Debt Elimination: Good for More than Just Your Finances

07-Apr-2008

Kelly McGonigal, psychologist and researcher at Stanford University in the U.S., held an on-line Q&A session on how important it is to eliminate debt because of stress which was then published by the Washington Post. Guided by the public?s questions on why to eliminate debt, she makes her strong point that debt and stress work in a negative cycle. If you are in debt, you are likely stressed. You generally react to stress with some sort of coping mechanism, which for many is to shop, making your debt worse. She points out that stress is a factor in ?increased risk for diseases from diabetes to heart disease to infections like the common cold. Stress can also exacerbate any pre-existing conditions (from chronic pain to cancer) by undermining the body?s ability to repair itself or care for itself.?

Obviously, then, working to eliminate debt is of utmost importance. And although there are advertisements galore online and on the television about how to eliminate debt, it is best to treat too-good-to-be-true solutions with extreme caution. Although it is a difficult route, much of what needs to be done to eliminate debt is within your power and own abilities. For most, beginning with a spending log is very helpful. Boston.com, in their column ?Smart Money Tips for 2008? suggests, ?Setting up a spending plan? To start, total your unavoidable expenses, such as rent, food, and bills. Subtract them from your income? From there, decide which expenses you can eliminate, whether it?s the weekly nail appointment or the nightly dinners out.? 

After seeing where your money is being spent, set up a budget and stick to it in order to eliminate debt. For those that need to make a visual plan, Microsoft has several budget templates on-line that you can download for free.

If, however, you are in over your head and want outside help to eliminate debt, there are credit counselors. There are many free hotlines that you can call and free on-line services that will counsel how to eliminate debt; however, again, beware. Do not give your personal information to just anyone. Research the service that you are contacting, and ask them about any fees or suggested donations up front. Once they have heard your financial situation, they may suggest more drastic measures to eliminate debt, such as: debt consolidation, debt negotiation/settlement, an individual voluntary arrangement (IVA), or insolvency.