60% of Americans Are Worried About Their Debt -- but You Don't Have to Be
You can take control of your debt to alleviate your financial anxiety.
Being in debt is a major source of worry for the majority of Americans. In fact, according to recent research from Northwestern Mutual, as many as 60% of people described their level of debt as a source of financial anxiety.
This isn't a surprise, as being in debt can be a nerve-wracking experience for a few reasons. After all, when you owe money, you have a monthly obligation to creditors you must fulfill -- and you may be worried about your ability to do that if money is tight or you fear your income may be reduced in the future.
Debt can also be stressful when you see a good portion of your money wasted on interest charges every month. This is especially true if you feel like you're never going to get out of debt and are going to be paying extra forever.
While being in debt is a justifiable source of anxiety, you don't just have to keep worrying forever. You can take control over your debt and eliminate it as a source of concern. Here's how to do it.
How to put an end to debt fears
There are a few key steps to take if you want to stop worrying about debt. Here's what they are:
- Reduce your interest rate. If less of your money goes to interest, debt won't be quite so costly and you can pay it off faster. You may be able to reduce the interest rate you're paying by refinancing with a low-interest personal loan. Or you could transfer high-interest credit card debt to a new balance transfer credit card offering a 0% promotional interest rate.
- Make a debt payoff plan. You'll worry less about your debt if you're working on paying it off and have a scheduled debt-free date to look forward to. You can embrace different methods of debt payoff, including a debt snowball approach where you pay off your smallest balance first, or a debt avalanche approach where you repay your debt with the highest interest first. With either option, you'll make minimum payments on all your debt but will pay extra to the one you're focused on. Once that's gone, you'll redirect all the extra payments to the next debt on your list.
- Create a budget. Budgeting lets you see exactly how much you can put toward your debt to pay it off ASAP. It also gives you more control over your money so you're less likely to end up in debt again.
- Track your payoff progress. By monitoring your efforts to repay your debt and watching your balance fall, you can start to feel good about your financial situation instead of anxious about how you'll ever become debt free. This can help motivate you in your paydown efforts.
- Save up an emergency fund. The last thing you want is to backslide and end up in more debt once you've made progress on paying it off. To make sure that doesn't happen, start working on saving an emergency fund that you can use to cover unexpected expenses.
By taking these steps, hopefully you can free yourself of your debt quickly and stay out of debt so you'll never again be among the 60% of Americans who describe their debt as a source of financial anxiety. Once you take control of your finances, your stress level about your debt should decline right away as you work toward becoming debt free.
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