Ways That Debt Reduction Improves Psychological Wellbeing

Financial trouble is one of the leading causes of unhappiness and stress across the board. While debt might night automatically mean troubles, having large amounts of debt and no coping skills or strategies in place to handle said debt can definitely wreak havoc on your mental health. If this sounds all too familiar here are a few ways that you can ease your mind when you’re drowning in debt, and improve your psychological wellbeing.

Loan Refinancing

Student loans are among some of the most common loans around, and thus, a very common cause of debt. If your loan payments are feeling too excessive and you worry that you are in danger of defaulting or having to rearrange your budget entirely just to make those payments, consider looking into refinancing. You can refinance your existing student loans into a new loan with a private lender. When you refinance student loans you are reconfiguring how you pay back the balance which can mean lower interest rates, or lower monthly payments, or even both. 

The Snowball Method

Here you will be ranking your debt balances from smallest to largest, and chipping away at them one by one, to eventually have zero balances across the board. You will pay off the smallest balances first then move on the larger ones. The snowball piece of the puzzle refers to the momentum that you are building as you pay off each outstanding balance. This can help you remember what makes you happy in life because you will have a series of victories along the way instead of working towards one final destination that might be years down the road. 

Debt Consolidation

Here you are going to view your total debts as one balance, instead of broken up piece by piece, turn them into one, large, and new, loan, then pay one monthly payment to cover everything. For example, if you have a car loan, credit card debt, and a private loan, all with outstanding balances, instead of paying each lender every month, once your debt is consolidated you will simply pay one bill. Be sure to shop around for lenders because you will want to ensure that your interest rate and loan terms are favorable and don’t end up costing you more over time than you would have originally been paying. 

Automatic Payment Deduction 

This is a great out-of-sight, out of mind, option to repay your debt, however, it does take discipline. You can set your reoccurring bills up to be automatically deducted from your account so that you do not have to worry about paying them on time and in full. You do, however, have to know how much needs to be in your account, and on what dates, so that you do not overdraft your account, or default on payment because you didn’t have enough of a balance to cover the automatic withdrawals. 

Mental Health Improvements

The relationship between debt and depression is layered. The first, and most important, step is to realize that you can get out from underneath debt if you work hard, and diligently to do so. Ignoring your debt is going to cripple you and re-route your efforts entirely. You can expect better mental clarity, improved time management, and overall balance, all to stem from having focused on reducing your debt.