Finances & Money

How to Deal with Financial Stress, and Why You Should Take It Seriously

Cleverdude_spendingplanStrained finances are among the leading causes of stress in America, perhaps the world. Money is a physical representation of our ability to marshal resources at any given time. The amount of money you have is an indicator of the amount of resources you can produce in the short term, and speaks to your longterm viability.

The lack of money represents how marginalized you are in the current society, and will be in the future. Having insufficient funds is an indicator of the kind of life you will not have. It limits where you can live, what you will drive, who you will marry, and the likely success of your progeny. Money is life. If you don’t believe it, try living life without any. You can’t do it.

So it should come as no surprise that financial stress is at the heart of any number of problems we face. If you are under the impression that financial stress is no big deal, it is time to think again. Here are just a few undesirable places poor finances can lead:


People who have suffered from prior drug or alcohol dependency are particularly vulnerable to financial stress. Among other things, it can trigger relapse back to those chemical dependencies. According to this (source) from Desert Hope, a treatment center located in Las Vegas,  4 of the top 5 triggers for relapse are related to finances in one way or another. They are:

  • Loss
  • Finances
  • Disappointment
  • Stress

The fifth is untreated mental and health issues. Those issues could range from clinical depression, to physical maladies that go untreated due to insufficient finances.

High-Risk Business Decisions

A person in desperate financial straits is a prime target for predatory lenders. According to

Predatory lenders typically target minorities, the poor, the elderly and the less educated. They also prey on people who need immediate cash for emergencies such as paying medical bills, making a home repair or car payment. These lenders also target borrowers with credit problems or people who recently lost their jobs. This could disqualify them from conventional loans or lines of credit, even though they have substantial equity in their homes.

In a financial crisis, one of the first things a person looks to do is shore up their finances with a personal or business loan. They feel like if they can just keep things afloat for a few more weeks, somehow, everything will be back to normal. But they never seem to figure in the additional finances required for repaying the loan. They get the quick fix of a bad loan with a high interest rate, only to discover they are worse off than they were originally.

Businesses under financial stress often do things that are against their longterm interests. Blackberry: a company known for mobile security, has climbed into bed with Android, known for its mobile insecurity, all because of hopelessly flagging handset sales and a lack of ecosystem support from developers.

In business, hard times are often the catalyst for risk. And risk is not always a bad thing. But all risk taking should be calculated risk, not a desperate roll of the dice. Financial stress leads to the desperate kind of risk that most often leads to disaster.

Making the Hard Changes

The easy way to solve financial stress is to make more money. If that plan is not realistic for you, then you have to do the harder thing: Change your lifestyle. Frugality hurts, at least in the beginning. It involves denying yourself things that you want. It means living with less. Ultimately, it involves an alteration of one’s self image.

You might have a hard time seeing yourself as the kind of person who rides the bus, of living in an apartment, or shopping at Walmart, or wearing out-of-date fashions. But the facade imposed by your unrealistic self image may be driving you to bankruptcy. But if you can make the change, the snowball effect of frugality is a net positive.

There is no shortcut. At the end of the day, the only way to deal with financial stress is to deal with the stressed finances. Credit repair and loan consolidation are excellent tools. But they don’t replace the real work of reevaluating your lifestyle and living within whatever means you actually have. Financial responsibility is the only real cure for financial stress.

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