Too Much Debt to Handle? Effective Strategies for Relief

Debt can feel like a never-ending weight on your shoulders, dragging you down no matter how hard you try to get ahead. If you are feeling like it is all just too much debt to handle, take a deep breath—you are not alone in this. It is easy to feel overwhelmed, but there is always a way forward. Whether it is juggling credit cards, loans, or everyday bills, you have options to get back in control.

Today, we will cover what to do if you have too much debt to handle. We will go over the signs of unmanageable debt, steps to take when you are overwhelmed by debt, the psychological impact of debt, and how our team at Farber can help you. Let’s get into it.

Recognizing the Signs of Unmanageable Debt

Before you can tackle your debt, it is important to recognize the signs that it may be too much to handle. If any of the following resonate with you, it might be time to consider debt-relief options:

• You consistently miss or are late on payments
• Your credit card balances never seem to go down
• You rely on credit to cover basic living expenses
• You feel overwhelmed just thinking about your debt
• You receive frequent calls or letters from creditors or collection agencies.

Recognizing the signs early can allow you to take proactive steps before the debt becomes unmanageable. Whether only one or all of them resonate with you, that is ok. It is never too late or too early to tackle your debt. We are here to support you on your journey.

Steps to Take When Overwhelmed by Debt

If you are already feeling like you have too much debt to handle, do not panic — there are immediate steps you can take to start addressing the problem.

Make A Note of Where You Are At

The first thing you need to do when you are feeling overwhelmed by debt is to get a clear view of your financial situation. It might not be fun, but it is necessary.

Start by listing out all your debts — this includes things like balances, interest rates, and due dates. Whether you prefer writing it down on paper or making a simple spreadsheet, this step will give you a clearer picture of what you are dealing with.

Be sure to include debts like credit card balances, student loans, auto loans, or payday loans. Writing down the interest rates and payment dates for each will be helpful and give you a clear idea of when payments are expected and how much is due. You will also be able to see how much interest is building up for each one.

Put Your Debts in Order

Once you have all your debts in front of you, it is time to prioritize. You can do this in a couple of ways. Some people like to focus on the debts with the highest interest rates first, so they stop growing out of control. This method is called the avalanche method.

Others prefer to start with the smaller debts, also known as the snowball method. This method means knocking out the smaller debts first to build momentum and feel a sense of progress. The more debts you pay off, the more it snowballs, and the sense of accomplishment grows!

You can pick whichever one will work the best for you or feels less overwhelming. Either way, you will be making progress toward paying off your debts and repairing your relationship with money in the long run.

Build a Budget (and Stick to It)

A budget is your best friend when it comes to managing debt. Take a look at your income and expenses. Be sure to include your fixed expenses, like rent and utilities. You will want to also include your variable expenses, which are the expenses that can vary from month to month. This includes entertainment or dining out.

From there, you can start building a realistic budget. If you need help figuring out how to structure your budget, there are many free budgeting tools and apps available out there. You can do a quick search and adjust it according to your needs. Your budget can be done with paper and pencil, a spreadsheet, an app on your phone, or whatever tool is more convenient for you!

By having everything listed in front of you, you can see where you can cut expenses and where you can set money aside for paying down your debt. Maybe you can dine out less or cut out subscriptions you are not using much.

There are other ways to help you save money, like using coupons, finding deals, or taking advantage of free rewards programs. For example, you can try calling your phone or internet company during big shopping dates or holidays, such as Black Friday, to negotiate a better plan that will save you money. It will be worth a short even if you can get a few dollars shredded off your monthly bill. Anything helps!

When to comes to building a budget, you should make it easy enough for you to stick to it. It is important to not make any unrealistic promises to yourself. For example, if you usually spend $500 on dining out and you want to suddenly cut it out completely, it might be too big of a change to your current lifestyle.

Any large cuts could easily make you fall back into the spending cycle. Instead, we suggest you make small cuts and increasingly cut more from you spend each month. This will give you time to adjust and get used to the changes.

Once you have a budget set, while it is important to stick to it, you should have room for flexibility as well in case your financial situation changes. This is also why having an emergency fund would be helpful if the unexpected happens, like if you lose your job. So, if you have not already, ensure that part of your budget includes setting money to the side in case of rainy days.

Find Motivation

Sometimes you need a bit of a push to keep yourself on track and think of the bigger picture. It is like having a vision board of everything you want to work towards and achieve. Is that trying to save enough money for a down payment? Or maybe you want to save up to go on a vacation. Whatever motivates you, keep that in mind and use it as an end goal after you pay off your debt.

Explore Debt Repayment Strategies

Now, let’s talk about strategies you can use to tackle debt, depending on what works best for your situation. We mentioned a couple above, but we will list them all out for you again:

Snowball Method

Focus on paying off the smallest debts first, which can give you a psychological boost as you see quick progress. Once you get the smaller debts out of the way, you can then focus on the larger ones.

Avalanche Method

The avalanche method focuses on paying off debts with the highest interest rates first to minimize the amount of interest paid over time. Be sure to look at each of your debts and the amount of interest that builds up each month. If the interest is quickly growing for one or more of your debts, maybe you should tackle those first!

Balance Transfers and Consolidations

If you have multiple high-interest debts, you can consider consolidating them into one loan with a lower interest rate or using a balance transfer to move your debt to a lower-interest card.

However, this option may not be for everyone and can be hard to qualify for if your credit has already been damaged. This means that you may only qualify for higher interest rate consolidation loans, which could lead to greater financial strain in the long run. We recommend consulting with a debt expert to understand all your debt-relief options.

Debt Management Plans

There are several debt management plans or debt-relief solutions that you can consider, such as consumer proposals, bankruptcy, and as mentioned, debt consolidation. Whichever one you pick will depend on how much debt you have, the type of debt, and other factors related to your financial situation.

You should consider working with debt experts, such as the team at Farber, to develop a debt management plan that fits your budget and financial goals. Debt is a difficult thing to talk about. We know that it’s a hard first step to ask for help, but we are committed to helping you find the confidence that comes with leaving your debt behind.

Communicate with Creditors

When you find yourself with too much debt to handle, communication is key. Many creditors are open to negotiation, whether it is lowering interest rates, setting up a payment plan, or even offering temporary relief. Reaching out to creditors can help alleviate some of the pressure and make managing your debt more manageable.

If you are looking for support, you can reach out to a Licensed Insolvency Trustee (LIT) to communicate and negotiate on your behalf. They are licensed and regulated by the Canadian government. They also have in-depth knowledge of Canadian insolvency laws and are authorized to file debt solutions, such as consumer proposals and bankruptcies.

The Psychological Impact of Debt

It is no secret that debt does not just impact your finances — it can also have a big impact on your mental health. Feeling like you have too much debt to handle can lead to anxiety, stress, and even depression. If you are experiencing sleepless nights, constant worry, or feelings of hopelessness due to your debt, it is important to seek support.

Whether it is talking to a loved one, seeking therapy, or connecting with a financial counsellor, addressing the emotional impact of debt is just as important as tackling the financial side. You should not have to do this alone.

Learn How Farber Can Help

When you are facing too much debt to handle, sometimes it’s best to seek professional help. Farber offers a range of debt relief services designed to help you get back on track. Whether you are interested in consumer proposals or simply want advice on the best way forward, Farber can guide you through the process with compassion and expertise.

Debt does not have to control your life. By recognizing the signs of overwhelming debt, taking immediate steps to manage it, and exploring your options for debt relief, you can begin your journey towards tackling your debt and building a better relationship with money— so, book a free consultation with Farber today!