Money woes can lead to anxiety, depression

  Most of us enjoy buying gifts for our loved ones during the holiday season. For many couples that joy turns to high levels of stress when the credit card bills start to roll in during January and February. To make matters worse, some of us who were expecting an income tax refund to offset our holiday spending find that we actually owe Uncle Sam money instead.

  In both my mental health and my tax practice, I work with individuals suffering from anxiety and depression. My experience as a counselor has been that most people argue with their spouse about money, with child-rearing issues running a close second. The purpose of this article is to provide suggestions on how to cope with the stress that financial problems can bring. I’ll talk about some simple financial steps you can take to alleviate the problem first, and then how to cope with your current situation psychologically.

  First, if you are married or cohabitating, make a commitment to one another that neither of you will enter into a major financial transaction (like buying a house or a car) without consulting the other. Blindsiding your partner with a major purchase will undermine your relationship.

  If both of you are prone to overspend, then a good investment would be to seek the advice of a financial planner to develop a budget designed to help you live within your means. Discipline and self-control are the key words here. Instead of going to a fine restaurant, stay home and prepare a fine meal. If you don’t think this will save you money, I challenge you to review your check register and credit card statements and add up the total you spent on dining out over the past six months. For many of us, this will be more than an additional mortgage payment.

  Second, begin a systematic savings plan and stick with it. Most financial professionals say that the average family should have six to nine months of savings socked away to stave off a potential financial crisis (e.g., job loss, sudden medical emergency, etc.). While this may seem daunting, start putting whatever you can into an account on a regular basis.

  Regular contributions to your employers' 401(k) or 403(b) plan also lower your taxable income as do contributions to a regular IRA. If you are considering making contributions to both, see a tax consultant or other financial professional to know the limits for your specific situation. Not knowing the limits could subject you to a surprise tax bill at the end of the year.

  Finally, make sure that you are only paying the taxes you are legally obligated to pay. One study by the general accounting office revealed that as many as half of all tax returns contained errors, some of them costing individual taxpayers more than $1,000. Understating your tax liability can also cost you more money in the long run. If you are audited, you will discover that IRS penalties and interest are exorbitant. Make sure you or your tax preparer are as accurate as possible on your return. If you are self-employed, careful planning can ensure that you only pay what you owe, putting less pressure on your family.

  Once you and your partner have made the commitment to start on the path to financial responsibility, acceptance of your present circumstances is the first step toward good mental health. While blaming each other can make us feel good in the short term, both of you need to honestly look at what you did to land yourselves in this situation. If you find that you cannot get beyond the blame stage, then taking your case to a neutral third party (family member, pastor or counselor) is in order. Accepting that your situation will not change overnight is more than half the battle.

  You or your partner will doubtlessly find that you are tempted to slip back into your old spending patterns. Be on the lookout for those thoughts that justify excessive spending. They usually sound like "We deserve to eat out tonight" or "My car is really out of style, and interest rates are so low!"

  When these thoughts threaten to swamp your financial boat, take a moment and remind yourself of the pain you are now in because of your past behavior. Add up all of your unsecured debt and be mindful of that number. If it helps, put that number on a 3x5 card and display it in a prominent place. Be sure you subtract your payments so that you can see the progress you are making and also remind yourself that one day you will be financially free.

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Kevin Benbow is a licensed associate counselor with the EXCEL group. He also operates a tax consulting business in his spare time.