Need help with your debt? We can help you towards a brighter financial future. Get started online or Call 800-497-1965

If you’re in debt, you can likely point out the effects that it has on your life. The inability to accomplish your financial goals, facing high interest payments, and dealing with garnished wages may first come to mind, but have you considered the impact that debt can have on your mental health?

Researchers at the University of Southampton in the U.K. conducted a review of 52 existing studies on debt and mental health, finding that debt and mental health may be closely linked. While fewer than nine percent of those without mental health problems were in debt, more than a quarter of those with mental health problems were also in debt. 

Although various factors play into one’s mental health, the burden of debt can cause problems that hit deeper than your wallet. 

The Side Effects of Debt

Many worries, thoughts and emotions are intertwined with our finances. Studies show that indebtedness correlates strongly with the following:

  • Depression
  • Anxiety
  • Anger
  • Shame
  • Guilt
  • Fear
  • Sense of Failure
  • Stress

Why Does Debt Affect Our Mental Health?

There are many reasons why debt may factor into your mental well being. The social stigma and embarrassment of owing money can greatly affect your self worth. Even the type of debt that you have can play into how you feel – one study showed that over one third of Americans see credit card debt as more embarrassing than other types of debt.

Outside of judgement from the outside world, debt can also strain your relationships. Research shows that arguments about finances are the top predictor of divorce. You may also find yourself comparing your finances to those around you, affecting your relationships with your friends and colleagues.

Many who struggle with debt experience negative feelings about themselves and their circumstances. These feelings can develop into depression or anxiety. If you have pre-existing mental conditions, the pressures that come from debt may make your symptoms worse.

Additionally, our mental health can add to our debt. The costs of therapy, medication, outpatient care and inpatient treatment can quickly add up. Those without insurance may not be able to afford the expensive out-of-pocket costs of treatment. Some may find themselves overspending, ignoring bills or working fewer hours due to their mental state, resulting in greater financial burdens.

According to Ned Presnall, LCSW, dealing with debt can affect your sense of agency over your money which can send you spiraling further into depression and debt.

“If you have debt, you may feel like you’re not going to get rewards for your work, because you have to pay for past expenses. Not being able to use and enjoy the money you make can create a lack of agency and a sense of hopelessness.”

This is especially true if there is no perceived pathway out of debt, no matter how hard you work.

“We know from research that if you don’t see a way out of debt or poverty, we see an increase in various health problems, and lower life expectancy. Also, people who cope poorly with debt may acquire even more as a result.”

For example, the joy associated with making a big purchase or taking a vacation you can’t afford may act as an emotional band-aid for people who are struggling. Unfortunately, the mood boost is short-lived and quickly replaced by added stress.

“It’s important to break this cycle and develop a payment plan or some other long term strategy to figure out a path forward. This will alleviate some of this helplessness and restore your financial agency.”

Ned is the owner and founder of Plan Your Recovery an outpatient counseling center in St. Louis, MO. He’s also a professor and researcher at Washington University in St. Louis in the departments of Clinical Social Work and Psychiatry, respectively.

What You Can Do

Finding relief for both your mental health while dealing with debt may seem difficult, but it is possible. Begin with these steps:

  • Address Your Mental Health: It’s hard to improve your surroundings and circumstances when you aren’t feeling your best. If you have health insurance, start there – contact your provider to learn more about what services your plan will cover. If you don’t have insurance, or if your plan’s mental health options are still too expensive, you still have options. Check out this guide to affordable therapy from Healthline
  • Budget, Budget, Budget: Budgeting is one of the easiest and most helpful things you can do to improve your financial health. Budgeting not only gives you a visualization of where your money is coming and going, but having a clear, mapped-out plan can reduce money-related anxiety.
  • Explore Your Debt Help Options: Paying back your debts can provide peace of mind and a sense of accomplishment. Being debt free allows you to stop focusing on your past obligations, and to instead look forward to your future financial goals. If you are unable to manage your debt on your own, you may find relief by consolidating your debts into a simpler monthly payment, or working with a credit counselor

Taking a Holistic Approach

Debt affects people in different ways. Some may feel anxious when they have $500 in credit card debt, while others may not react until facing the possibility of bankruptcy. Regardless of your tolerance to debt and how you’re managing your repayments, it’s important to acknowledge your mental health while addressing your finances. By being proactive, developing better habits and asking for help when you need it, you can build the proper foundation for a brighter, healthier, and less stressful financial future.

Was this helpful?

More Like This

5 Personal Finance Documentaries to Kickstart Your Financial Health

Have you ever found yourself scrolling through endless financial advice articles, wondering where to begin when it comes to improving your financial health? Maybe you lose interest halfway through personal finance blogs because you are already short on time and attention. Documentaries are great alternatives to traditional financial resources because they educate and entertain. Kickstart your […]

31 Days of Financial Wellness

To celebrate Financial Wellness month, we created a month-long challenge. If you are willing to spend a few minutes every day working toward your goals, the challenge can help you reset your budget, improve your relationship with money, save on everyday expenses, and more.