Citizen Advice Bureaus dealt with 5,300 debt problems today;
More than 7,716 loan repayments went unpaid;
7.5m people withdrew 500m from cash machines;
24.5m transactions worth 1.4bn was spent on plastic cards;
1/3rd of all groceries bought today will end up in the rubbish.
If one of these statistics relates to you, chances are you are
dealing with financial stress.
Research indicates that young adults have become de-sensitised to debt.
One in five young adults would consider bankruptcy or Individual Voluntary
Arrangements (IVAs) as a solution to the burden of high levels of debt.
Whilst bankruptcy may appear to reduce the amount of debt owed it doesn't
reduce the level of financial stress. It simply swaps one type of
financial stress with a different type of financial stress.
We train ourselves from an early age that debt is ok, we use frivolous shopping
as a means of stimulation, enjoyment, tribal affiliation or an opportunity
to socialise. Research indicates that 25% of young adults indulge in
frivolous shopping (when we buy stuff we don't need with money we don't have).
We train our minds to associate excitement with purchasing to such an
extent that the monthly credit card bill arriving with an available
balance prompts the unconscious question, "What shall I buy?" We mistake
the available balance on our credit card bill as money in the bank. There
are three issues with this lifestyle.
Sooner or later the credit card bill catches up with you. For
many people this is an incredibly stressful experience. Feelings of
anxiety or depression are not unusual.
By not changing the conscious-unconscious relationship between
spending and excitement, you will take on more debt as soon as you are
no longer officially bankrupt. This process leads to long-term poverty
just as yo-yo dieting contributes to long-term obesity.
A choice such as bankruptcy can have long-term career implications
as some professions do not allow those who have declared themselves
bankrupt to practice. It's really important to get quality impartial
advice when considering bankruptcy or an IVA.
So how do we move out of this spiral? First we need to retrain our minds
so that we associate pleasure with an available balance in our savings
account not our credit card. Here's one way of achieving that.
Set up a standing order that transfers money from your current
account to a savings account. Get one with a savings book so you can put
the book in a drawer and forget about it. Arrange for the money to be
transferred as soon as you get paid or better still get your employer to
pay part of your salary directly into a savings account.
Now this accumulation of funds isn't for spending. Eight months
after you have opened the account take your passbook to the bank and get
it updated so that you can see the transactions over the last eight months
. Focus on the buzz and feelings of satisfaction as you look at the
balance in your account.
Now for the really important part...don't spend it...put the
savings book back in your drawer for another eight months. Over time you
will retrain your nervous system so that you associate pleasure with
saving. By keeping it in the back of your drawer and forgetting about it
for a while, you're making sure you don't spend it before you have an
opportunity to enjoy that sense of achievement. It's also a good idea to
check out tax efficient savings options so you are maximising your return
on the investment.
The next thing to tackle is that credit card debt. It's important to see
it as it is, but not worse than it is.
Make a list of all your credit cards, the outstanding balance for
each one, the minimum payment required and the interest rate. It takes 10
years and 7 months to repay a credit card balance of 360 if you are making
just the minimum payments. The great news is that we can make compounding
interest work for you rather than against you.
Set up standing orders so that you are certain that you are
meeting all your credit card minimum requirements.
Now focus on the credit card that carries the highest interest
rate and commit to making an additional minimum payment each month. Set
up a standing order so that it happens without you focussing on it. Once
you have repaid the outstanding balance on this card do the same thing
for the credit card that carries the next highest interest rate. To
calculate how long it will take to repay your credit card using a
combination of minimum payments and additional payments,click here for the
Repayments Calculator.
Choose the credit card that carries the lowest interest rate.
This is the one that you will use for emergencies. Cut the other cards up
so that you are not tempted to top up the outstanding balances and undo
all your good work.
When those credit card statements turn up on your door, really
focus feeling great as you watch that balance melt away to nothing.
Of all the sources of stress today - relationships, work, competitive,
financial, environmental - financial is the most insidious. You can never
leave it behind for a moment, it's always sitting there on your shoulder.
Swapping one label (high level of unsecured debt) for another (IVA or
bankrupt) doesn't reduce the level of stress that you're carrying. Taking
action to change what is causing the stress at its root is the only way
to ensure a life beyond stress. As the old saying goes, If you keep doing
what you're doing, you will keep getting what you've got.
Interested in receiving coaching to jump start your prosperity programme
and say goodbye to financial stress once and for all? Click Here
to request your appointment.
Would you like to learn more about stress?
Enter Your Details Here to Request Your FREE Guide to Managing Stress
There are no upcoming courses presently. If you'd like us to set one
for you, we'll be pleased to do so, just contact us to arrange something.
![[book now]](../images/H-booknow.gif)
![[login/registration]](../images/H-login.gif)
![[contact us]](../images/H-contactus.gif)
![[contact us]](images/B-contactus.gif)