Debt can be extremely stressful and can often lead to feelings of anxiety and depression. It is very easy to feel stuck and helpless when your finances are in trouble. However according to Scott Rick, an Assistant Professor of Marketing at the University of Michigan’s Ross School of Business, you can restore order to your finances and ease the anxiety and depression with the following advice:
1. Face the reality of you situation - This isn’t easy as its upsetting to confront something that feels terrifying but confronting it is the way through. For example do you avoid opening opening up your credit card bills? Do you only glance fleetingly at the charges? Do you avoiding looking closely at how much interest you’re paying? If you answered yes to any of the above, it’s because you’re depressed about how you much debt you acquired in the past, and anxious about how you’ll ever pay it off in the future. But if you want to put an end to the depression, anxiety, you have to closely examine all of those bills.
2. Choose the debt- elimination method that causes you the least amount of anxiety - Once you understand how much you owe and to whom, it’s time to choose between one of two repayment methods:
Snowball Method: Making the minimum payments on all of your debts, then throwing any remaining money towards your smallest balance
Debt Stacking: Making the minimum payments on all of your debts, then throwing any remaining money towards the debt that carries the highest interest rate
From a purely financial standpoint, debt stacking is your best bet because it saves you the most money in interest payments.
His final tip is to be mindful the day you are clear of debt it can be tempting to go out and enjoy some retail therapy! But be careful so stay within your means and not to get pulled back into the cycle of debt and anxiety all over again.