Do debt problems cause you lost sleep and rising anxiety? You’re not alone. Dealing with money problems is a massive source of financial stress for many people.
A 2017 Center for Financial Services study found that almost half of Americans had expenses equal to or greater than their income – and that their debt problems caused them a serious amount of stress. [Source]
What are some of the most common debt problems?
Debt Problem #1: You Don’t Know How Much Debt You Have
When the bills are piling up, it can feel easier to shove them in a drawer and ignore your debt problems. But not knowing exactly how much debt you have and how much it’s costing you can ruin your finances.
To deal with this debt problem, you’ll need to create a comprehensive list of all of your debts. You also need to know the monthly payment you need to make to keep your account in good standing.
Figuring Out Your Debt Problems
Depending on how many bills you have, this might take a while, so don’t get discouraged. Take it step by step. Here’s what to do:
- Gather your most recent bank statements, credit card statements, and mailed bills.
- Pull credit reports and get your current credit scores. You can do this for free from annualcreditreport.com. The amount you owe to each creditor and the monthly payment amount should be listed there.
- If needed, call your creditors for an updated balance or check your current balance online.
- Create a list or spreadsheet of your balances, payments, and due dates.
Easy Software to Add up Your Debt
If you don’t feel like messing with spreadsheets or need some help managing your finances online, check out Personal Capital. Personal Capital is free, takes only about 30 minutes to set up, and allows you to easily track your income, expenses, and net worth online while you work on your debt management.
You simply enter your bank account and credit card info one time, and then the online app updates your debt and income automatically. It also offers super cool graphics and charts to help you manage your money problems.
Just knowing, in black and white, how much debt you have and the total of your monthly payments can relieve some stress over money problems. Debt management can be discouraging if the total is more than you anticipated, but now that you know, you can move on to making a plan.
Debt Problem #2: You Don’t Make Enough Money
Not having enough income to pay all your bills can definitely lead to debt problems. It might seem like a solution to fill in the income gap with credit cards or consolidation loans. But in the long run, as the debt balances keep increasing, you have to find a way to bring in more income.
If you’re working, the fastest solution to your debt problems may be to strategize a way to increase your take-home pay by working more hours, seeking job advancement opportunities, or asking for a raise.
If those strategies aren’t an option, though, look into starting a side hustle in your off-hours.
Making Extra Money to Pay Off Debt
What’s a side hustle? Side hustles are simply extra money you earn part-time (though in some cases, side hustles can turn into a full-time business), not from your current vocation.
The big benefit of a side hustle is that you can use that money to deal with your debt problems and pay down your debt balances.
The types of side hustles you can start to help manage your debt are endless. Some popular ones are:
- Freelance writing, graphic design, or computer programming is an easy-to-start side hustle.
- You can start a dogwalking or petsitting business.
- You can find items to sell for extra cash at a yard sale or online. (Click here for 50 Things to Flip for Profit)
- You can offer yardwork or housecleaning services.
Easy Side Hustle Ideas
One of the best side hustles I know of is taking surveys. Advertisers want your feedback on their products, websites, videos, and online content – so much so that they’re willing to pay you to provide your opinions.
One of the easiest survey sites to use is Swagbucks. If you’ve never heard of it, Swagbucks is a site where you earn points for the normal stuff you do online – like watching videos and doing Internet searches. You can also sign up to answer surveys on Swagbucks.
In return, you cash in your points for gift cards or cash payments – Amazon $25 gift cards and $25 Paypal cards are some of my favorite rewards.
Another awesome side hustle? Starting a blog, just like this one! There are tons of bloggers making serious cash (like, wipe out your debt in one month Cash!) with blogging.
Check out this list of Blogger Income Reports to learn about bloggers who turned their side hustle into serious cash. A lot of them used their blog income to pay off debt and resolve their debt problems, just like you’re trying to do.
- 10 Things I Quit Buying to Become Debt Free
- 7 Debt Payoff Habits: Mindset Hacks for How to Pay Off Debt
- 15 Ways to Find Money to Pay Off Debt Fast
Debt Problem #3: You Spend a Lot Eating Out
Eating out is convenient, but just a meal or two added to your credit card every week can balloon to a serious debt problem over time. When you’re trying to deal with debt problems and debt management, living without eating out should be an essential part of your get out of debt plan.
If you’re prone to eating out but just can’t stop, try looking back at your credit card statements or Personal Capital account. Add up your total eating out cost for the month (Personal Capital already categorizes this for you – so easy!) – don’t forget those Starbucks runs either.
Why Eating Out Causes Debt
Eating out is a major cause of debt problems for a lot of people. Your best bet to save money on eating out is to start cooking at home and packing every food, snack, and beverage you eat when you’re at work or away from home.
Yes, you’re busy. Yes, it takes extra effort. But your debt problems will never go away if you don’t stop adding to it.
Try This Tip to Stop Eating Out
One tip that might make avoiding eating out easier is to try a meal kit delivery service. These services take the work out of food shopping and deliver fresh ingredients to your door – no extra work needed. All you have to do is prep the delicious meal you’ve chosen (they even include a recipe card, so you don’t even need to look anything up) and enjoy it debt free.
One of the meal delivery kit services I’m a fan of to reduce eating out debt is Green Chef – simply because they focus on meal kits with fresh, organic, healthy ingredients. They also cater to a variety of food preferences like omnivore, vegan, paleo, carnivore – I’m loving the keto-friendly meal kit options right now.
Debt Problem #4: You Have a Lot of Nonessential Expenses
Dealing with your debt problems often means cutting your monthly expenses so you can put your money toward debt repayment instead. Some things you can do to reduce expenses include:
- Stop buying clothes, furniture, and other nonessentials.
- Use up food and health and beauty items you’ve already purchased.
- Focus on no-spend social activities.
- Cancel subscriptions to services you use infrequently or not at all.
- Call your service providers to see if you can get better rates.
- Negotiate for a better price on your cable or Internet.
But whether you’re a mom or dad, working full-time, or a college student, you live a busy life. So busy, in fact, that you might not even have the time to find specific ways to cut expenses.
Being too busy to watch your finances carefully can be a definite contributor to debt problems. Soon you’re paying for services you don’t use and not getting the discounts you could use to pay off debt.
One way you can stop wasting money is by automating your finances with a trusted company called Trim. Trim makes it easy to find extra money to pay off debt since they automatically work with your service providers to get you the best rates. And what if you didn’t have to call each subscription you have to save money? Outsource the pain of recurring bills by signing up with Trim.
Debt Problem #5: You Feel Hopeless About Your Debt
Dealing with your debt problems isn’t always an easy fix. It can take a tremendous amount of personal growth to change your habits, develop a debt management plan, and begin to make progress on your debt.
Feeling hopeless about debt problems is common. And it can be the first step on your way to repairing your financial health if you let it inspire and motivate you, rather than defeat you.
You Are Not Alone: A Lot of People Have Money Problems
Keep these statistics in mind as you think about your debt problems:
- A 2017 Marketwatch study found that half of Americans live paycheck to paycheck.
- Nearly one in five people have $0 saved for an emergency.
- About half of Americans are concerned, anxious, or fearful about their finances and debt problems. [Source]
Clearly, if you have money problems you are not alone. Fixing debt problems isn’t an overnight process – it will take time to create a money management plan, trim expenses, and begin to pay off debt and save money.
At one time, my family had debt problems, too. We had an infant and a boat (those two things don’t really go together), student loans, credit card debt, auto loan debt, and even a motorcycle debt! We were drowning in payments.
In desperation to fix our debt problems, I began listening to Dave Ramsey’s radio show and reading his books. His clear plan for eliminating debt resonated with me, and we began using a debt snowball to get rid of our payments. We sold the boat, then the motorcycle. Any extra we had went to paying down our debt, until that day a few years ago when it was finally, finally, all gone.
Finding a Plan to Solve Debt Problems
If you have debt problems, I really recommend checking out Dave Ramsey’s books, courses, and podcast. (Note: He tends to be very forthcoming about his religious beliefs, however, the structure of his debt repayment plan is still very useful, even if you don’t agree with his religion.)
If you find a money management plan that’s realistic for solving your debt problems, you don’t have to be hopeless. Instead, you can take pride in the small steps you’re making toward financial success.