When it comes to general anxiety and stress, money is one of the things that can really put us on edge. It’s understandable: money (or lack of it) plays into every part of our lives. Worries over it can lead to the emergence of poor mental health very, very quickly. In fact, the two are inexorably linked. So, how can we stop debt overwhelming ourselves? What resources are there out there to help?
Here, we’ve pulled together a few ideas and resources that you can utilise to stop money worries taking over your life. Read on for a few suggestions…
- Remember: There is No Shame in Debt
- Read MoneyMagpie’s New Redundancy eBook
- Draw Up a Budget
- Organise Your Debts
- Consider Contract Work
- Seek Debt Advice
Debt is something that we, as Brits, often feel uncomfortable talking about. The truth, though, is that if you do speak about it you’re likely to realise that more people than you expect are also negatively affected. And with the COVID-19 situation ongoing for the foreseeable future, alongside confirmation that we are in another recession, the furlough scheme winding down and the likelihood of redundancies increasing, this situation is going to become all too familiar to huge numbers of people.
It’s important to realise that there is no shame in debt, that you’re not alone in it, and (mostly importantly) that it’s not a failure on your part. Realising these things is the first step in your journey to stopping debt overwhelming yourself. Read our guide about where to find free, confidential debt advice to seek professional help.
If you’ve been made redundant as a result of COVID-19, you might be worried about what happens next. How long will your redundancy payout last? Should you use this time to upskill? How should you go about looking for a new job in a time of social distancing and recurrent local lockdowns?
In MoneyMagpie’s new redundancy eBook, you’ll find a guide to the redundancy process, plus an action plan that will be helpful if you’ve found yourself in debt at the same time. The eBook also includes the difference between voluntary and compulsory redundancy, the financial support that you could be entitled to, and even some suggestions on how you could make extra money. Find out more and download your copy here.
Yes, a basic one – but one that’s important, nonetheless. If you’ve been in a well paid job, maybe you haven’t had to budget too much. Maybe those credit card bills were easy to pay back every month, without many constraints being put on your finances.
Of course, if you’ve now been made redundant and are looking at having no income for a period of time, this may no longer be the case. The first step is to look at your regular outgoings, and consider cutting back on things that aren’t completely essential. Prioritise your bills and rent/mortgage, but also any debts that you have. At the very least, knowing exactly the amount that you need to cover your family’s expenses each month will get you on the front foot, avoiding you sliding further into debt and/or finding yourself becoming overwhelmed.
If you’ve got debts in a few different places, it can be hard to know which you should pay off first. The key to this, though, is knowing which debts are costing you the most money. You might be surprised to find that it’s not always the highest debt. In fact, a debt that initially seems lower might be costing you more due to the amount of interest that you could be paying on it.
So, how should you go about this? First, work out how much each debt is costing you in terms of interest or other charges. Then list them, in descending order. You should pay off the most expensive debt first (required minimum payments aside, of course). As you make extra payments on the most expensive debt, you’ll reduce the amount it’s costing you. When this debt is paid off, move on to the second most expensive – and so on. It might seem counter intuitive to not pay off the largest debt first, but this is the method that will cost you the least in the long-term.
You might find that a consolidation loan will help reduce your interest payments and make it easier to control your budget. They’re not for everyone though, so read our guide on consolidation loans before deciding to opt for one.
If you’ve been made redundant from a stable job, your first instinct might be to jump right back into a permanent contract with an organisation immediately. With redundancies likely to increase in the coming months as we start to feel the full economic impact of COVID-19, this will become a familiar story.
There’s a chance that full-time, permanent roles might be harder to come by in the near future, though. You should be prepared for that to be the case, and to consider taking on shorter projects or contract roles. Contracts such as these can give you a stable income for a few weeks, months or a year, often with the same stability and benefits that you’d find in a full-time role. As the economy suffers, don’t dismiss short-term work. Look for recruiters in your industry that specialise, and make sure you’re on their books and that they’re working on your behalf.
As we’ve mentioned, discussing debt is something that we should all be doing more openly. Keeping quiet about it is a recipe to finding ourselves becoming overwhelmed. If you’re finding yourself worrying, or if you’d just like to speak to an expert, you should consider seeking out some free debt advice. We’ve written about this in our free debt advice guide. Seeking expert help is the first way to stop debt overwhelming you – we promise!
Have you successfully dealt with debt and come out of the other side? Maybe you’re struggling with debt and want to discuss your experience or get advice from other Magpies? Either way, we’d love to hear from you. Chat to us over on the forums.
There’s a bunch of info on MoneyMagpie to help you reduce your debts, tackle redundancy, and start saving your emergency fund. Read these articles next!