automobile related bills if you need your automobile to get to work in order to bring in  income.

2) Federal tax and other government bills and fees.  The federal government has many powers to go after your assets and generally make your life miserable. After you pay your essential survival bills, these should be next on your list.

3) Utility bills - these are bills that you need to pay, but you don’t necessarily have to pay them all at once. You can make partial payments to these services and still keep your utilities turned on.

4) Other bills - this includes credit card bills and all other non-secured loans that you have. These are all loans that you can make minimum monthly on. You may affect your credit rating but at least you won’t lose any of your essentials. In addition, these creditors are the most amenable to debt settlement negotiations.

Initially, when you look at the pile of debt that you owe, it can be paralyzing and stressful. But stress is only a state of mind. When it comes to financial matters, there are always options available to you. Once you realize this, your mind becomes amazingly clear. You will not only become stress free, but you will be in a better state of mind to come up with a plan to get rid of your debts and enable you to live a normal life again.

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