Geraldine Carroll, co-founder of Winter Wisdom - a personal finance and success blog, looks at some practical ways of paying back debt and coping with the stress that comes with it.
Now that Christmas is over for another year, it’s time to pack away the decorations and send the wrapping paper and cards off to the recycle centre. However, if you’ve borrowed money to make ends meet this holiday season, you might find the resulting debt a bit trickier to offload. Owing money presents us with two major challenges — the practicalities of actually paying it back, and the psychological pressure that goes with that. In this article, I’ll attempt to address them both.
Your main focus with any debt should be reducing the amount of interest you have to pay. If you’ve borrowed on a credit card, you can try to transfer your balance onto a card with a lower interest rate. Creditcard.ie is a great comparison site where you can find plenty of zero per cent balance transfer cards with interest-free periods running from six months up to a year. You can save a lot of money and clear the debt sooner if you manage to rid yourself of some of the interest payable. There are two things to remember here though: (1) check first to see that there are no restrictions on your current credit card agreement preventing you from transferring your balance and (2) find out whether the new provider charges a fee.
The same tactic can work for other credit arrangements too. If you took out a high-interest loan or overdraft, look to your local Credit Union to see if they would be prepared to take over the debt (Credit Union interest rates tend to be lower in comparison to other financial institutions). You could also meet with your lenders to try and renegotiate the interest rate. If you can convince them that the only way you can clear the debt is if they make the rate more affordable, they might well agree to accommodate your request.
In any case it’s best to try and get small debts paid off quickly, before they start accumulating interest and affecting your ability to keep on top of things. You can free up cash to throw at a short-term loan by arranging to temporarily make minimum payments on your larger ongoing debts. If you need help negotiating with your lenders then the Money Advice and Budgeting Service (mabs.ie) should be your first port of call. It’s a free confidential service funded by the Citizens Advice Board with offices located throughout the country. They provide budgeting advice and mediate on behalf of borrowers to try and bring their debts under control.
Of course, that’s only the practical side of the equation. The mental and emotional pressures of debt can cause all kinds of other issues ranging from strained relationships to major health concerns. The good cheer that Christmas brings can soon go out the window when faced with the harsh realities of January. At a time when our immune system is already struggling to fight off the usual winter bugs, the last thing we want to have to cope with are the physical symptoms of debt-related stress. These can manifest themselves as sleep and digestive problems, high blood pressure and lack of concentration resulting in accidents, to name but a few. Therefore, it’s a good idea to try and actively reduce your stress to manageable levels.
You can ease the pressure a little just by putting a plan in place to deal with your debts, but there are further measures you can take to keep the ball rolling. First, try to eat as healthily as possible and get some form of exercise. Clean food and physical activity have been shown to have a reducing effect on levels of stress and anxiety in the body. You can also try drinking calming teas and performing simple meditative techniques. If you feel a bout of stress coming on, sipping a cup of green tea or taking a few minutes to close your eyes and focus on your breathing can carry you through. However, if it’s all becoming too much you ‘must’ talk to someone. I can’t emphasise enough how important it is to get your worries off your chest and seek friendly advice. Try your family and friends first — you’ll probably find they’re more than willing to be supportive. If this isn’t possible or you would prefer talking to a stranger, try contacting a support group such as The Samaritans (samaritans.org), Pieta House (pieta.ie) or Aware (aware.ie). And of course, Winter Wisdom (winterwisdom.com) is there as well if you’re looking for inspiration and a positive approach to tackling all of the challenges that a new year brings!
www.winterwisdom.com for more advice and information.