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Debt is a growing concern among Americans. In fact, it recently hit record highs of more than $14 trillion. Then, it surged almost another 8 percent this year according to reports released by the financial sector in February. For most families, rising debt is a matter of struggling to meet ongoing expenses more so than making reckless purchasing decisions. Costs of living are growing, and household incomes are essentially staying the same if not dropping. Of course, job losses and reduced hours brought on by the now-infamous pandemic didn't help the situation.
Exploring the Magnitude of America's Debt
Based on the latest studies, the average American family has amassed more than $90,000 in debt at present. This varies slightly by age group with those ages 40 to 55 typically having the most debt and young adults up to the age of 23 having yet to reach the national average. Still, any significant amount of debt can be disconcerting especially if paying it off seems impossible. While you can learn more and seek help over at National Debt Relief, we'll discuss some of the main debt-related points to consider right now.
Understanding Some of the Problems Debt Can Cause
Research indicates that overwhelming debt and other types of financial struggles can cause a range of problems for those affected. For one, financial worries have been known to lead to anxiety and depression as well as other mental health issues. Debt is also notorious for keeping people up at night, which further increases the risk of mental and emotional problems.
Stress from financial concerns and resulting insomnia can also bring about a long list of physical health issues, such as fatigue, decreased immunity, high blood pressure, heart disease, and migraines to name a few. To make matters even worse, those who are struggling with debt often sacrifice healthcare just to help make ends meet. In short, their debt is not only causing health problems but denying them help for their medical issues.
Dealing with the Problems
You'll find that there are several methods for dealing with debt. We'll cover the common financial options shortly. First, though, it's important to understand some of the ways of handling the physical and emotional effects of financial worries. One of the first and most effective steps you can take is being proactive.
Sit down and figure out how much and what types of debt you have. Many people feel this would be counterproductive in alleviating anxiety over financial stress, but the opposite is actually true. Knowing what you're dealing with somehow makes it all seem a little less overwhelming. That's the beginning of the process.
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Cut out Unnecessary Spending. From there, you can look at some of the unnecessary expenses you're generating and begin weeding them out of your budget. Some common examples are frequently dining out, paying for more cable or phone service than you need, and purchasing brand names at the supermarket rather than less expensive store brands. You may be surprised at the difference such small steps can make.
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Find Hidden Money in Your Life. Most people have unexpected sources of extra income lying around their homes. You may have old jewelry that you just don't need or want. Maybe you have a few high-end purses or pairs of shoes gathering dust in the closet. You may even have some valuable old coins that hold no sentimental value to you. All these items can be sold if you find the right buyer. You can post them on eBay, Facebook Marketplace, or other websites to make them visible to potential buyers.
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Stop Worrying. This is easier said than done; there's no doubt about that. Still, you need to remember that you're not alone. At least 80 percent of American families are in debt, so you're the rule rather than the exception. Families are constantly battling financial woes, and they're surviving one day at a time. You can do the same.
Those are some simple but effective solutions for coping with the stress of being in debt. They won't immediately eliminate your debt, but they'll help reduce the risk of anxiety, depression, and other issues. Additionally, the simple act of being proactive will make you feel a great deal more empowered.
Examining the Potential Financial Solutions
Now, we can move on to the more in-depth debt relief options that are available. Seeking help from the experts is your next step in dealing with debt. They can explain the options to you and help you figure out which one would best fit your situation.
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Debt Consolidation. Debt consolidation consists of taking out a loan to pay off unsecured debts, such as credit cards. This option is helpful if you can get a loan with a lower interest rate than your existing unsecured debts. By using this loan to pay off some of your existing debts, you'll reduce multiple monthly payments to a single one and hopefully eliminate a great deal of interest in the process.
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Debt Settlement. In some cases, creditors are willing to settle for a portion of what creditors owe them rather than demanding the full balance and risking not getting paid at all. That's what happens with a debt settlement program. A debt relief company will first go over your debts and finances with you. If you can feasibly afford to pay a portion of your existing debts in monthly installments, the debt relief company will negotiate with creditors to create a debt settlement plan. Then, you'll make monthly payments until the agreed-upon amount is paid off. The rest of the balance will essentially disappear.
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Debt Management. Debt management could be described as debt consolidation and settlement rolled into a single process. Debt relief specialists negotiate with creditors to reduce the amount you owe them and take out a consolidation loan on your behalf. Then, you'll make monthly payments to a dedicated account specifically for paying off your debts, and the money will be distributed among your creditors.
Various types of bankruptcy are also an option, but they're generally used as a last resort. Not all of these solutions are appropriate for all situations. Still, there's a good chance one of them may be right for you.
All Things Considered
These days, most Americans are in debt, and the issue is most likely only going to grow moving forward. If you're among the majority, you're not alone, and you have options. Start being proactive by taking a few small steps to ease your mind. Then, turn to the professionals for help with ultimately eliminating the debt you're dealing with.
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