So, you’ve found yourself in debt—and enough debt that you’re constantly worrying about it. Know that you’re not alone. As of the end of 2024, the average American household held an all-time high debt amount of $104,215. When everyone around you is in debt, it can become easy to normalize it. But debt can harm more than just your wallet; it can negatively impact your mental health as well.
Why Do People Get Into Debt?
People can get into debt for many reasons, good and bad. Some of the most common reasons are:
- Keeping Up With the Joneses: With the rise of social media, now more than ever, comparing your life to those around you is inevitable. And when everyone seems to be going on vacations every few months, driving luxury cars, and always wearing the latest fashion trends, it’s easy to get swept up in spending just for appearances.
- Debt to Advance Yourself: Not all debt is bad. Generally speaking, mortgages and student loans can be seen as “good debt” because they’re used to advance your life.
- Necessary Resources: Sometimes, you must go into debt to acquire something you need for daily living or working, such as a car or a laptop.
- Business Ventures: People who want to launch a business often have to get a loan to get it started.
- Job Loss: Unexpected job loss can result in someone using credit or loans to pay their bills while they search for their next position.
- Divorce: Divorce is expensive because of legal bills and the splitting of assets. This sudden change in finances can lead a person into debt as they adjust to their new normal.
- Poor Financial Management: Not understanding the basics of finances, such as living within your means, can result in debt.
- Easy Access to Credit: Having easy access to credit, especially at a young age when you may not understand interest, can lead to overspending.
- Emergency Expenses: Without an emergency fund, an emergency expense can force you into debt.
The Role of Mental Health
And you can’t talk about debt without mentioning mental health. Your mental stability can greatly impact your ability to make responsible decisions. Some examples of mental health impacting your finances are:
- Someone who is depressed might stop paying their bills on time, causing interest to accrue.
- Shopping addiction is a real mental health condition that often causes the person to spend beyond their means.
- Someone with bipolar disorder might max out all their credit cards when going through a manic episode.
- An individual who suffers from substance abuse addiction might go into debt as they feed their cravings.
- Individuals with dementia often forget to manage their bills, causing accounts to be sent to collections for repayment.
The Psychological Effects of Debt
Money can’t buy happiness, but not having enough money can surely bring on a host of mental health problems. It can feel all-encompassing when you have overwhelming debt and can’t see a way out. Some of the mental health effects of being in debt are:
- Increased Stress: Worrying about your finances constantly is stressful. Prolonged stress can lead to many physical and psychological health problems.
- Relationship Problems: One study found that 54% of people believe that a partner with debt is a valid reason for divorce. Financial stressors can lead to the breakdown of relationships with partners, friends, and family for various reasons.
- Depression: Studies have shown there’s a direct correlation between financial stress and depression. Worst of all, it can feel like a never-ending cycle because some people cope with their depression by spending more.
- Sleep Issues: You may struggle to fall asleep or sleep too much because you’re so worried about your finances.
- Anxiety and Self-Esteem Issues: Those with debt can feel increased anxiety as well as decreased self-esteem. Both of these issues can lead to daily unhappiness.
How to Cope Mentally With Debt
Debt happens. Remember that your self-worth isn’t tied to your bank account. Still, staying in debt isn’t a solution either. As outlined above, even if your mental health isn’t suffering yet, there’s a good chance that psychological issues will arise the longer you maintain debt.
If you’re in debt, here are steps you can take to protect your mental health:
1. Make a Plan
Your debt will always feel overwhelming as long as it looms over you with no end in sight. You need to make a plan immediately on how you’ll become debt-free. There are lots of free resources available online that can help you walk through your options. (Tip: research the avalanche and debt snowball methods.)
No matter how long or slow the journey is, you can feel a huge sense of comfort knowing that you’re making progress. You’ll feel in control of your life again and empowered that you have what it takes to improve your financial situation.
2. Talk to Others
One of the biggest impacts debt can have on you is within your relationships. Maybe your partner doesn’t understand why you don’t talk as much to them about your feelings. Or, your family is upset with you for not coming on the next family trip. Or, friends don’t understand why you’re so depressed all the time. Your struggles with your debt can impact how you feel and interact with those closest to you. And if they don’t know what you’re going through, it can cause tension and even break ups.
Be open with those in your life. Tell them about your debt and your plans to pay it off. You’ll feel a huge sense of relief getting the secret off your chest. And your loved ones will be able to support you better as you make changes.
3. Seek Support
Being in debt can bring on many feelings of shame. You might be embarrassed that you got to this point and that you now have to make cutbacks. Even after opening up about your debt with loved ones, you might still feel all alone in this struggle.
Consider finding online support in debt repayment communities and forums. You’ll receive a lot of comfort in realizing just how common getting into debt really is. You’ll find solidarity in reading about other people’s stories. And, hearing how others got out of debt can be a great source of inspiration for you.
Your Financially Stable Future Awaits
You don’t have to live in debt forever. Getting out of debt can improve your life in so many ways. Not only will your debt-related mental health issues disappear, but you’ll have security and comfort knowing that you can afford to pay your bills. The hard work is worth it, so start making a change today.
You might also be interested in: Debt Snowball Or Debt Avalanche: Which Method Is Best To Eliminate Your Debt?
