10 Steps for Dealing with Financial Stress

2017-04-24

Dealing with financial stress can be overwhelming, but with a systematic approach, it becomes manageable. Financial stress often arises from various factors such as debt, unexpected expenses, or job instability, and it can impact both mental and physical well-being. By implementing practical steps and strategies, individuals can regain control of their finances and alleviate stress. By addressing these issues head-on and seeking support when needed, individuals can pave the way toward financial stability and peace of mind. Texas Bay offers 10 tips to help alleviate this stress.

1. Identify the Top Sources of Financial Stress

Identify your biggest financial stressor. Write down your biggest money challenges, be it debt or savings or making your bills. Keep the list short and revisit it every 3-6 months. Some examples:

Debt overload
Job loss
Unexpected expenses
Healthcare costs
Retirement concerns

2. Create a Monthly Budget

If you haven’t yet, create a budget. It is a powerful tool to manage your finances. Start with your net income (what you bring home). List all your expenses, including rent/mortgage, fuel/toll expenses, electricity, groceries, and even that daily cup of Starbucks. Set up recurring payments for your bills so you don’t incur late fees.

HINT: Use Texas Bay’s Online Budgeting Tool.

3. Make the Most of Your Income

Small changes add up. You may not be able to cut $100 per month, but cutting $20 from 5 expenses is usually doable. Identify wants vs. needs. Cut from your wants list first. From your needs list, call your providers and ask for discounts. Even if it’s temporary, it can help you catch up. Adjusting your thermostat by 7º-10º when you’re out of the house and 3º-5º while you’re sleeping can save you money. Examine your spending habits and find ways to save on small, daily expenses.

HINT: Use Texas Bay’s Spend Less Calculator to see how small adjustments can make a big difference.

4. Build an Emergency Fund

This is one of the best stress relievers of them all! This is your safety net for when something happens and you need financial assistance. Better your own money than borrowing it. Target 3 months’ worth of bills to be covered, then continue to add. The ideal is to have 6-12 months’ worth covered.

HINT: Set up an automatic deposit into your savings account. Even $25 per pay period can add up. Use Texas Bay’s Emergency Savings Calculator to create a plan.

5. Reduce Your Credit Card Debt

List all your cards, along with the current interest rate, and make note of any annual fees. Identify how much you can pay on your credit cards each month and pay more toward the one with the highest interest rate until you feel it’s under control. Then target the next highest rate. Get rid of the annual fee cards.

HINT: Texas Bay offers a Credit Card Payoff Calculator. For a look at your overall debt status, use the Managing Debt Calculator.

6. Talk to Your Lenders

Don’t be afraid to call and ask for help. Be honest and transparent about your financial difficulties and explain why you're struggling to make payments. Most lenders offer programs, such as skip-a-pay, to help during trying times.

Negotiate terms – During your conversation with your lenders, be prepared to negotiate new terms for your debts. This could include lowering your interest rates, extending your repayment period, or temporarily suspending payments altogether. Explain what you can realistically afford to pay and ask for their understanding and cooperation.
Document everything – Keep detailed records of all communication with your lenders, including the names of representatives you speak with, the date and time of the conversation, and any agreements or arrangements made. This will help ensure that everyone is on the same page and provide evidence in case of any disputes later on.
Follow through – Once you've reached an agreement with your lenders, make sure to follow through on your end of the deal. Stick to the new payment plan or terms that have been agreed upon and continue to communicate with your lenders if you encounter any further difficulties.

7. Create Extra Sources of Income

Talk with your employer about more hours and possibly overtime. If you haven’t had a raise in over a year, don’t be afraid to ask for one. Sell items you no longer need. If you can, take on a part-time job, do so, even if temporarily. A little additional income can help.

8. Get Help with a Financial Review

Texas Bay offers FREE Financial Wellness Checks. During this review, we will go through your finances, discuss your goals, and help you develop a plan to achieve those goals.

9. Track Your Progress

From all the above, you will have some goals and plans in place. It’s important to track these and celebrate reaching milestones, such as paying off a credit card or hitting a certain balance in your Emergency Fund.

10. Take Care of Yourself

Financial stress can cause overall stress-related symptoms. It’s important to identify ways to relieve overall stress in your life, such as exercise, meditation, or even talking with someone.

We invite you to schedule an appointment for a FREE Financial Wellness Check, where we’ll go through your current situation and help you create a plan to improve it. Schedule an appointment today!

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