According to creditcards.com, nearly 40% of Americans carry credit card debt month over month, and the average total is close to $16,000. This doesn’t even include student loan debt, where, according to the Federal Reserve, one in five borrowers owe $50,000 or more. Let alone other obligations such as mortgages, car loans, medical debt, and personal loans.
Psychological and emotional issues associated with carrying debt are so widespread that the words “stress” and “debt” are often seen as synonymous. While some debt is considered “good” (that’s a future blog post!), and debt is a personal issue that effects people differently, there is always a mental impact to owing money.
When debt mounts, stress increases. People may find themselves ruminating about the debt and this can effect many areas of life. Debt can increase work stress, causing people to constantly worry about their income and keeping it sustainable. It can bleed over into everyday things like pumping gas or getting lunch. Every time money must go out, it can be a trigger for the debt related stress. This can really deplete the happiness people derive from spending money (like going out to dinner or treating themselves to something new). The higher the debt-to-income ratio, the more stress these issues can create.
Anxiety, and its sibling depression, are two of the most common psychological issues that can impact people carrying debt. Obviously, those that suffer most from these issues tend to be struggling to pay off their debt. Some studies report that people having trouble paying their debts are more than twice as likely to experience mental health problems, like depression and anxiety. Many people report feeling worried all the time, feeling overwhelmed, and feeling hopeless.
Another common issue people carrying debt may struggle with is feeling regretful. They feel constantly reminded of what may be deemed as poor financial decision making. This can give way to feeling shame and guilt, which can have such a negative effect on mindset. It doesn’t help that we live in a society that associates money with success, and debt is a taboo topic. Because people feel embarrassed that they are in debt, keeping it a secret can become so paramount that they will go further into debt for the appearance of “success”. It can become a vicious cycle that ends in even more overwhelming debt.
People also report experiencing feelings of anger, resentment, denial, and fear when they are in debt. This is especially true for people that have incurred debt for reasons that felt out of their control, such as unforeseen medical bills, a death in the family, divorce, or job loss. It may feel very difficult to overcome these difficult life situations when one is constantly reminded of them due to the debt accumulated during because of them.
Just as denial is a stage of grief, it can also be a very real stage of debt. People find themselves avoiding phone calls from debt collectors and not opening bills. Ignoring the debt obviously creates a bigger issue, as if payments are missed, late-fees and additional interest can accrue. The behavior of denying the debt can also feed the behavior that created the debt in the first place. Here, again, people may find themselves continuing to spend outside of their means because they haven’t come to terms with the severity of their debt.
Fear can also be a major issue for people in debt. Struggling to make payments to creditors, especially those associated with your livelihood, such as a mortgage or car payments, can leave people fearing their wellbeing every day. Add to that the long-term fear of never getting out of debt, and it can really take a toll on your mental health.
The good news? There’s a road to becoming debt-free, and once a person starts down it, the negative emotions tend to dissipate and eventually become replaced with relief and feelings of accomplishment. The first step is to face the debt head on. Recognize it’s a problem and start finding ways to attack it. People report feeling lighter from the moment they begin to deal with the problem. There are many different options for all the many different debt situations that exist, and people should be careful to consider them all carefully. But once they get to it, they can get to feeling better!