Debt and Health

Can debt affect your health? It may already be doing just that, whether you care to admit it or not. For many people in debt, financial worries became a daily burden. Concern about money matters can interfere with your sleep (debt-insomnia, a new word I just made up), upset your stomach, give you headaches, and make you irritable.

Psychologists who study stress say that stress is highly individual. What stresses one person out may not bother another. The astronaut and now Senator John Glenn reportedly blasted off into space (first American to orbit the earth) and scientists monitoring his pulse rate during blast-off found his heart rate never topped 75 beats a minute (that's just a hair above normal). Most of us have a more rapid heart rate watching TV! The fact is Glenn's "stress thermometer" was just set very, very low.

Others of us can get upset if the evening paper isn't delivered or if our mail goes to the house next door.

Debt is a pretty worrisome thing, so it probably bothers the majority of debtors and it can be freaking out the more sensitive types.

Another reason for stress is lack of control. If we have control over something, it tends not to upset us as much as things we can't control. For instance, working long hours at your own business is rarely perceived as super-stressful by entrepreneurs. Put those same entrepreneurs in the corporate world and assign them to work for a dimwitted boss, and you have a bunch of basket cases.

If you feel like your debt is spiraling out of control, where you just can't stop the financial bleeding (like a catastrophe, for example), or where somebody else is digging you deeper and deeper into debt, it can make you sick.

Worry, insomnia, eating disorders, headaches, and stress-related ailments are common in people in debt.

Another reason to link debt and illness is that many people facing overwhelming debt cut back on health insurance, health care, or even healthful food. To save money, debtors may pass on health clubs, organic produce, doctor visits, and vitamins.

While debtors ought to economize, there is no need to jeopardize your physical health just because your financial well-being has deterioriated.

People who think debt is making them sick should take stock:

• Exercise, even if you just jog around the neighborhood or walk up and down the stairs at work. You don't need a pricy gym membership to stay fit.
• Eat as healthfully as you can. You may think fruits and veggies are too expensive, but they are still cheap compared to eating out all of the time.
• Try to get enough rest. If you have insomnia, learn some relaxation techniques or other remedies to get sufficient sleep.
• Connect with people. I can't prove it, but I think a major factor in depression comes from a sense of isolation. You don't need to spend a lot of money, either. Meet for potluck parties or go to the park or beach. If you don't have friends, join civic organizations, religious organizations, clubs, or other groups to meet people your own age and background.

In-Debt Mindset

Americans are pretty easygoing about a lot of things, including debt. When confronted by rising prices, declining home sale prices, and higher-than-anticipated jobless rates, most Americans act as if this was barely as interesting as, say, the latest news blip about Britney or Angelina. True, economic news is boring (excuse me, I must have nodded off). But there is a reason we should notice at least some economic news, even if we don't wade knee-deep into the economic blogs and reports.

Economic news is like the weather. If you hear on the news that it's raining, you'd be crazy to go out without taking appropriate precautions. Precautions don't mean that you need to run around your house, holding your head in your hands, your mouth open like that Scandinavian nightmare painting, shrieking, "Run for your life! It's raining!" Instead, a sensible person would take an umbrella to work. He or she might also wear old shoes or grab a raincoat. If you're the kind of person who walks or bikes to work (yes, they exist), you might re-think your normal mode of transportation and hitch a ride.

The point is, we adjust. We know that there are times to bring an umbrella, take a sweater, or wear shorts and flip-flops.

When it comes to economics, however, our in-debt mindset encourages us to try very hard to live as if every day was the day we wished it would be instead of the day it is. Gas prices going up? Use the same amount of gas. Unemployment higher than anticipated? Continue to antagonize the boss and show up later and later for work. Grocery prices climbing? Keep buying the same stuff. Just lost your job? Do a little retail therapy, you'll feel better. It's only plastic.

For some reason, we normally flexible Americans find it very hard to let our spending ebb and flow with market conditions. There are times to spend, but there are also times to cut back. There are even times to skrimp, although that's not a very popular word in our society, even in these unsettled economic times.

Too many of us think that debt can get us over the rough patches. Sure, things are high now. Just put gas on the credit card and pay it down later on. Things are bound to get better in the future.

While there are situations that make debt a good option, even a downright necessity, driving to the mall for a spending spree followed by drinks, dinner, and a movie isn't one of them.

The Economy on the News

My favorite part of the news is the weather report, because it relates to me. The weather guy or gal is not always accurate, but the predictions generally map onto actual events in a pretty gratifying proximity of time. Even when the weather guys flub it, it's still interesting because I wonder how they missed. Sometimes I even start to project how they miss so that I can adjust their reports. For instance, the weather guy on a local station here tends to get the weather events right, he just jumps the gun by about half a day.

That's why I dislike economic news, particularly these days. Not only is there a distressingly long lag time between the report ("Recession!") and actual events, but what the economists are talking about does not seem to actually map onto my own experiences.

For instance, everybody is in a lather about economic downturns. That is likely true. And if you are faced with unemployment, foreclosure, or other problems like that right now, I do not mean to trivialize your situation. It's bad!

But there are a lot of people who are doing just fine right now. If you're not selling your house, kept your job, and are just maybe spending more on gasoline and less on going to the movies, that is not exactly the sort of situation that calls for putting on a helmet and heading for the bunker.

My family always marched to a different economic drummer. For instance, my great-grandparents did not go broke in the Depression. They went broke years earlier. When everybody was booming, my relatives were going down the drain. To them, the Depression was the period when everybody else caught up to them. Actually, they were pulling themselves back together then.

And right now, many of us are not necessarily in financial dire straits. If you're OK, don't fall for the gloom-and-doom stuff. It does not mean it isn't real, it just means that you can't base your financial decisions on what's going on right at this moment.

I guarantee you, somebody will become a millionaire during this recession. And in the next boom cycle, some people will go broke.

The economic news is a different sort of news than the weather report. The weather report should influence our daily behaviors (take an umbrella to work? wear a coat?) but economic news may not have that much to do with our individual decisions at all.

How Rich People Use Debt (And Why They're Smarter About It Than the Rest of Us!)

Talk to a person saddled by overwhelming debt, and debt is a true four-letter word. The zealots among them dream of a glorious debt-free day when there will be neither plastic nor student loans nor even mortgages to weigh them down.

Debt can ruin you, no doubt about it. But not everybody thinks that debt is a thing to be avoided.

Some writer once said, "The rich are different." I don't know if that's true, but the rich think differently about debt. I'm not talking the socialite, easy-money, or ditzy celebrity "rich." I'm talking about people who amassed their own fortunes, sometimes against formidable odds. Those guys think differently about a lot of things, including debt.

For smart money managers, debt can be a tool. It's a way to leverage your money by letting a little money buy you a lot of advantage. (Here's an example. You buy a house when you think you can get a great deal. Only you don't sink your life savings into the house, you put a little down, take out a mortgage, and pay on the debt until you can re-sell the house at a tidy profit. That's leveraging your money.)

Debt can also be a way to finance a business or investment without tying up your own money. Most smart business people recommend that you don't sink your life savings into your own business, but rather let some venture capitalists subsidize you. That's using debt in a smart way (well, it's smart if you have a plan).

And that's the main way that rich debt differs from the debt that drowns poor people. Rich people have a plan.

To use debt wisely, you should know why you're getting in debt, understand the risks involved, and have a clear and concise exit strategy. A rich person who goes into debt not only knows how he or she is getting out, he or she also can tell you when (approximately) it will happen.

Although rich people take risks, they are actually risk averse. They only appear to take risks because their different way of thinking means they behave different from most of the rest of us (the non-rich). Still, they never get into debt without a plan to get out and a backup plan behind that. They may even have a third "May Day!" plan which is a plan to deal with a worst-case scenario.

Poor people tend to get into debt casually, without thinking. They have (at most) only a vague plan of how they're going to get out of debt ("Someday I'll be making more money than I am now and I can pay it off then.") They have no backup plan and a worst-case scenario has never even entered their minds.

What's more, rich people have debt with a purpose. They may enter into debt--often and for large amounts--but it's always for a reason and that reason is to boost their net worth. Poor people also get into debt but it's often for no real purpose other than to feel better or keep up with the neighbors or not miss out on a vacation.

Depression Money

People in the Depression knew how to pinch a penny. They weren't great savers, because they just didn't have enough left over to save. But they can teach us a lot about how to manage our money. I just wrote an article on that that you can access at http://www.articlesbase.com/finance-articles/what-the-great-depression-can-teach-you-about-managing-money-today-288443.html

It's one of those e-zine sites that let's you lift the article, so you can publish it as content yourself, if you need it.

The weird thing about the Depression is that a lot of people remember at least some of it fondly. It's not that people were glad they had to make do with hand-me-downs or forego entertainment or other treats. The fact is some of the stuff we buy today (movie tickets, restaurant meals, vacations, department store clothes) shuts us off from other things. We don't sit around and talk any more or cook or sew or try to figure out how to do things ourselves. Those things are inconvenient. They can take a lot of time, and they can sometimes be frustrating or boring or difficult.

But they can also be fun. Memories are made at the dinner table, not the drive-through, even if the dinner table meal is plain. Most kids love crafts and we recall the times we spent together, not the TV shows or movies we watched together in a catatonic stupor.

Maybe there's more than just money stuff to be learned from the Depression.

Tax Time

According to some game show I accidentally saw yesterday (so you know it's accurate), more Americans get a refund at tax time than have to pay. While that may sound good (who doesn't like to get money in the mail), it indicates that most Americans don't really understand how money works.

Paying too much in taxes does not help you financially. It allows the government the chance to hold your money (for months even) at no interest. This is good for the government, not so good for you. While you may get a windfall back, this was money you could have had working for you all along.

The game show did not say but I suspect most Americans also blow their tax money. You'd be better off using it to pay off some debt. If you don't have any debt or have more tax refund than debt, how about savings?

Sounds unamerican, doesn't it?

Debt consolidation is one of those subjects that gets people riled up. At its most basic, it's a financial tactic, a method of re-arranging obligations. In its pure form, debt consolidation is not a magic act: no debt disappears. Debt does not even decrease. What it does is roll up small debts into a larger package and re-finance the larger package.

Businesses do this all the time. They might call it restructuring their debt. In the right hands and for the right reasons, it's not only legal, ethical, and moral, it's probably sound business and just plain smart.

Ordinary people can consolidate their debts, too. The reason debt consolidation is such a misunderstood and unappreciated subject among debtors is that debt consolidation won't work for everybody. Many people who could use it simply won't qualify (you need pretty decent credit to make it work). Some people who might qualify might not really derive much benefit. It takes some organization, figuring out, and paperwork, and if you only save a couple of bucks, maybe it isn't worth it.

Debt consolidation isn't debt voodoo, you know, where you owe a company $1,500 and you walk away owing them $800. There are settlement options for stuff like that, but that's not true debt consolidation.

Another problem with debt consolidation is that even if a debtor qualifies and it's a prudent move, it sort of repackages the debt in a way that makes it easy to live with. Unless that debtor has done some soul searching, he or she will probably just go out and make more debt.

For some good general information on debt consolidation, check out www.debt-consolidation-diva.com or look for credit counselors in Google or your local phone book.