It’s easy to be fearless when you have a healthy bank account. Think about it. Most stress in a capitalist society is centered around the acquisition or lack of wealth. When money is not coming in, people tend to behave differently. That’s fear manifesting itself.
Put in that context, there’s lots to be afraid of in 2021. The pandemic caused economic damage that will continue for many years. Job losses were widespread. Credit card debt rose. Mortgages and rent payments fell behind.
When you examine your financial situation closely, you’ll find a number of issues that instill fear in your mind. It’s okay, you’re not alone. To alleviate some of those negative emotions, we’ve made a list of “financial fears,” along with some suggestions for how to deal with them.
Financial fear #1: Student loan debt is a crushing weight
It’s there. You know it’s there. You knew when you took it on that it would always be there, or at least it seemed that way. Now, as times get a little tougher and the cost of living goes up, student loan debt feels like an unbearable weight slowly crushing the life out of you.
Solution: Federal lenders usually offer income-driven repayment plans. If your take-home pay has gone down because you’re not getting overtime anymore, ask to restructure your payment plan. If it’s a private loan, seek out refinancing options.
Financial fear #2: Credit card interest is too high
Credit card debt was through the roof for a lot of people last year. Now, it’s time to pay the bill, with interest. In some cases, that monthly interest charge can be equal to a second car payment. That’s mind numbing, and the fear of never being able to pay it back is paralyzing.
Solution: There are actually two solutions in this case. The simplest is to apply for a debt consolidation loan and pay off all your credit cards with it. The second is to look into debt restructuring and seek settlements from the credit card companies.
Financial Fear #3: Your credit score is too low
Some science fiction novels tell a story where people no longer have names. They become known by their number. Yours is between 300 and 850, the higher the better. People with low numbers have limited purchasing power—that’s something to be afraid of.
Solution: In case you didn’t get it, we’re talking about your FICO credit score. There are many ways to improve it, including making payments on time and lowering your credit usage. Here’s another tip: Start paying with cash or debit instead of credit. Card balances will go down and your “number” will go up.
Financial fear #4: Retiring without enough money
Fear is compounded when you add a feeling of helplessness to it. The thought of being in your golden years without the means to support yourself can be overwhelming. That fear gets worse as we get older, when the time left to save for retirement gets shorter.
Solution: Save early and save as much as possible. That said, it’s never too late to begin. The IRS offers a “catch-up” period for 401(k)s and IRAs that are held by people over 50 years old. The maximum contribution limit during those last few years is higher than usual.
Financial fear #5: Recession, interest rates, and stock market crashes
We’ll call this one fear of the future. Yes, the country could go into another recession, interest rates will rise at some point, and the stock market goes up and down like a rollercoaster. That doesn’t mean it will “crash,” but those who’ve been through hard times are always concerned about it.
Solution: Read up on the history of the stock market. Even when the market goes down, it always comes back up at some point. Interest rates are raised and lowered to control inflation. Recessions are inevitable. Accept all of this as truth and only worry about things you can control.
FDR once said, “The only thing we have to fear is fear itself.” This rings true when it comes to fears about money because there’s always a solution to a financial problem. Sometimes you have to work a little harder or dig a little deeper to find it, but it’s always there.
Guest Author Bio
Kevin D. Flynn is a former fintech coach and financial services professional. When not on the golf course, he can be found traveling with his wife or spending time with their eight wonderful grandchildren and two cats.