Help, I’m in Debt:

Strategies to Relieve Debt Stress

Debt is stressing me out!

If overwhelming debt is causing you stress, you are not alone. Millions of Americans are suffering from anxiety and depression because they have difficulty paying their financial obligations. If you are pulling your hair and thinking, “Help, I'm in debt!” Keep reading for strategies to relieve debt stress.

Whatever the cause of the debt – be it over-spending, salary reduction, or emergency expenses such as medical bills – the action you take to beat the “bill blues” is the same.

Debt stress relief tips

1. Confront the problem

Rather than hiding from bill collectors, regain control by answering the calls. Be calm and rational. Understand the Fair Debt Collections Practices Act, a law that protects your rights as a consumer. Write to your creditors to explain your situation. Include what led to the problem (even if it was your “fault”) and how you plan to fix it.

2. Fight inertia.

Doing nothing, while easier than taking action, will get you nowhere. Get up and get out, but resist the urge to shop if your spending is out of hand. If you are already loaded down with debt, and keep receiving offers for more credit cards in the mail, destroy them and throw them away. Consider removing your name from promotional lists by visiting or by calling 888-5-OPTOUT (888-567-8688).

3. Prioritize your spending.

Chances are, there are some expenses you can reduce or cut out that can immediately relieve some of the pressure. Review your spending plan and eliminate expenses that aren’t absolutely essential. Prioritize according to necessity – basic needs such as food, housing, utilities and children’s expenses come first, and everything else after those.

4. Talk about it.

If you are depressed about money problems, you may feel alone. Yet the moment you begin to discuss it, you will find you are not only in immense company, but that discussing it can make you feel a lot better. If you feel your “debting” is compulsive, you may want to talk to the professionals at Debtors Anonymous. Log on to or call 800-421-2383 to find a meeting near you.

3. Put it in perspective.

Do you have your health? The love and support from friends and family? Focus on the good things that are happening in your life. It’s hard, but you are going to need to be optimistic to make positive changes.

Debt payoff strategies

Carrying consumer debt can weigh heavily on our minds, reduce our freedom of choice, and cost us a ton of money in interest. Assuming you’ve got more than one debt to pay off, which method of debt repayment should you use?

The Snowball Method

The snowball method works as follows:

  • Rank your loans from smallest balance to largest balance.

  • Pay above the minimum on the loan with the smallest balance. Pay the minimum balance on all your other loans.

  • When the smallest debt is paid off, take everything you were putting toward the account and add it to the payment for the loan with the next lowest balance.

  • Repeat the process until you’ve paid all debts.

The Avalanche Method

The avalanche method works as follows:

  • Rank your loans from highest interest rate to lowest interest rate.

  • Pay above the minimum balance on the loan with the highest interest rate. Pay the minimum balance on all your other loans.

  • When the debt with the highest interest is paid off, take everything you were putting toward the account and add it to the payment for the loan with the next highest interest rate.

  • Repeat the process until you’ve paid all debts.

Debt Consolidation

Another option is debt consolidation. If you have multiple credit card or other debt balances with various interest rates, for some it may be a good strategy to consolidate it. Consolidating with a debt consolidation loan or personal loan creates one balance with one interest rate that you are focused on paying off each month. 

How to begin debt consolidation:

  • List all of your debt and interest rates, add up the total debt

  • Research loan options and rates 

  • Check your credit score and see what you may qualify for

  • Decide which debt, if not all makes sense to consolidate

  • Apply for loan and pay off all debt

  • Consistently make monthly payments and do not incur more debt

Which Method Wins Out?

As you can see from above, both the snowball and avalanche method are similar in that they have you focus on a particular account while paying the minimum on all others. And when you’ve paid off one account, you redirect whatever money you allocated for it to the next one. But when you do the math, the avalanche method usually will get you out of debt faster. That’s because you reduce the amount of interest you pay on the loan. For this reason, the bulk of money gurus tell people to attack high-interest accounts first.

But here’s the catch. For some individuals, it’s incredibly hard to stay motivated to stick to a debt repayment plan because they don’t feel the gratification that comes with being done with accounts. There’s some solid science behind this. Dopamine is a natural hormone that not only keeps people looking for new information and answers (motivation), it also helps them feel happy. The brain releases dopamine in anticipation of reward. So in theory, having multiple zero balances to look forward to along the way can make it easier to stick to a debt repayment plan.

Debt consolidation works if you do the research and get a significantly lower interest rate, are dedicated to making monthly payments on time, and committed to not incurring more debt (like continuing to use credit cards). 

Ultimately, which technique you use is your personal decision. Just be honest about your situation and habits and pick the strategy with which you feel most comfortable.

NCD CU is here to help! We provide financial counseling and loan solutions to help those who are struggling with debt or want to fix their credit. Give us a call at (718) 328-3930 or visit our loan solutions page.

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