Less debt, less stress: How to cut costs and concerns

by Aaron Burns

The old saying, “Money can’t buy happiness” may have some merit. But not having enough money buys plenty of stress.

Wells Fargo economist Michael Brown said a major factor in consumer spending – and the debt it entails – is the hope that the nation can recover from its economic downturn.

“The struggles of the federal government, in particular the growth in expenditures and only marginal growth in federal revenues (in 2012 compared to 2011), stems from the new slower pace of economic growth,” Brown said. “It is the absence of confidence among consumers and businesses that has kept a lid on economic growth and in turn generated problems with the federal government.”

A big cause of stress comes from people borrowing money they can’t pay back.

“If headlines are dominated by slow economic and job growth, consumers become more cautious about the way they spend,” Brown said. “In addition, individuals feel less confident to invest and therefore one’s ability to spend in the future is affected.”

It’s especially true if people don’t have as much expendable income as in past years.

Due to holiday purchases and stockpiling debts, people have less money when starting the year and more stress as they try to find ways to decrease their spending as the year unfolds. Debt-related stress doesn’t affect one economic class over the other, however. A 2011 About.com study showed 75 percent of people reported money-related stress.

Fifty-two percent of 1,226 Americans  polled said they planned to save more money in 2012, according to an American Psychological Association report, but more than 25 percent said willpower and time kept them from keeping the promises.

“It’s also important for people to take care of themselves when they’re experiencing a lot of stress,” APA President Dr. Norman Anderson said. “Eating healthy and getting enough sleep can make a difference physically and emotionally. Getting enough sleep is certainly an affordable option.

What are some more ways to make a money-saving, stress-killing strategy and to stick to it? The APA offers six steps:

• Define stress: How do you know when you are stressed? Does that experience change during tax filing season or when making financial decisions?

Identify money stressors: What events or situations trigger stressful feelings? Are they related to meeting tax deadlines, paying bills, money decisions or financial responsibilities at work or home?

• Recognize how to deal with financial stress: Is this a behavior you rely on year-round, or is it specific to tax filing deadlines or other money decisions? Do you turn to unhealthy financial behaviors such as overspending, misuse of credit cards, neglecting bills or constantly borrowing money in an effort to deal with financial stressors?

• Understand what money means to you: Money could be a symbol of an emotional issue, not just a symbol of currency.

• Find healthy ways to manage the stress: Try to develop healthy stress management behaviors (exercise, keeping a journal) so that when you’re in a financial crisis, you’ll have strategies available to help you reduce stress.

• Ask for professional support: Financial planners can help you recover your economic independence and confidence. Psychologists can aid in managing the stress and finding personalized methods to handle it.

Another method of reducing debt stress is to simply reduce the debt, Brown said. Sometimes it can be that simple.

“The primary way individuals reduce their debt is by paying down existing debts and making a conscience decision to borrow less,” he said.

“The best strategy is always to take a balanced approach. Some debt is fine, but (it) should be managed in a way that does not affect one’s ability to meet other obligations.”

Anderson said the APA’s annual Stress in America studies since 2007 show that “money and work have been a cause of stress for more than two-thirds of adults,” Anderson said. “The numbers have remained fairly consistent over time.”

Another factor, Anderson said, is that people need to remember that spending money doesn’t help you de-stress in the long-term if debt is already an issue.

“People don’t need to spend a lot of money to manage their stress in healthy ways,” he said.

Want to learn more?

Visit www.apa.org for more information on how to talk to your children about the economy, manage your economic stress, stay resilient and find warning signs that debt could be leading to stress.

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