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Health

How to Cope With Financial Anxiety

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Man sitting at desk with laptop coping with financial anxiety
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Perhaps you’re filing your taxes late, or you’re having a hard time juggling your rent and other bills. You feel your whole body tense up and a sense of dread coming over you at the very thought of having to tackle financial tasks. Money worries come from many different sources, but that panicky feeling does have a name: financial anxiety.

As it happens, you’re far from the only one experiencing anxiety over money. In fact, in April 2019 we conducted a survey and found that 75% of participants responded “yes” when asked if they had ever felt anxious about their financial situation. The American Psychological Association’s Stress in America survey also shows that money remains one of the top stressors reported among Americans year over year, alongside work and health-related concerns.

Despite money being such a big trigger for anxiety, we don’t seem to talk about either money or anxiety enough. To help get the conversation started, let’s take a closer look at what financial anxiety is and how you can recognize it. And for those who are already dealing with money anxiety in one way or another, we’ve got some expert tips to help you cope and feel better about your financial situation.

What is financial anxiety?

Financial anxiety can look different from person to person. Your money worries may be different from your friend’s money worries. The way financial anxieties manifest themselves in feelings and behaviors may not be the same either.

“Financial anxiety can be described as a fear-based response or attitude towards one’s personal finances that is often connected to (or leads to) ineffective money management and suboptimal financial decision-making,” said Megan Ford, M.S., LMFT, a financial therapist at the University of Georgia and a member of the Financial Therapy Association (FTA).

As Ford noted, anxiety over money is not a diagnosable disorder, according to the Diagnostic and Statistical Manual of Mental Disorders, which helps classify various mental health diagnoses.

Ford emphasized that she likes to differentiate a disordered level of financial anxiety from general anxiety, which is a normal reaction to stressful and uncertain situations. Money anxiety becomes disordered when you find yourself worrying about the economy or your finances for hours on end, for example, which prevents you from sleeping or performing your usual tasks and responsibilities.

Is financial anxiety normal?

If you find yourself with intense money worries, know that you’re not alone. In the aforementioned MagnifyMoney survey, more than 1 in 3 respondents, or 34%, reported feeling anxious about money every single day in the last week. And it also seems as though money anxiety could be getting worse: 44% of respondents were more anxious about their finances today compared to one year ago.

“It’s also likely that as we begin to recognize this phenomenon and discuss it more openly, people might be more inclined to identify with it,” Ford added.

Both anxiety and money are largely taboo subjects in society, although discussion around both topics are opening up. Wider awareness and education of money anxiety can help bring more acceptance and help to those who need it.

What causes financial anxiety?

Turns out, having a lower income is a big source for Americans’ financial anxiety. It was the most common reason across all age groups surveyed, although notably Gen Z’ers — with 66% of its respondents, the youngest cohort surveyed — marked that reason more than Millennials and Gen X’ers did.

The second-most common source of money anxiety was living paycheck to paycheck, which more Gen X responders chose compared to their younger counterparts.

Tips for coping with financial anxiety

As mentioned above, the sources of your money anxiety and the things that trigger it may not be a cause or a trigger of the next person’s financial anxiety. Given this, your coping methods needs to be adjusted to your needs. Here are a few tips that can help you start getting money anxiety under control, courtesy of Ford:

Accept your anxieties and name your triggers

Being anxious but not knowing the root of your anxieties can instill a sense of panic or powerlessness. Finding the source of your anxiety and identifying what triggers it can help you regain some of that power and control over your situation.

“If anxiety can be relieved through education or clarification on a particular aspect of one’s finances, this can help to significantly reduce someone’s experience of financial anxiety,” Ford suggested. Once you understand the source of your money anxiety, you can take the necessary steps [to] address the root causes of your financial problems.

For example, perhaps you notice you feel anxious whenever you check the mailbox. Receiving mail is probably not what’s making you anxious; bigger and bigger credit card bills is the likely root problem. Recognize that your creeping credit card debt is affecting your daily life — you can’t look at the mailbox without feeling queasy. Use this moment of clarity to help reform your credit card use and switch to using your debit card instead.

Educate yourself about the financial problems causing your anxiety

Education and knowledge is the right place to start removing stress and fear from your financial life.

If you’re worried about passing your debts onto your loved ones when you die, for example, do some reading about the way debt is passed on after death. That can provide some clarity to the gray areas and help you create a plan with your loved ones. Afraid of unmanageable credit card debt? Research counseling that can help you come to grips with your problems and put a plan in place to resolve them.

Try slowing things down

Since a state of anxiety can make things seem like they’re speeding up and out of your control, Ford suggested slowing things down. Take deep breaths and try writing down the thoughts in your head and the sensations in your body.

Ford suggested taking notice of “whether you’re being driven to make a decision rooted in anxious or fearful feelings.”

“Evaluate whether those are fully, 100% true,” she continued, “or if there are exceptions or untruths.” Slowing down and reflecting can give you the opportunity to navigate any impulsivity and potentially find more productive ways to think about the issue at hand.

Visit a financial therapist

Sometimes you need extra, outside help to overcome a hurdle like money anxiety. If you can afford to do so, you can pay a visit to a financial therapist who can help guide you through your anxieties and proposed solutions.

According to the FTA, financial therapists use a “combined approach informed by both therapeutic and financial competencies [to] help people reach their financial goals and attend to the emotional, psychological, behavioral and relational hurdles that are intertwined.”

The FTA website can help you find a financial therapist in your area. While therapists can work on a sliding scale to accommodate your situation, seeing a financial therapist without properly budgeting for those costs can result in even more money anxiety.

Note: MagnifyMoney commissioned Qualtrics to conduct an online survey of 819 Americans ages 18-53. The survey was fielded from April 14-23, 2019, and the margin of error for all respondents is +/- 3%.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

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Featured, Health

5 Ways to Keep Medical Debt From Ruining Your Credit

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Your physical well-being isn’t the only thing at stake when you go to the hospital. So, too, is your financial health.

According to the Consumer Financial Protection Bureau, more than half of all collection notices on consumer credit reports stem from outstanding medical debt, and roughly 43 million consumers – nearly 20% of all those in the nationwide credit reporting system – have at least one medical collection on their credit report.

Now, you might be inclined to think that, because you’re young or have both a job and health insurance, medical debt poses you no risk. Think again. According to a report from the Kaiser Family Foundation, roughly one-third of non-elderly adults report difficulty paying medical bills. Moreover, roughly 70% of people with medical debt are insured, mostly through employer-sponsored plans.

Not concerned yet? Consider that a medical collection notice on your credit report, even for a small bill, can lower your credit score 100 points or more. You can’t pay your way out of the mess after the fact, either. Medical debt notifications stay on your credit report for seven years after you’ve paid off the bill.

The good news is that you can often prevent medical debt from ruining your credit simply by being attentive and proactive. Here’s how.

Pay close attention to your bills

Certainly, a considerable portion of unpaid medical debt exists on account of bills so large and overwhelming that patients don’t have the ability to cover them. But many unpaid medical debts catch patients completely by surprise, according to Deanna Hathaway, a consumer and small business bankruptcy lawyer in Richmond, Va.

“Most people don’t routinely check their credit reports, assume everything is fine, and then a mark on their credit shows up when they go to buy a car or home,” Hathaway said.

The confusion often traces back to one of two common occurrences, according to Ron Sykstus, a consumer bankruptcy attorney in Birmingham, Ala.

“People usually get caught off guard either because they thought their insurance was supposed to pick something up and it didn’t, or because they paid the bill but it got miscoded and applied to the wrong account,” Sykstus said. “It’s a hassle, but track your payments and make sure they get where they are supposed to get.”

Stay in your network

One of the major ways insured patients wind up with unmanageable medical bills is through services rendered – often not known to the patient – by out-of-network providers, according to Kevin Haney, president of A.S.K. Benefit Solutions.

“You check into an in-network hospital and think you’re covered, but while you’re there, you’re treated by an out-of-network specialist such as an anesthesiologist, and then your coverage isn’t nearly as good,” Haney said. “The medical industry does a poor job of explaining this, and it’s where many people get hurt.”

According to Haney, if you were unknowingly treated by an out-of-network provider, it’s would not be unreasonable for you to contact the provider and ask them to bill you at their in-network rate.

“You can push back on lack of disclosure and negotiate,” Haney said. “They’re accepting much lower amounts for the same service with their in-network patients.”

Work it out with your provider BEFORE your bills are sent to collections

Even if you’re insured and are diligent about staying in-network, medical bills can still become untenable. Whether on account of a high deductible or an even higher out-of-pocket maximum, patients both insured and uninsured encounter medical bills they simply can’t afford to pay.

If you find yourself in this situation, it’s critical to understand that most health care providers turn unpaid debt over to a collection agency, and it’s the agency that in turn reports the debt to the credit bureaus should it remain unpaid.

The key then is to be proactive about working out an arrangement with your health care provider before the debt is ever sent to a collection agency. And make no mistake – most providers are more than happy to work with you, according to Howard Dvorkin, CPA and chairman of Debt.com.

“The health care providers you owe know very well how crushing medical debt is,” he said. “They want to work with you, but they also need to get paid.”

If you receive a bill you can’t afford to pay in its entirety, you should immediately call your provider and negotiate.

“Most providers, if the bill is large, will recognize there’s a good chance you don’t have the money to pay it off all at once, and most of the time, they’ll work with you,” Dvorkin said. “But you have to be proactive about it. Don’t just hope it will go away. Call them immediately, explain your situation and ask for a payment plan.”

If the bill you’re struggling with is from a hospital, you may also have the option to apply for financial aid, according to Thomas Nitzsche, a financial educator with Clearpoint Credit Counseling Solutions, a personal finance counseling firm.

“Most hospitals are required to offer financial aid,” Nitzsche said. “They’ll look at your financials to determine your need, and even if you’re denied, just the act of applying usually extends the window within which you have to pay that bill.”

Negotiate with the collection agency

In the event that your debt is passed along to a collection agency, all is not immediately lost, Sykstus said.

“You can usually negotiate with the collection agency the same as you would with the provider,” he said. “Tell them you’ll work out a payment plan and that, in return, you’re asking them to not report it.”

Most collection agencies, according to Haney, actually have little interest in reporting debt to the credit bureaus.

“The best leverage they have to get you to pay is to threaten to report the bill to the credit agencies,” he said. “That means as soon as they report it, they’ve lost their leverage. So, they’re going to want to talk to you long before they ever report it to the bureau.

“Don’t duck their calls,” he added. “Talk to them and offer to work something out.”

Take out a personal loan

Refinancing your medical debt into a personal loan is another move you can consider making, particularly if you can get a lower interest rate than you could with a credit card, and you aren’t able to secure a 0% credit card deal. Peer-to-peer lenders LendingClub and Prosper both start with APRs as low as 6.95%, and LendingClub’s origination fee starts as low as 1%.

Even better, SoFi offers personal loans at a rate as low as 5.99% and has no origination fee (although you do need a relatively high minimum credit score to get a loan, at 680).

MagnifyMoney’s parent company, LendingTree, features a handy personal loan tool where you can shop for the best loan for you.

Bottom line

Dealing with medical debt can be particularly stressful, as you have to worry about money matters along with managing health issues. However, having medical debt does not have to spell disaster. If you follow one or more of the steps above, you should be able to keep your finances healthy.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

MagnifyMoney
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Have a question to ask or a story to share? Contact the MagnifyMoney team at [email protected]

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Featured, Health, News

How Weight Loss Helped This Couple Pay Down $22,000 of Debt

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Photo courtesy of Brian LeBlanc

Brian LeBlanc was fed up. The 30-year-old policy analyst from Alberta, Canada, had struggled with his weight for years. At the time, he weighed 240 pounds and had trouble finding clothes that fit. He decided it was time to change his lifestyle for good.

LeBlanc started running and cutting back on fast food and soft drinks. He ordered smaller portions at restaurants and avoided convenience-store foods. About a year into his weight-loss mission, his wife Erin, 31, joined him in his efforts.

“The biggest change we made was buying a kitchen food scale and measuring everything we eat,” Brian says. “Creating that habit was really powerful.”

Over two years, the couple shed a total of 170 pounds.

But losing weight, they soon realized, came with an unexpected fringe benefit — saving thousands of dollars per year. Often, people complain that it’s expensive to be healthy — gym memberships and fresh produce don’t come cheap, after all. But the LeBlancs found the opposite to be true.

Erin, who is a payroll specialist, also managed their household budget. She began noticing a difference in how little money they were wasting on fast food and unused grocery items.

Photo courtesy of Brian LeBlanc

“Before, we always had the best intentions of going to the grocery store and buying all the healthy foods. But we never ate them,” she says. “We ended up throwing out a lot of healthy food, vegetables, and fruits.”

Before their lifestyle change, Brian and Erin would often eat out for dinner, spending as much as $80 per week, and they would often go out with friends, spending about $275 a month. Now, Brian says if they grab fast food, they choose a smaller portion. Now they might spend only $22 on fast food per month, instead of over $200.

What’s changed the most is how they shop for groceries, what they buy and how they cook. Brian likes to prep all his meals on Sunday so his lunches during the week are consistent and portion-controlled. They also buy only enough fresh produce to last them a couple of days to prevent wasting food.

Losing weight — and student loan debt

Photo courtesy of Brian LeBlanc

Two years after the start of their weight-loss journey, they took a look at their bank statements to see how their spending had changed. By giving up eating out and drinking alcohol frequently, they were spending $600 less a month than they used to, even though they’ve had to buy new wardrobes and gym memberships.

With their newfound savings, the LeBlancs managed to pay off Brian’s $22,000 in student loans 13 years early. Even with the $600 they were now saving, they had to cut back significantly on their budget to come up with the $900-$1,000 they aimed to put toward his loans each month. They stopped meeting friends for drinks after work, and Erin took on a part-time job to bring in extra cash. When they needed new wardrobes because their old clothing no longer fit, they frequented thrift shops instead of the mall.

When they made the final payment after two years, it was a relief to say the least.

Now the Canadian couple is saving for a vacation home in Phoenix, which they hope to buy in the next few years, and they’re planning to tackle Erin’s student loans next. They’re happy with their weight and lives in general, but don’t take their journey for granted.

“There were times we questioned our sanity, and we thought we cannot do this anymore,” says Erin. But they would always rally together in the end.

“There are things that are worth struggling for and worth putting in the effort,” Brian says. “Hands down, your health is one of those things.”

Other Ways Getting Healthy Can Help Financially

Spending less on food isn’t the only way your budget can improve alongside your health. Read below to see how a little weight loss can tip the scales when it comes to your finances.

  • Spend less on medical bills. Health care costs have skyrocketed over the past two decades, but they’ve impacted overweight and obese individuals more. A report on the “state of obesity” in America found that obese adults spend 42% more on healthcare per year than those of normal weight.
  • Buy cheaper clothes. Designers frequently charge more for plus-size clothing than smaller sizes. Some people claim retailers add a “fat tax” on clothes because there are fewer options for anyone over a size 12. It might not be fair, but it’s the way things are.
  • Save on life insurance. Your health is a huge factor for life insurance rates. Annual premiums for a healthy person can cost more than for someone who is overweight, because BMI (body mass index) may be a factor for determining pricing.

Getting Healthy for Cheap

Still worried that an active lifestyle will require you to spend more money? Here are some tips on keeping costs low while you improve your lifestyle.

  • Get a family membership. Gyms often provide a discount if you sign up for a family membership instead of an individual one. Most of these deals are only beneficial for households with children, but some might offer a lower price if you sign up with a spouse or partner. Always ask the gym about any special deductions they might have.
  • Skip the fancy gym. Many would-be exercisers skip the gym pass because they assume it will be expensive. Before you give up, call around and compare prices. Try your local YMCA, as they often have income-based membership.
  • Shop at thrift stores. Finding inexpensive workout clothes can be another barrier to exercising. Who wants to spend $75 on yoga pants? Don’t visit the mall for your new duds. Your local thrift shop or consignment store will have running shorts and tank tops for only a few dollars. Secondhand clothes also make more sense if you’re in the midst of losing a lot of weight and changing sizes frequently.
  • Go vegetarian. Meat is often the most expensive item in your grocery cart. If you’re trying to eat healthier and concerned about money, try vegetarian protein options like lentils, beans,and quinoa. You don’t have to fully adopt the vegetarian lifestyle, but just reducing your meat intake can have a significant impact on the grocery bill.
  • Buy frozen produce. Frozen produce is often as healthy as buying fresh, but it can be significantly less expensive. Frozen veggies and fruit also last longer, decreasing the risk of food waste. You can often find coupons, and the long shelf life makes it easy to stock up if there’s a sale on your favorite green beans.
  • Cut back on eating out. Ever wonder how restaurant-quality food can be so much better than what you make at home? You guessed it: more salt, more sugar, more butter and more fat. By limiting the meals you eat out, you’ll avoid all that — as well as those outrageous restaurant markups. If you do eat out, you can do your best to pick the healthy choice. You may also choose to take advantage of cashback credit cards that may reward you for your healthy dining out.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Zina Kumok
Zina Kumok |

Zina Kumok is a writer at MagnifyMoney. You can email Zina here