What will it take to have a successful debt relief journey? If you are one of the many Americans who are struggling with debt, then you have no choice but to embark on this journey.
According to reports, there is an increasing number of accounts that have entered into a “financial hardship” status. If you didn’t know, entering into this status means you have acknowledged that you cannot pay your debts like you used to. You are asking the bank, creditor, or lender to allow you to change your payment terms so it becomes more affordable. You either pay a lower amount, just the interest rate, or not pay anything at all. This will be your arrangement while you are still under a “financial hardship” status.
If you think that you need to enter into this status, it just shows how bad your situation has gotten. You need to find a way to ensure that your debt relief journey will be a successful one. To do that, there’s one thing that you need to do – you have to learn more about what you will go through while you are trying to get out of debt.
6 emotional stages of your debt relief journey
Some people make the mistake of focusing too much on the financial aspect of their debt relief journey. While it is very important, it’s not the only thing that you should focus on if you want to improve your debt situation. You should also consider the emotional journey that you have to go through as you pay off your debts.
Because your debt has a huge effect on your emotions as well. You have to realize that once your emotions are involved, it will also affect your mental abilities. This is why debt can lead to a lot of stress. It can really feel like a huge burden for you. In fact, one survey revealed that more than 7 out of 10 of the respondents admitted that their finances were the number cause of stress in their lives.
So what can you do to make yourself strong enough to deal with the emotional stress that comes with your debts?
You need to understand the emotional stages that you will go through as you embark on your debt relief journey. There are 6 stages that you will go through. If you know where you are at the moment, you would know how to act and get through to the next stage.
Now let’s get to the 6 stages of your journey towards debt freedom.
If you are reading this, it’s possible that you have gone past this stage. But nevertheless, let’s try to understand what happens during this stage.
The first stage is when you are unaware that you have a problem with debt. You don’t know that you are already overspending and that you are maxing out your cards. This is why it’s important for you to keep a monthly budget. You should track everything that you spend and make sure that you are only spending on things that are necessary. If you know where your money goes, it should be easy for you to make decisions that will never compromise your financial position.
Once you have gone past the stage of ignorance, the next stage is denial. You don’t believe that you are in debt or having financial problems. Sometimes, people still refuse to believe even if they are shown the facts. This is just our pride getting in the way of us admitting that we did something wrong. Most of the time, people in this stage are easily offended. So if you find money a sensitive topic, you might be in this stage.
If you are fortunate, you might skip this stage. There are some people who go from ignorance to the next stage – recognizing that you do have a problem with your debts.
After getting past the denial stage, you will go through resistance. In this stage, you are beginning to realize that you do have a problem. But unfortunately, you still don’t know what to do about it. The result is you resisting the proper solutions that would have made your life easier. In your mind, you are resisting help because you know that this is your problem and it’s your job to fix it.
While this mentality is not really bad, you should be open to other options that will help you get out of debt. If your options are confusing, do your research. Or ask someone you trust. There’s no shame in making mistakes as long as you are doing your best to correct what you did wrong.
Stop resisting the options that will make your debt relief journey easier.
The fourth stage is called the dismissive stage. It’s a bit like resisting the options and trying to do things on your own. Now, you are just dismissing the dangers of your debt predicament. You think that everything will work out and that you’ll survive this. While the mindset is admirable, the lack of plans and action might backfire on you.
Unless you take your debt situation seriously, you will not be aggressive in trying to get rid of it. Without the right attitude, you might fail in your attempts to get out of debt.
To get out of this stage, you need to be reminded that acting on your mindset is very important. No matter how difficult it is, there’s a way out and you can complete your debt relief journey.
This is the stage where things will finally start to move forward. You are finally accepting that your debts are your own responsibility. You landed in it so you have to get yourself out.
When you get to this stage, you have to be careful. While you are ready to accept your situation, you have to be prepared to face your fears as well. This is the time when you’ll get the courage to really look at your situation and assess the damage that debt brought upon your finances. What you’ll find might cause you to feel fear because of what you have to overcome.
But that’s okay. Take that fear and use it to challenge and motivate yourself to get out of debt.
The final stage of your debt relief journey is application. This is the time for you to be proactive in completing your debt relief efforts. You can choose to do this on your own. Or you can get the help of someone who is more capable and knowledgeable. Whatever option you choose, make sure you start with a plan. This will be your guide as you try to get out of your tough debt situation. It will also help you stay on top of the whole situation. That way, you can monitor the progress of your debt payments. If there is a need to make a decision, you can act quickly to make informed choices.
Tips to ensure you’re debt relief journey is a success
Now that you understand the 6 stages of your debt relief journey, where do you think you stand right now? Identifying where you are will help you determine how to act. When you act accordingly, it will be easier for you to progress to the next stage.
While you are trying to pay off your debts, there are three important rules that will help make things easier.
Have a plan
Start by having a plan to get out of debt. You need to make sure that you are not just blindly going into all of this. You have to create an actionable and reasonable plan that will allow you to maximize your finances to support your debt relief journey. This plan will be your guide from start to finish. It will tell you what expenses you need to sacrifice and the amount you have to set aside to meet your debt payments. More than that, it will also tell you when all of your sacrifices will end. Sometimes, people just need an organized plan that will tell them when their journey will end. It motivates them to keep going.
Commit to the plan
Once you have your plan, it’s important to commit to it. If you can stick to the plan, you’ll be in a better position to complete it. This means you have to make it a priority. If you get a side gig that will increase your monthly income, don’t use the extra money to buy new clothes or to go on a vacation. Use it to pay off your debts. That is how you commit to it. In case there is an expense that you need to pay, make sure it’s really necessary. Don’t compromise your debt payments unless it’s absolutely needed.
Reassess the plan
Finally, you have to be ready to reassess your plans every now and then. Getting out of debt is not an overnight thing. You should expect your debt relief journey to be quite lengthy. That means a lot of things can happen from the moment you started your payments and until the last one. Your lifestyle can change and that means your expenses will change as well. That can affect your ability to follow the plan that you created. This is why you have to make sure you will reassess the plan to ensure that it is still aligned with your current financial situation.