Credit cards are now a normal part of life for most of us - whether you are single, in a couple, or in a family. A credit card can be a life-saver in a sticky situation, or may be a way of treating yourself to something when you don’t have the money to pay for it there and then. As long as you manage your credit cards, and can maintain the repayments, many people would agree that they are a worthwhile financial tool.
However, if you do not stay on top of your repayments, your debt can very quickly grow out of control, and your credit cards can become a huge burden. This can result in high levels of stress, which can induce many health issues including headaches, back pain, depression, anxiety, ulcers, heart problems and muscle tension.
A survey undertaken in the United States, found that one in five people with high levels of debt stress experienced mental or physical health deterioration. It found that those who were stressed from their high debts were 13 times more likely to lose sleep at night, over than those who weren’t. Further to this, the findings showed that people who identified as stressed were six times more likely to be depressed.
There is currently around $33 billion of credit card debt owed by Australians (excluding debt where no interest is being charged).
So, does paying off your credit card debt seem out of reach? The first step to getting your financial situation under control is to take a step back, do some sums, and set up a realistic personal budget. Here are some tips to help you to get back on track:
- Developing a Budget
Perform a realistic assessment of your finances. Work out how much money you take in, and how much money you spend. Make a list of regular expenses, such as rent, mortgage repayments or internet bills, as well as general living costs such as groceries, transport and entertainment. Writing everything down will help you to keep track of your money, and help you identify areas where you can save.
- Stop adding more debt
If you have credit available on your card, don’t use it. Focus on chipping away the debt you already have. A helpful trick is to place your credit card in a small dish of water and leave it to set in the freezer. With your credit card fixed in a block of ice, impulse purchases will be less likely as you’ll have to wait until the card has thawed before you can use it. Talk about freezing your assets!
- Pay a little more than the minimum
Instead of repaying only the monthly required minimum, try to pay a little bit more each month. You’ll notice a difference if you simply add $50 each month to your repayments. Before you work out the amount to repay, be sure to check the arrangements that are in place with your credit provider, as sometimes the minimum amount is just enough to cover the interest payable on the debt. Make sure you’ll be able to maintain the amount each month, by going back to your budget and looking at your other monthly expenses and income.
- Identify negative coping strategies
When in stressful situations, we sometimes cope by engaging in activities that give us an instant feeling of happiness. When these activities can have a long-term negative effect on us and our finances, this is known as a negative coping strategy. A common manifestation of this is shopping, or what is sometimes referred to as “retail therapy”. Some other examples are: addicted gambling behaviour, frequent binge drinking/clubbing, and using food to compensate for stress. If you identify yourself as using negative coping strategies, and you think this may be impacting your health, then you might feel like you need professional help. This could be by getting in touch with the CBHS Health and Wellness team (firstname.lastname@example.org), visiting your GP, or finding a specialised debt handler who can help you to resolve the base problem.
- Dedicate time to having fun and relaxing
Exercise and fun can be great relievers of stress. Get outside and go for a walk or a bike ride. Set aside time to relax, and do things that you enjoy – play the piano, paint a picture, plant a garden or do some volunteer work.