How to Manage Financial Stress and Anxiety

07.07.2021 by Harry //

To manage financial stress and anxiety, there are several things you can do to take care of yourself and your emotions.

Using your money wisely and taking it day by day is a good start, finding ways that you can consolidate your financial burdens, and start taking care of them little by little.

It may sound easier said than done but, you’ll be back to yourself in no time.

What Causes Financial Stress?

Many things can cause financial stress. Sometimes unexpected things happen that take us by surprise and other times we just don’t make enough to make ends meet. In some cases, you may lose your job or suffer from an injury that keeps you from working.

Whatever the case, the inability to maintain your necessities can cause stress. This stress leads to anxiety, making you feel nervous and anxious. Anxiety and stress can affect everything in your life, making you feel uneasy, unconfident, and restless.

Over time, if you don’t address these issues, you’ll have bigger issues and could develop panic attacks and general anxiety disorder.

6 Ways to Combat Financial Anxiety and Stress

When you start to feel anxious about your paychecks, you may be suffering from financial stress. A good place to start is to assess your financial situation, looking for the root cause.

Getting to the bottom of what’s causing your anxiety is a good way to start taking care of it, getting your life back, and taking charge of your emotions. You can also tackle your financial stress with these 6 tips.

1. Stay Positive

First and foremost, you should stay positive. We are not perfect and sometimes things happen that are out of our control. Admitting that your finances are in turmoil, you can start taking the first steps to fix them.

Try and keep a positive mindset and realize that you just have to take things day by day. Your financial stresses won’t be around forever, and you can start working on them.

2. Start with the Most Important

When tackling a debt, start with the most important first. Whatever collects the most interest or weighs you down the most is where you should start, jumping on a payment plan when you can.

You can start by taking a look at your credit report and making phone calls if you need to ask questions about totals.

Once you have that in place, start taking steps to plan how you’re going to pay.

3. Be Real

When you have financial stress, the last thing you want to do is be unrealistic. Don’t be afraid to face the total that you owe, coming to terms with your debt. In this way, you can truly see what you have to work on and avoid thinking you owe much less than you do.

If you need to, work with an attorney, a financial advisor, or even a friend to talk it out and make sense of it all.

4. Use Your Money Wisely

Just because you’ve come to terms with the amount you owe doesn’t mean that you should start to blow your money. It means quite the opposite. Take care of your money and don’t spend it on unnecessary things.

It can help to get on a strict budget, one where you know exactly where your money is going. Try writing out your monthly income and setting aside the amount you need for essentials like food, gas, and utilities.

5. Take Small Steps to Success

When you’re trying to relieve your financial stress and anxiety, try and keep from overwhelming yourself. That means taking small steps instead of overthinking and trying to tackle too much at a time.

When you take small steps, you start to realize that you are hitting smaller milestones that get you closer to your final goal. In the end, you can use those small successes to build yourself up and put a dent in your debts to start feeling relieved fast.

6. Be Honest with Yourself

There is nothing worse than underestimating the amount of financial burden you feel. Not being honest with yourself could lead to more stress as you start to realize how far in debt you are.

Start by finding out what you owe and then, take steps to eliminate it.

How to Tackle Financial Stress

Dealing with financial stress is not easy but, with the right attitude and small steps, you can get yourself on the right road to becoming debt-free and more at ease with yourself.

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If you have financial stress, here are three things to look into.

1. Consolidation

Consolidation is one loan that you can use to combine all of your debts into one place. Most of the time, those who have debts benefit from consolidation, able to reduce the interest and pay only one payment per month.

2. Bankruptcy

Bankruptcy is another option but, it comes with a few consequences. Your credit will show bankruptcies for up to 7 years, something that could affect your ability to buy things like a house or vehicle. Before filing bankruptcy, it’s best to check all of your options and save that for last.

There’s No Better Day Than Today

Sometimes, it’s easy to put off paying for your debts. Instead of waiting, start taking control of your finances to reduce your stress and anxieties.

There is no better day than today to start taking control over your life and start living more freely. Remember to check your debts, be honest with yourself, and find options that work for you.

Help is out there and there are more options than you might think. From attorneys to credit cards, you have a number to choose from. Whether it’s contracting an attorney or creating a budget yourself, you can do it, and your start living a worry-free and debt-free life.

Image credit:[KAROLINA GRABOWSKA]

When to Refinance Student Loans

06.29.2021 by Harry //

Refinancing student loans can be a great idea, but it is not the best option for everyone. Refinancing student loans allows you to pay a lower interest rate while merging your payments into one.

You should not refinance your loans if you need to take advantage of federal student loan protections.

It may be a good idea to refinance student loans if you are a private student loan borrower, but it is generally not a good idea if you are a federal borrower.

This article describes refinancing student loans, when it is a good idea, and the pros and cons of refinancing student loans.

What Does It Mean to Refinance Student Loans?

To refinance student loans is to take out a new loan that replaces an old loan (or more than one loan).

By taking out a new loan, your old loans will be paid off, but you still have to make payments towards your new loans.

The new loan will give you new terms, a new lender (sometimes), and most importantly, a new interest rate.

Should I Refinance My Student Loans?

When deciding whether or not to refinance student loans, take into account the following factors:

Your current loan interest rate. High-interest private student loans can be a challenge to pay off. If you want to lower your interest rates, and thus lower your monthly payments and your total loan amount, you should consider refinancing.
How much money you would save. You should only refinance if it allows you to save money on your interest rate, monthly payments, and overall loan payment.
Your credit score. A solid credit score will make you more eligible for student loan refinancing. It should at least be above 670. The higher your credit score, the more likely lenders will work with you and offer you lower rates. You also need a solid credit score because new credit applications will trigger a hard credit inquiry, which will limit your ability to apply for other types of credit such as credit cards, auto loans, and mortgages.
If you need a co-signer. Some lenders will allow you to have a co-signer. Having a co-signer can help you qualify for student loan refinancing. It is a good idea to opt for a loan that will release the co-signer after a certain number of on-time payments.
Your payment history. Lenders will look at your payment history. This is the determining factor in your credit score. Lenders may not allow you to take out a new loan if you are having trouble affording your current student loans.

Who Qualifies to Refinance Student Loans?

To qualify to refinance your student loans, you must have a good credit score. A credit score is the determining factor to get approved for student loan refinancing.

Lenders need to know how likely you are to repay your loans, and they get this information from your credit score.

You also need a steady income to refinance student loans. When you take out a loan, you must prove you earn enough money to repay it. If you have a reliable income, you are showing that you will eventually repay your loan and that you won’t fall behind on payments, even if financial emergencies happen.

To qualify for student loan refinancing, you must also have a low debt-to-income ratio.

A debt-to-income ratio represents how much debt you have compared to how much money you earn. You want this ratio to be low, so lenders trust that you can comfortably pay off the loan.

Private Student Loans vs. Federal Student Loans

The majority of borrowers are federal student loan borrowers – about 92% of borrowers. Private student loan borrowers make up the rest.

When it comes to refinancing your student loans, which type of borrower you are will determine whether or not it is a good idea.

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Student Loan Refinancing Guide

Both federal and private student loan borrowers can refinance their loans, but federal loan borrowers have payments on freeze right now because of the pandemic. Federal loan borrowers would lose this benefit if they refinanced.

Until September 2021, federal student loan borrowers are not charged monthly payments and their interest rate is set to zero. Since the only reason to refinance is to get lower interest rates, it is not a good idea for federal borrowers to refinance at this time.

Federal loans also come with other benefits such as income-driven repayment plans that can lower monthly payments and Public Service Loan Forgiveness for working at non-profits, government agencies, etc.

If you refinance federal loans, you lose these benefits. Even when payments resume for federal loans, you should only refinance federal loans if you don’t think you will ever use the other benefits offered.

If you believe your income will be stable throughout your loan payments and you won’t qualify to be forgiven, then you can refinance your federal student loans.

Another aspect to consider when refinancing federal loans is President Biden’s plan to cancel student loan debt.

While no plan has been passed yet, federal student loans could be forgiven at least in part. If you refinance your loans, you will no longer be eligible for forgiveness.

On the other side, it is a good idea for private loan borrowers to refinance right now to take advantage of low interest rates. If you have taken out private student loans and are paying too high of an interest rate, it may be a good time to take advantage of low interest rates from private lenders.

Private student loan borrowers who want to refinance should choose a lender that offers fixed APRs. This will lock in your low interest rate.

Refinancing student loans may help you get a lower interest rate and reduce your monthly payments. However, it may not be the best way to get out of debt. Refinancing is not the best idea for every borrower.

WHEN TO REFINANCE YOUR STUDENT LOANS:

You should refinance if you want to pay off your loan sooner. You can pay off your loans quicker by lowering your interest rates.

You should consider refinancing if you are not making progress in paying off your loans. If you are struggling to keep up with monthly payments and interest, refinancing can help you start to make more progress each month.

You should only refinance your student loans if your income and credit are good. These factors are necessary to qualify for student loan refinancing and will help you qualify for lower interest rates.

Another great reason to refinance is that market interest rates are at a historic low. Private student loan borrowers can take advantage of low market interest rates by refinancing

Image credit:[KAROLINA GRABOWSKA]

How to Plan Long-Term Financial Goals

06.07.2021 by Harry //

Being financially stable in life can open up opportunities and allow you to live your life free of stress. Although many people find it easy to plan for short-term financial goals, such as saving up to buy a new TV, it can be a lot more difficult to think about goals and plans for the long-term.

Typically, long-term goals are seen as achievements anywhere between 5-10 years from the present moment. An example of these types of goals would be saving up for a college education or buying a new home.

Basically, think of long-term goals as more expensive and more serious purchases (or investments).

By having long-term financial goals you will also find that how you view money in the now changes.

The best place to start is by thinking about where you want to be in five years’ time. Where do you see yourself? Will you still be working? Retired? Buying a house? Raising children? Knowing the answer to this question will help you to better understand your situation.

Work Out Your Living Expenses

Once you know what your financial situation will be in the long term, you should start to think about how much you are going to need.

If you are going to need a large sum of money, then you are going to have to put a lot of money aside now. If you plan to retire and live cheaply then you can save less. You should set realistic goals that are personal to you and your lifestyle.

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For example, the average amount that people are recommended to save for retirement is 10%-15% of their income. This should give you a ballpark figure to know how you compare to the average person.

If you have any debts that need to be paid off then you should consider them, too. They are essential expenses and you should think of them as such.

How Do I Achieve My Long-Term Financial Goals?

One of the best ways to make sure that you keep on track for achieving your long-term financial goals is to have motivation behind reaching them. It is all well and good to say “I want to pay off my debt”, but if that is the only motivation, your progress will decrease quickly and dramatically.

Instead, think about what else this can achieve for you. For example, if you pay off your debt you can stop paying interest. This means that you can have more money to spend on clothes, furniture, days out, etc. You can start saving up for a holiday or a wedding.

One of the easiest ways to do this is to enlist the help of a visual tool, such as a graphic organizer.

Essentially, they work the same way as a mind map. You write your major long-term goal in the middle (e.g. I want to pay off my debt) and then you sit and think about all the other ways that this goal will have an impact on your life.

We can become unmotivated when things are too far in the future—that is why a lot of people struggle to save money in the long run. We find it easier to think of things we can buy if we save up a few hundred dollars, but saving up to buy a house in 10 years seems impossible, or not important enough right now at this moment.

Create Smaller Goals to Get You There

By creating smaller and more manageable steps, you can connect the here and now to the future.

By creating a series of smaller goals you will find that you are led to your long-term goals without getting distracted or sidetracked.

Learn to Prioritize Your Goals

It is unlikely that most of us will have just one long-term financial goal to work toward. Often, we will want to buy a house, have children, send those children to college, and then retire. All of these desires can be costly and expensive endeavors. That means that you can easily become confused or misled when trying to reach these goals.

The best way to stay focused as life becomes chaotic is to know which ones are the most important. For example, if home prices in your area are not ideal, prioritize saving for the kid’s college fund.

Consider Your Other Savings

Not only should you consider what are the big goals that you need to save for, but you should also always allocate a little extra money to an emergency fund. This way if there are any unexpected problems in life, even as minor as the boiler breaking down or as major as a pandemic making you redundant, you will not need to touch your savings for your goal.

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Depending on how major or minor the unexpected occurrence, your hard work could be wiped out. For example, if you have spent years saving for a house deposit and then become seriously ill, you could find yourself needing to dip into your house deposit savings to cover your medical expenses.

However, if you already have a money pot of savings set aside for emergencies then this means that you are more likely not to ruin your hard work.

You can still reach your long-term financial goals without having to worry about the unexpected.

The best way to do this is to visually see everything. Many people find spreadsheets incredibly helpful. They can write down what the goal is, e.g. wiping out their debt, and then write down the amount of money that they have left after general expenses each month.

They can then allocate a proportion of this money to the “wiping out debt” account. This gives you a clearer picture of the exact time frame that you are looking at and exactly how much money you will need to do so.

Conclusion

Whatever your long-term financial goals, you should always consider how realistic they are. Once you have an idea of how much money you will need and how much time it will take, you can start to budget accordingly.

Writing down a priority list to focus on the most efficient goal is also an easy way to avoid distractions as you save.

This reinforces the idea that what you do now matters in the future. If you need to write down all of the positives that achieving your long-term goals will give you. This way you can ensure that they seem more real and achievable.

Image credit: [KAROLINA GRABOWSKA]