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How Debt Affects Your Mental Health and What to Do About It

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Student loans. Mortgage payments. Unexpected medical expenses. At some point, debt affects nearly everyone. And while clicking a bank statement or opening a credit card bill may seem daunting, the stressors of debt extend far beyond a spreadsheet line item. Money — or the stress of owing it — may directly affect your mental well-being.

“Debt is like having a 100-pound weight tied to you,” says Erika Martinez, a Miami-based clinical psychologist. “We live in a debt culture; it’s the norm, and fighting to get debt-free can feel like swimming against the current.”

Here’s a look at how debt may impact your mental health and how you can manage your debt and the stress it causes.

How debt may affect your mental health

Sixty-two percent of those surveyed in the American Psychological Association’s 2017 “Stress in America: The State of Our Nation” report said money is a significant stressor in their lives.

“Money is just another relationship we have,” said Martinez. “And we have to learn how to be in that relationship. If we learn maladaptive patterns early on, they’ll be reflected later during adulthood.”

Well-documented links exist between economic crises — the Great Depression and Great Recession, for instance — and an increased rate of suicide. And while that’s a worst-case scenario, it underlines the all-too-real impact of financial uncertainty on mental health.

Mental and emotional side effects of debt may include:

  • Guilt
  • Shame
  • Denial
  • Resentment
  • Anxiety
  • Anger
  • Frustration
  • Fear
  • Insomnia
  • Panic attacks
  • Alcohol and drug abuse
  • Exhaustion
  • Suicidal ideation
  • Health issues, such as high blood pressure

Debt goes hand in hand with other stressors

Amounts of debt and reasons for owing money vary, of course. And other factors may compound mental health issues. A disabled retiree may struggle to pay back thousands of dollars in medical expenses. A college graduate might face a $1,000-a-month student loan debt while trying to find a higher-paying job. Or a family may grapple with mortgage and utility bills, a common scenario among clients for New York-based financial debt resolution attorney Leslie H. Tayne.

“My clients come in with a lot of different financial-related stressors, but one of the most prominent ones I see is not having enough money to pay their bills or not having any money left over after they pay their bills,” reported Tayne, who also authored the book “Life & Debt: A Fresh Approach to Achieving Financial Wellness.”

“That exacerbates stress.”

Another common source of anxiety, depression and stress: the dissolution of a marriage. A 2017 MagnifyMoney survey found that 21% of respondents said money was the reason for their divorce; 59% reported they went into debt due to the expense of a divorce. (Disclosure: MagnifyMoney is owned by LendingTree.)

And major milestones like graduating college and getting out into the working world prove formidable for anyone, regardless of debt. Out of the clients Martinez sees, she says student loans are by far the biggest debt culprit for her millennial clients. The Institute for College Access & Success’ Student Debt and the Class of 2017 report found that two in three college graduates had student loan debt, with borrowers owing an average $28,650.

So it’s no surprise that a 2017 Student Loan Hero survey found that more than 67% of student loan borrowers reported physical symptoms of anxiety due to the stress of their debt, including trouble sleeping, headaches and upset stomach. (Disclosure: Student Loan Hero is owned by LendingTree.)

Facing your debt head-on

No matter your debt situation, there is plenty of help out there for getting a handle on your financial future and your mental wellbeing.

  • Seek professional support. Look for mental health support from a qualified professional to address symptoms like anxiety and depression. “Be really clear that your feelings are resulting from debt,” said Martinez. “Believe it or not, not a lot of therapists ask about this.”
  • Find someone to hold you accountable. It could be a family member, a support group like Debtors Anonymous or a friend. “Debt can be very lonely,” explained Martinez, adding that societal pressures and expectations can add to a person’s sense of shame and embarrassment. Find someone you trust, and ask them to be your accountability buddy.
  • Own your denial. Debtors Anonymous relies on a 12-step principle that admits powerlessness over debt. Whether you attend the group or not, often, simply admitting your debt has become unmanageable is powerful. Martinez says she sees many stressed-out clients dealing with anxiety and depression. “They don’t connect that final dot back to the money,” she explained.
  • Organize your finances. Gather all your financial paperwork in one place, so you have the full picture of your debt. Once you add the numbers, you’ll have a clearer idea of where you are and where you need to be.
  • Set clear, reachable goals. “If you have a lot of debt, resolving to pay it all off in a few months or even a year might not be a reasonable expectation,” said Tayne. Instead, come up with a viable plan. Once you reach your smaller goal, you’ll be more motivated to continue paying down debt.
  • Shift your thinking. A change in attitude is everything, says Tayne. “I often try to impart to my clients that not all debt is bad debt and that you can be thankful for what your debt has provided for you — whether it’s education, or a home or any other number of positive aspects of your life.”
  • Find a finance professional. There are countless financial resources out there both online and in person. “If you were sick, you’d go to the doctor, so if your finances are sick, then you go to a financial attorney,” said Tayne.

You may also decide that a personal loan is a viable option for consolidating or refinancing debt to free up cash flow in your monthly budget. You may also reduce the overall cost of your debt as you repay it. However, taking out a personal loan is a big decision that you need to consider carefully.

For example, you should review potential lenders’ fees, conditions and terms. And you should take time to consider how you could use a personal loan to improve your financial situation, if at all.


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