The Impact of Debt on Mental Health: Coping Strategies & Solutions

Updated: August 6, 2024

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Carrying debt can have a tremendous impact on mental health. If you've ever experienced anxiety over a debt-collection phone call or a bill coming in the mail, you know this firsthand. Before COVID-19, 56% of Americans said that their debt was negatively impacting their life. The addition of a pandemic and added financial stress has likely increased that number.

As you work to balance your finances, take notice of how you feel physically and mentally. Feelings of being overwhelmed or helpless can have a profound impact on your mental health over time. Overcoming financial stress is a critical step in getting out of debt. Learn which people are likely to be the most severely affected by debt stress, how your finances can affect your mental health and how to cope with financial stress.

Whose Mental Health Is Impacted by Debt?

Whether you're a millennial facing college loan debt or a senior looking at retirement and long-term care, you're not alone. Americans of all ages are impacted by debt. However, some generations carry larger debt loads than others because of economic events that have taken place in their lifetime.

According to a Northwestern Mutual study, members of Generation X, the group born between 1946 and 1964, carry the most debt of any generation. The average Gen Xer has $36,000 in personal debt, excluding home mortgages.

However, Gen X is not the only generation experiencing debt. Below are the top age groups most likely impacted by debt and financial stress and why this is the case.

Who Is Impacted
Why and How

Millennials: ages 23 to 38

The average millennial faces debt because of the increased cost of living, student loan debt and the Great Recession's financial effects.

Generation X: ages 39 to 55

This generation tends to have the most financial obligations between paying mortgages, raising children and potentially helping parents financially.

Baby boomers: ages 56 to 73

Even though 28 million baby boomers retired in 2020, many did not retire debt-free. Baby boomers carry debt from mortgages, car loans, personal loans and credit card balances.

People aged 70 and older

The total debt burden for Americans over age 70 increased 543% from 1999 through 2019. This debt is primarily a result of mortgage and auto loans and having to take on more debt just to make ends meet.

Ways Your Financial Health Affects Your Mental Health

An illustration of a young couple with a wallet full of cash and a humanoid brain character

Overwhelming debt can result in stress and depression and has been linked to increased suicide rates. Money issues have also been linked to relationship instability, so both your sense of physical and emotional security can be at risk when debt is a constant presence in your life. The following are ways financial health can affect a person’s mental health.

1
Creates additional stress

Stress, especially chronic stress that becomes part of your life for years, has a deeply powerful effect on your mind and body. Stress puts more wear and tear on your cardiovascular system. Constant stress makes it easier to develop mental health problems and can affect the parts of your brain associated with Alzheimer's disease.

2
Risk factors for mental illnesses

People in debt are three times more likely to take their lives than those who are not experiencing financial issues. Long-term financial insecurity and consistent poverty, as well as the pressure from lenders and debt collectors to pay bills, can trigger suicidal thoughts and actions.

3
Developing physical health issues

Debt can lead to anxiety and depression, which can increase headaches, affect sleeping patterns and impact a person's ability to focus. This type of physical stress on the body can result in more frequent colds and infections and affect a person's ability to go to work which further enhances financial struggles.

4
Affects families and communities

Families suffering from debt, whether it be personal debt or student loan debt, are unable to put as much money into retirement as they would like and experience a delay in traditional milestones like starting a family and buying a home.

5
Developing behavioral symptoms

Financial stress can lead to an adverse change in behavioral symptoms such as changes in appetite, procrastination and nervous behaviors.

6
Increases poor spending habits

When someone is experiencing mental health issues, they may resort to overspending to relieve feelings of depression and anxiety temporarily. Compulsive overspending can lead to guilt, depression, overspending and ultimately more debt.

7
Increases usage of drugs and alcohol

Someone who is experiencing stress from financial debt may turn to antidepressants or alcohol to help deal with their anxiety. This can lead to addiction and even increased debt due to the costs associated with substance abuse.

Snapshot: Income Levels And Mental Health

Income inequality is directly correlated to mental health issues. Low-income populations are more likely to suffer from depression, attempt suicide and have higher substance abuse rates. Here are four statistics on how income levels could affect mental health.


  1. Increases psychological distress: 8.7% of people with incomes below the poverty line have severe psychological distress.
  2. Creates barriers to health care: Less than 15% of children living in poverty who need mental health care receive services.
  3. Developing severe mental illness: Adults aged 26 and older living below the poverty line are 26.7% more likely to experience severe mental illnesses.
  4. Leads to unemployment: 10.1 million Americans are unemployed. Unemployment can lead to mental disorders and further drive poverty.

Source: Centers for Disease Control and Prevention (CDC), Pediatrics, Substance Abuse and Mental Health Services Administration (SAMHSA) and U.S. Bureau of Labor Statistics

How Your Mental Health Can Influence Your Finances

An illustration of a humanoid brain lifting weights with a young couple encouraging the brain and coins are in the background.

Just as debt can lead to mental health issues, mental health issues can also influence a person's finances. Someone who is experiencing anxiety or depression may turn to poor financial decisions to cope. This can include making expensive impulse purchases and developing a shopping addiction. Depression can also lead to difficulties in working and keeping a job. In the U.S., depression causes 490 million disability days from work each year. When people experience mental illness, they may struggle to create and stick to a budget and pay their bills, which results in growing bills and debt.

Why Is There a Correlation Between Mental Health and Money?

Money is one of the most significant stressors for many people. According to the American Psychological Association, 72% of Americans reported feeling stressed about money at some time. One of the main reasons so many people feel stressed about money is how money is viewed and used in our society. Money is required to live and provide for a family, so individuals struggling to make ends meet may experience low self-esteem. Also, watching bills pile up on the kitchen table can easily send someone into a mental spiral of feeling stuck and like there is no way out.

Once someone struggles with their mental health, it enters all aspects of their life and can become a vicious cycle. According to the CDC, depression affects job performance and productivity, engagement with one's work, communication with coworkers, physical capability and daily functioning. Once a person is incapable of focusing or completing their work, they're unable to bring in income, thus fueling the cycle of debt and mental health.

Coping Strategies for Financial Stress

An illustration of the humanoid brain being strong and healthy while the young couple is happy for it. There is also a safe with coins in the background.

High interest rates make student loans and credit card debt a severe burden. Unexpected debts like medical expenses can happen to anyone. Add flatlining wages and a pandemic into the mix, and it can be hard to imagine living debt-free. You can take control of your money and mental health, and you don't have to do it alone. Here's where to start.

1
Talk to someone

Science shows that talking about problems helps relieve stress. By simply admitting to a close friend or loved one that you're struggling with your finances and mental health, your struggles may seem more manageable. The person does not need to have the ability to fix your financial problems or even help. The purpose of opening up to someone you trust can be a meaningful way to release the pressure you feel and talk through your feelings and fears with someone rather than keeping it bottled up and increasing your anxiety.

2
See a doctor

Mental health issues should never go untreated. If you begin to notice your physical or mental health declining, it's essential to get help. Even if you're unsure if you need assistance, if you notice your sleeping patterns, eating habits and energy levels shifting negatively, it's a good idea to get your health examined.

3
Speak with a credit counselor

Sometimes, it can be hard to see the way out of our financial problems. A credit counselor is a trained professional who can look at your finances as a whole and help you determine where you can start making some cuts and how to begin eliminating debt. Some nonprofit organizations, like the National Foundation for Credit Counseling, can put you in touch with a counselor who can customize advice for your situation.

4
Ask about writing off your debt

Some creditors may allow individuals who suffer from long-term health issues or disabilities to write off their debts. The easiest way to see if this is an option is to call the creditor's office and ask.

5
Seek out mental health counseling

Everyone feels down sometimes, but feeling hopeless, depressed or anxious enough to interfere with your life is a problem. You deserve help. Look for counselors who offer sessions on a sliding scale for payment, or call a free hotline or use digital tools like apps if you can’t afford a therapy session.

6
Make an action plan

Should you deal with a collections account or pay a high-interest debt first? Is there a way to reduce the burden of your student loan payments? Are you looking for methods to pay down credit card debt? Would bankruptcy relieve your debt or make life more challenging? Identify the most critical financial issue and make a plan, either on your own or with a professional to guide you.

7
Work on your credit score

It may sound silly to think about your credit score when you're trying to get yourself out of debt, but understanding your credit score is a big step toward borrowing money and making significant financial purchases in the future.

Advice on How to Cope With Debt Stress

While coming to terms with your financial situation is a significant step in improving it, it's crucial not only to recognize financial stress but take actionable steps to get out of debt and remove debt stress from your life. The following steps are an excellent place to start.

1
Acknowledge your debt and write it down

Talk to your partner, a trusted family member or a good friend about your debt and begin to write down all of the debt you have in an organized manner. This enables you to start tackling your debt one item at a time.

2
Prioritize your debt

Once you've made a list of how much money you owe and who you owe it to, you can start determining which debt is most important to pay off first. Typically, this should begin with debt that impacts your living situation, such as rent or mortgage and keeping the lights on.

3
Identify your spending habits

The only way to change spending habits is to identify what they are first. Are you an impulse buyer? Do you spend $6 a day at Starbucks when you could spend the same on a bag of coffee and make it at home? Once you identify your habits, you can start to make changes.

4
Set a budget

Create a budget that includes paying off your debt and living within your means. Budgeting leads to a more organized financial life and can help you keep track of money coming in and going out.

Once a budget is in place, you can critically look at opportunities to lower your monthly bills. This may include finding more affordable car insurance or health insurance. Or, combining bills for discounts such as bundling cell and internet service or home and auto insurance.

5
Take care of your mental health

If you’ve experienced any of the common symptoms of declining mental health, call a health care practitioner and get a wellness exam. Be honest with your practitioner about the debt stress in your life.

6
Contact a financial advisor or credit counselor

If you don’t have a financial advisor you can start with the National Foundation for Credit Counseling®, a national organization that will connect you with a nonprofit credit advisor.

7
Start paying down your debt

Whether you can put $5 or $50 towards your debt, you can begin to envision an end in sight once you start seeing your debt decline. This will have a tremendous positive impact on relieving your debt stress.

Where to Get Help

Even though debt can feel looming, there is help available to cope with financial stress and find ways to manage money better. From organizations to support groups and debt counselors, various professionals who are experts in money management and debt relief can help you begin to tackle your financial stress.

  • National Foundation for Credit Counseling: The NFCC is a national directory of nonprofit credit counselors. It provides debt advisers who can help you perform a financial review, establish a budget and create a personalized financial action plan.
  • American Psychological Association: The APA has published a series of guides, resources and content related to psychological science. APA is made up of 122,000 researchers, educators, clinicians, consultants and students. You’ll find numerous articles and guides on debt and financial stress.
  • Debtors Anonymous: This 12-step recovery program is designed for those experiencing unmanageable debt. Meetings are offered across the U.S. face-to-face or virtually.
Ask the experts:

What is the most dangerous mental health side effect of debt?

Indigo Stray Conger, LMFT

Anxiety and depression are both common and debilitating results of experiencing debt. The more significant the debt on a person's finances, the higher the danger of mental health repercussions. The amount of debt is less relevant than how the debt affects a person's quality of life. For one person, a couple of thousand dollars may feel insurmountable and lead to a significant loss of opportunity, whereas for another person, a few thousand dollars in arrears does not create significant stress or shifts in lifestyle.

Anxiety results from the stress of not knowing how to overcome debt, from imagining other future ramifications of continued debt and from the fear of others' judgement. Depression arises from a hopelessness corresponding to debt and a helplessness to confront the debt and find a path forward. Once anxiety or depression takes root, they can interrupt a person's ability to make headway on their financial situation, which in turn may increase symptoms of anxiety or depression. It is imperative to stop this cycle before mental health issues become entrenched.

Alan B. YoungProfessor of Sociology at MidAmerica Nazarene University

If I were to frame the point, it is that sometimes we get so focused on the strategies of debt reduction (like paying down the highest interest accounts first) that we neglect the mental health aspects. While strategies are important, debt can feel so overwhelming that it is hard to take any steps at all. For that reason, I think that the powerlessness we feel when facing a large pile of debt is the most dangerous mental health impact. It convinces you that there is nothing you can do to fix the problem, so why even try? The first step towards good mental health is to recover your sense of control. Once you get some “wins,” you can build confidence that you can fix the situation.

Michael UrbanSenior Lecturer, Director, Doctorate of Occupational Therapy Program at the University of New Haven

The most dangerous mental health side effects of debt are multifactorial in nature, as depression is often the most notable side effect of debt, but this can go hand in hand with other symptoms such as anxiety, feelings of being overwhelmed, sadness, excessive worries or fears, extreme mood changes of highs and lows and fatigue combined with sleeping problems.

When we think of mental health and debt, many point to depression, which can cause people to miss payments or overspend compulsively. But these other symptoms can also lead a person into further debt due to their impaired cognitive level. So many of these other symptoms can go unnoticed or be blamed on other factors, such as stress at work, managing home and work life, etc. Thus, feeding the depression and spending leads to a downward spiral of more debt and often interpersonal relationship problems.

Expert Insight on Debt and Mental Health

MoneyGeek spoke with industry leaders and academics to provide expert insight into debt anxiety and stress and advice on managing mental health while getting out of debt.

  1. What is the most dangerous mental health side effect of debt?
  2. If someone is experiencing declining mental health because of debt, do they tackle overcoming debt or improving mental health first? What are the first steps they can take to recover?
  3. What are the first steps they can take to recover?
Sathya Chey Patterson, CFP
Sathya Chey Patterson, CFPManaging Partner, Wealth Advisor at Arise Private Wealth
I think the three most serious mental health effects of debt are: - Chronis stress and worry: You simply feel the pressure and hopelessness when your debt balance level is growing due to accrued interest. - Relationship strains: It is no secret that financial issues are the top reasons for divorce and unhappiness in relationships. - Lack of confidence: When you feel ashamed or inadequate due to your debt, it affects your self-esteem. This could also lead to poor decisions regarding other areas of your life, whether financial or non-financial.
I think they can tackle both at the same time. First, seek help and support to navigate your negative thoughts. Then, try to understand your spending habits. What have you been spending your money on? Are they necessities or mindless spending that are on things you don’t even value? Understanding what you spend your money on and why may help give you the motivation you could do without some of these luxuries you’ve been spending on.
Create a plan that is realistic and achievable to get out of debt. I really love organizations like <a href=" https://www.debtwave.org/" target="_blank">Debtwave</a>, which help educate you on budgeting while also negotiating with credit card companies to lower your interest rate. They make it easy for you to have a debt payoff plan by making one monthly payment to them for a nominal administrative fee.
Christine Matthews, LCSW, MBA, CLC, CCTP, BSP
Christine Matthews, LCSW, MBA, CLC, CCTP, BSPCEO/ Owner at Never Journey Alone, LLC
The most dangerous mental health side effect of debt would be that prolonged debt can lead to severe depression and anxiety, which would then impact other areas of the person's life, such as important relationships and work performance that, in turn, limit the ability to gain an income to pay down or off the debt.
I believe that we have to assess and attack the "crisis" first. If the crisis is financial at the time of meeting the person, we have to help the person find the resources to resolve the debt while maybe exploring with the client their relationship with "money," which may have led them to debt. This is important to explore so that the person will not find themselves in the same situation again. As a therapist, I would want to assist the client in determining the "financial pitfalls warning signs" to be able to identify certain behaviors. Hopefully, being able to identify these behaviors will prevent the outcome of severe debt again. The idea is to get ahead of the problem before it happens again.
Admit that there is a problem and seek out help. If a person is struggling in life in any capacity, there is no shame in seeking help.
Madhavi Menon, Ph.D.
Madhavi Menon, Ph.D.Professor of Psychology at Nova Southeastern University
Debt can be crippling not just to one’s finances and credit score but also to one’s physical and mental health. I wouldn’t say that any one side effect of debt is more or less dangerous than the other, as they all tend to have a cumulative effect on the individual. Finances (or lack thereof) have often been linked to anxiety and stress, including constant worry about losing one’s job, mounting bills and expenses and rising debt. This form of chronic worry has been shown to negatively impact sleep and also affect social relationships, with people isolating themselves when they feel they don’t have enough money to join their friends in activities, leading to social isolation. There is considerable research on the association between poverty, financial stress, psychological distress and diminished mental health. There is also some longitudinal research that suggests that financial stress can have long-term consequences for people over the years, with some research by Choi (2009) indicating that experiencing economic adversity in childhood was linked with financial and mental vulnerability in the early adulthood years. Furthermore, financial anxiety has also been linked with lowered sleep quality as well as increased cortisol levels that are linked with blood pressure, heart rate mood and memory.
Financial debt and the associated decline in mental health should be tackled together. I would suggest taking baby steps to help alleviate the conditions for both financial and psychological health. For instance, creating a plan on how to begin bringing down the debt can help boost a sense of control over one’s finances, and that can help boost one’s sense of self and control, which can, in turn, help the individual start working on the plans they created. Instead of focusing on one and then the other, I would suggest a two-pronged approach to tackle both financial debt and mental health simultaneously.
Stephanie Gilbert
Stephanie GilbertOwner of Stephanie Gilbert and Associates, LLC
Living with debt can trigger a variety of mental health symptoms, but the most serious would be if a person feels so hopeless and trapped that they start to think about hurting themselves as a way out. Suicidality may seem like an extreme symptom as a side effect of debt, but financial pressures can feel overwhelming. They can impact every area of a person's life, and debt can be a contributing factor to someone considering suicide. Some warning signs of suicidality include someone expressing hopelessness, feeling like there's no way out and changes in behaviors such as isolating from others. Remember, a person might not be sharing their feelings, so it is important to ask. It's also important to note that if anyone has thoughts of hurting themselves, this is an emergency situation, and the person should call 988 or go to their nearest emergency room.
Reaching out for support is the first step someone can take. This may be talking to a trusted family member or reaching out to a mental health professional. From there, a person can make a plan to address their individual symptoms and circumstances. Depending on the severity of mental health symptoms, a person may need to focus on their mental health before reducing their debt. This is particularly important if a person is having severe mental health symptoms, including thoughts of hurting themselves. Or if a person has any mental health symptoms preventing them from working towards the goal of reducing their debt, including depression or anxiety symptoms. After a person's mental health symptoms have reduced to a point where they can take on additional goals of reducing their debt, this can become a focus as well. At times, debt can be such an emergency that it needs to be addressed right away, in addition to mental health concerns. For example, if someone's going to be evicted from their home or their car is going to be repossessed, if a person can address that problem, it's best to do so as soon as possible. If their mental health is preventing them from addressing the debt, having a trusted friend or family member help in that situation would be appropriate. Deciding where to start based on the circumstances and making a unique plan tailored to the person's needs, including their mental health concerns and debt recovery, is key to achieving better mental health and financial health.
Bob Sinclair, PhD
Bob Sinclair, PhDProfessor of Industrial/Organizational Psychology at Clemson University
I do not think there is one specific mental health effect of debt that would be the most dangerous. Research is fairly clear that economic stressors are associated with a wide range of mental and physical health concerns. I would expect high debt to be associated with outcomes such as anxiety and depression in ways that might be relatively minor for one person and quite severe for someone else. It is also important to note that mental health concerns such as anxiety and depression can lead to a variety of other health- and well-being-related challenges that may be quite severe in some cases.
Economic stressors and mental health concerns may have a complex relationship. People may experience declining mental health due to their debt, or they may experience increasing debt due to mental health challenges (for example, if treatment of a mental health condition is expensive or when declining mental health undermines one's motivation to attend to financial concerns). Of course, the opposite may be true as well. As people successfully manage their debt, it may lead to improved mental health outcomes, even as it may inspire someone to change how they cope with their economic situation. Ultimately, I think the answer to this question about which to tackle first depends on the severity of the circumstances. For example, if someone is experiencing serious mental health concerns, that has to be a priority as it will interfere with all aspects of their well-being, not just their ability to manage their debt. But if someone is experiencing crippling debt, it may be necessary to deal with that to address any resulting mental health concerns. In either case, I would encourage people to self-reflect on whether they are able to address their concerns through self-care (e.g., rethinking their financial management strategies to handle debt and finding new healthy ways to cope with mental health concerns). If these challenges seem beyond one's ability to manage on their own, then the good news is that professional support is available for both mental health challenges and financial concerns.
Dr. Robert J. Thompson, CHA
Dr. Robert J. Thompson, CHAAssistant Professor of Business at William Carey University, U.S.A.
The Financial Wellbeing Index score for February 2023 shows that two in five U.S. workers feel overwhelmed by financial stress. This is extremely concerning. As personal debt mounts, the individual can often begin to feel engulfed with no visible means of escape. This can foster bouts of excessive anxiety and depression. Unmanaged, the situation can become very grim. There are options to address a high debt-to-income ratio, such as debt consolidation, a personal loan and even bankruptcy, as a last resort. Unaddressed, debt will continue to mount and weigh heavily on the individual's mental health, not to mention the impact of potentially higher costs and/or even loss of employment and income. To me, this is the most dangerous aspect of debt. When an individual sees no way out of a "dark" situation, they can lose hope and take drastic measures. Research shows that people with financial hardships and a heavy debt burden significantly increase their risk of committing suicide. Therefore, seeking professional assistance in managing and reducing financial stress is important.
I believe you can do both at the same time. Research shows the average cardholder owes $5,769 in credit card debt and owns 3.8 credit cards. Managing this amount of debt distributed among multiple credit cards can be a formidable task. The tendency is to focus on the credit card with the largest balance; however, paying the card with the least amount owed first will enable it to be paid off sooner. Thus, more money can be put toward the credit card with the next highest balance as you move to pay off the next card, and so forth. Seeing progress in reducing the debt will improve your mental health as you begin to see yourself emerging from under the oppressive weight of the excessive debt.
Bobbi Olson
Bobbi OlsonFinancial Coach & Host of the "CentsAble Chat" Podcast
I’m not a mental health professional, but as someone who was affected by debt for a long time, I would say depression. My debt, and the feeling of hopelessness that went with it, caused me to feel depressed, which led to negative thoughts and interactions with family and friends. I was angry, hated my life, felt trapped in my job and in my life. I took it out on those I loved, who didn’t deserve it. The feelings of depression actually caused me to go further into debt, because I had a “who cares” attitude, which led to very bad financial choices. I felt like I had no options, and no way out. Thank God I was wrong! There is always a way out; nobody has to live like that!
Again, I’m not a mental health professional, but I would say it depends on the person. Some can pull themselves out of it without professional help, others need a helping hand. So be honest with yourself and get the help you need! But regardless, the first step anyone can take is believing that change is possible. Until you do that, a professional can talk until they’re blue in the face, and it won’t make any difference. My debt-free journey began because I was miserable and truly believed change was impossible, but I wanted to be able to say I had tried, so I read a personal finance book, tried out some of the ideas for myself and saw the light! Once I believed, there was no stopping me! FIND THE HOPE/BELIEF!
Katie Lear
Katie LearLicensed Clinical Mental Health Counselor, Coach and Author
Carrying debt does not guarantee that a person will develop mental health symptoms. However, we know that life circumstances like poverty, housing instability and other major life stresses put a person at an increased risk for mental illness. We often ignore just how big a part these larger societal factors play in an individual's wellbeing. A person struggling with debt may feel anxious a lot of the time: they have this big, looming threat hanging over them that feels impossible to overcome. They may find themselves ruminating over thoughts about their debt or blaming themselves for failing to develop a good solution. These shame spirals tend to magnify anxiety over time. Meanwhile, calls or threats from collection agencies can heighten the sense of urgency about paying off the debt, leaving the debtor feeling perpetually on guard or edge. You can't sustain this kind of high anxiety forever. Eventually, the energy burns off, and you're left with depression. Things feel hopeless, and it's hard to drum up the motivation to continue fighting. To my mind, this is the most dangerous side effect of debt. A vicious cycle can form between your finances and your mental health. Depression robs us of our ability to take action; it's hard to even get out of bed for some people. This leads to a vicious cycle where depression prevents a person from taking steps to improve their finances, allowing the debt to grow even bigger. In difficult situations, depression sufferers may have thoughts of suicide or turn to substances to cope with their emotional pain.
Even though mental health and debt are linked, I don't think there's ever a reason a person should sacrifice their well-being for their finances. We strive to have good financial health because we want to lead happy, full lives, not the other way around. Even though debt can feel very urgent, if a person has survived this long living in debt, they can probably withstand a few more months while working to stabilize their mental health. Someone struggling with anxiety or depression due to debt likely has other factors contributing to their struggles. Family tension, low self-esteem and sleep problems can arise when someone is stressed about money. There may also be difficult life circumstances that contributed to the accumulation of the debt in the first place, such as chronic illness, addiction or underemployment. It's worth taking a holistic view of all these factors because it can alleviate the shame and increase the odds of making lasting changes. Any form of counseling would be a good first step, but finding a financial therapist is an excellent way to address mental health issues related to debt. Financial therapists can provide mental health counseling and guidance about money matters. This type of therapy could include learning coping skills to deal with strong feelings, discussing areas related to money, such as work and marital struggles, and even exploring your money mindset to discover the thoughts and emotions that inform your financial choices. Make sure whoever you work with is licensed as both a financial therapist and a mental health professional to make sure you're getting the best care.
Michael Urban
Michael UrbanSenior Lecturer, Director, Doctorate of Occupational Therapy Program at the University of New Haven
The most dangerous mental health side effects of debt are multifactorial in nature, as depression is often the most notable side effect of debt, but this can go hand in hand with other symptoms such as anxiety, feelings of being overwhelmed, sadness, excessive worries or fears, extreme mood changes of highs and lows and fatigue combined with sleeping problems. When we think of mental health and debt, many point to depression, which can cause people to miss payments or overspend compulsively. But these other symptoms can also lead a person into further debt due to their impaired cognitive level. So many of these other symptoms can go unnoticed or be blamed on other factors, such as stress at work, managing home and work life, etc. Thus, feeding the depression and spending leads to a downward spiral of more debt and often interpersonal relationship problems.
If you or someone you know is experiencing mental health issues because of debt, the most important step is to make sure the individual is addressing the mental health component first. But in tandem with the debt, this often makes it hard for the individual to address. To best achieve this tandem effort, the individual should seek help from the following combination of healthcare professionals: their primary care doctor, a psychiatrist or psychologist and an occupational therapist. The primary care doctor and a psychiatrist or psychologist will work together to treat the mental health condition. The occupational therapist will aim to address the mental health symptoms impacting the individual’s daily functioning overall to improve quality of life and build overall functional skills around money management, while integrating with any other social contextual factors that can perpetuate the mental health symptom cycle.
Claudia Grauf-Grounds, PhD
Claudia Grauf-Grounds, PhDEmeriti Professor, Marriage & Family Therapy, Licensed Marriage & Family Therapist
Managing a significant amount of debt is stressful. Each person or family must evaluate what becomes “too much” debt. Sometimes a decline in our physical or mental health signals that we must do something differently. When we attend to this signal early and well, it is beneficial to our overall well-being. However, one of the serious outcomes of chronic or overwhelming stress is that it triggers physiological and psychological responses that can become more debilitating. Anxiety or depression can lead to more severe behavioral reactions, such as suicide. Thus, one of the most dangerous mental health side effects of too much debt is death.
Both mental health and debt are best tackled by getting support. Call trusted friends or family; call a therapist or join a support group. Increasing social support is the most researched positive factor in tackling stress. Others can often see which of these factors are more significant to prioritize. We often lose the capacity to evaluate correctly once the stress is too high. Our social connections help to remind us that our lives are more significant than our current financial situation.
Dr. Alex Melkumian
Dr. Alex MelkumianFounder of Financial Psychology Center
Money is such an­­­ integral part of our daily lives. It contributes greatly to our feeling of well-being and overall success. On the contrary, the lack of money and the presence of large amounts of debt are internalized as a stamp of failure. The impact of debt can range from daily stress and anxiety that rob you of your joy to severe depression and shame of not being enough. In extreme cases, that can lead to hopelessness and even suicide. Not all debt is bad. A 3% secure mortgage loan is different from having $50 in credit card debt at 27% APR or $150,000 in student loan debt while working at a job that pays $50,000 a year. - Becoming healthier with debt is about removing the negative label and discerning between the various types of debt. - Rome was not built in a day. You did not get into debt overnight. Hence practicing patience and self-care will help to be disciplined, consistent and strategic about getting out of debt. - Keeping strong emotions at bay is key. Working to curb your emotions, particularly resentment, shame and deprivation, will lead to emotional equanimity. When you are not clouded with emotion, you can make focused, deliberate, strategic decisions to get out of debt over a sustained period of time.
In normal times, financial stress is the most common type of worry among Americans. The pandemic has exponentially amplified the levels of financial anxiety. Small businesses are going under, people are getting laid off, and freelance workers are losing valuable contracts. This has led to many people maxing out what credit they have and increasing their debt while completely upsetting their debt-to-income ratio. The fear of not being able to pay it back and losing what you have can bring on intense anxiety attacks that are prone to strike at any moment. They can be triggered during the day by financial engagements, or they can arise from the subconscious at night and cause insomnia. As one falls deeper into debt or prolongs it through minimum payments, it can become very dark. You'll have a person who feels they'll never be able to get out from under this massive weight of debt. It can cause depression, and if untreated, that depression can lead to suicide. While there are typically practical solutions to debt, the emotional toll can be so great that those suffering are unable to address their finances in a logical manner, further exacerbating the stress. At this time, it is important to triage the crisis and deal with the most acute pain point. In financial terms, that could mean building an emergency fund (a "sleep well" account) or paying down the account bearing the highest interest. In psychological terms, when you are feeling stressed over debt or finances in general, and you find the anxiety is so great it is negatively impacting your life, it is suggested to implement a couple of key steps to stabilize your position. One should get help. There are specialized financial therapists that can walk you through the process of uncovering your relationship with money. Because finances are such a taboo topic in our society, one does not get to share what is going on for them financially, so they can get stuck in their own head without anyone to talk to. This builds anxiety and can lead to panic attacks and even suicidal thoughts. The biggest warning sign is if you are constantly thinking about your money or never thinking about it. These can be signs that you are obsessing or avoiding. The inability to have open conversations about finances makes it more complicated to tell when others are suffering financially. They may be spending big but diving themselves into debt all because of anxiety and the stigma of financial shame.
Elliott Michael Smith
Elliott Michael SmithCEO at The Ohana
The mental price of debt isn't discussed enough. A person living with debt often feels like they are always looking over their shoulder. They never feel like they can get settled because the burden of what they owe is forever lingering. In many cases, people living with debt feel extreme shame over their situation. Denial, stress, fear, panic, anger and depression are also common. However, there is one mental health side effect that is the most worrisome of all. This side effect is a compelling, desperate desire to escape the situation, which can ultimately lead to suicide. Some people who struggle with debt report having suicidal ideations caused by a desire to "escape" their situations. A <a href="https://pubmed.ncbi.nlm.nih.gov/20550757/" target="_blank">2011 study looking at personal debt and suicidal ideation</a> found that those in debt were twice as likely to think about suicide after controlling for sociodemographic, economic, social and lifestyle factors. Overall, difficulty with paying off debt was found to be strongly associated with suicidal thoughts. Interestingly, researchers found that one specific emotion served as a bridge between being in debt and having suicidal feelings. That emotion was hopelessness. The connection between hopelessness and suicidal ideation is worrisome. However, the good news is that people can recover both mentally and materially from debt.
Addressing mental health should always be prioritized over overcoming debt. However, it doesn't have to be a choice of neglecting debt just because you're focusing on mental health. Focusing on your mental health may help you get in the right frame of mind to create solutions for managing your debt. Ideally, you'll be taking steps to address your mental health while also building a plan for getting out of debt. First, let someone know you're struggling. People with debt often get buried in shame, which is far more destructive than being buried in debt. Counseling may help you to address the depression and anxiety you're feeling. If your debt is a result of compulsive spending, talking with a therapist about discovering the underlying root of the issue may make it easier to stop the debt cycle. Once you've created a plan for getting help for your mental health, consider using tools that can range from a budgeting app to a debt advisor to come up with a new budget. Many financial institutions provide free advice to people in serious debt. They may even be able to help you stop creditors from hounding you if constant harassment is exacerbating your mental health issues. The good news is that debt doesn't have to define your mental state. Know that you are more than the sum of your bank statement. If you've been living in shame over debt, sharing your debt worries with a therapist can provide a sense of relief. While debt can feel like a crushing weight, focusing on your mental health can help you get in the right frame of mind for tackling the situation from a place of empowerment.
Curtis Lehmann
Curtis LehmannAssociate Professor at Azusa Pacific University
Suicidality could be the most dangerous mental health effect of debt, given that it could potentially endanger the person's life. Debt, especially when the balance is escalating and cannot be discharged through bankruptcy, can lead a person to feel trapped. Two major theories of suicide, advanced by Rory O'Connor and Igor Galynker, have emphasized that a sense of entrapment is the central feature of the desire for suicide. Entrapment is an emotionally intense and overwhelming experience. Some have even described the experience as similar to being a caged animal. Now, I want to be clear that debt on its own will not cause a person to feel trapped in this way. But for some people who are susceptible to mental health problems and dysfunctional ways of thinking, debt can contribute to this sense of being hopelessly trapped. Fortunately, there are effective treatments that can alleviate this sense of entrapment that causes a desire for suicide.
If debt is causing a decline in your mental health, the best approach generally will be to address both issues simultaneously. Unfortunately, some people's mental health problems can disrupt their efforts to address their debt effectively. In that case, I would encourage the person to seek out a therapist who can help with the symptoms that might be derailing their efforts to address the debt. But I would also be careful not to frame the issue as either a personal mental health or a personal budgeting issue. There are systemic issues at play, so it is important for our government leaders to create a financial system that does not perpetuate financial exploitation. We need policies that take into account our human vulnerabilities and minimize the risks of debt for our collective mental health.
John Carlson
John CarlsonProfessor of School Psychology at Michigan State University
To answer the question about the most dangerous mental health side effect associated with debt, you must first understand one’s feelings/beliefs around debt accumulation. Those comfortable with high debt levels managed effectively may not experience any negative impacts on mental health. Others with high debt levels that are clearly beyond their means may be oblivious to the problem or demonstrate poor self-awareness. In those situations, not making rent/mortgage payments, persistent calls and letters from debt collectors, an eviction notice, a decline in relationships or other areas of dysfunction may shake them out of their debt stupor. Unsustainable debt can also begin to overwhelm those who may be quite comfortable with spending above their means. Losing a job, having pay stagnancy or reductions or the inability to sustain side hustles may create an increased gap between expenses and income. Particularly those who can’t adapt their spending to match their means may feel mental health problems arise. At some point, in situations where behavioral change does not happen, one’s poor self-awareness, lack of self-control or inability to delay gratification may jump out as a mental health side effect or personality characteristic that led to having excessive debt in the first place. For those with low debt tolerance who can recognize they have taken on more debt than they can handle, burdensome and even dangerous mental health side effects associated with debt can certainly arise. These may include excessive worry and anxiety, uncertainty about the future, obsessions and compulsions related to their debt levels or increased feelings of helplessness and hopelessness. Feeling out of control, sensing direct threats to one’s identity and feelings of worthlessness may too develop. Relentless anxiety and impaired cognitive functioning, like those seen during a psychological breakdown, may also occur. Negative changes in thoughts, feelings and actions around one’s debt situation, in turn, can begin to impact physical health, including sleeping, eating and emergent unhealthy habits. These combined physical and mental health challenges can impact relationships, employment and overall life functioning — so much so that feelings of wanting to escape from the financial burden and stress they have created for themselves and the ones they love can fully consume their mind. Suicidal ideation and tendencies would be especially of grave concern and must be addressed immediately through mental health care referral and treatment.
Self-awareness and self-control are essential to preventing uncomfortable levels of debt. The relationship between increased psychological impairment and financial burden must be addressed in parallel. First, working with a professional to determine which came first is essential. Did mental health issues like impulsivity or detachment from reality lead to debt intolerance, or vice versa? Second, are there any underlying addiction behaviors at the root of the financial challenges that have emerged? If so, like with the often dual relationship between substance abuse and mental health issues, financial and mental health counseling would need to occur simultaneously. Third, rational decision-making and clear thinking are essential to establish. Climbing out of a situation that you unexpectedly may find yourself in requires planning and good problem-solving skills. Working collaboratively with a professional may be essential to both overcome debt and reduce the psychological burden resulting from one’s excessiveness, lack of self-control or an unexpected change in one’s personal or financial situation. Recovery should also be facilitated through the involvement of social or family supports. Tackling and overcoming debt is a challenge. Like with any good challenge, remember, disequilibrium = growth.
Steven C. Hayes
Steven C. HayesFoundation Professor of Psychology at the University of Nevada, Reno
Unsecured debt can be an intense stressor, and not just in a practical sense. It also can challenge our usual sense of self-worth and self-story in a profound way. Your mind may start calling you a loser or worthless as if financial worth and human worth are the same. Health practices slip away; sleep problems commence; and all of the usual psychological suspects are more likely to follow: anxiety, depression, substance use and even suicidality. Fortunately, these linkages are not mechanical. Debt is not human doom. Even bankruptcy does not equal your failure as a person. Behavioral science has identified three basic skills you need to take the punch that debt can deliver and still prosper as a person. Ironically, these three skills are also known to help you mobilize your psychological and social capital to help you manage your financial capital. Skill one is to learn to step back from harsh internal judgments and intense, overwhelming feelings and learn to stay more open to your own experiences, even when that is hard. That means feeling scared when you are scared or sad when you are sad but not letting your emotions carry you away. It means noticing your mind judging you, but doing so with a little gap between you, the person listening, and the voice of that internal critical dictator — more how you’d listen to a foolish neighbor once again giving you bad financial advice. There is no need to argue back. A nod and a thank you are enough. Emotional and cognitive openness and flexibility is your ally. Avoiding, clinging or disappearing into the internal dialogue is not. Skill two is learning to be aware and present as a whole person. That means letting go of your attachment to self-stories — good, bad or indifferent — and, instead, finding a part of you that is deeper. There is a more spiritual or noticing sense of self that allows you to connect in consciousness with others. It’s where you can find peace of mind and purpose even amidst the most challenging financial situation. It’s where you will find a deep connection to your friends and allies. It is likely being buried over by problem-solving chatter. Find it. If you engage in spiritual practices, they will likely help. Then, from that deeper sense of self, learn to be more flexible with your attention. Don’t disappear into rumination and worry. Bring your mind back to what’s present inside and out. If there is a solution to your debt problem, that is where you’ll begin to find it. If there is not, that is where you will find the whole person called “you” who can prosper, learn and connect with others even amidst financial failure. Skill three is learning to create habits of values-based action. You need to be actively engaged in building that kind of life. Find the intrinsic qualities of being and doing that you want to bring into the world through your actions. Think of the heroes and guides you look up to. Use your ups and downs to help you learn more about the intrinsic qualities you want to manifest in your life. Then build habits around that — not around self-aggrandizement or fear. There you may also get serious traction on the long and difficult behavioral journey of walking out of debt. Studies with thousands of people followed for a decade or more show that these three skills — learning to be more open, aware and actively engaged in life — are kryptonite to the negative mental health and behavioral impact of stressors of all kinds. That includes financial stress, but it also includes the behavioral problems of impulsive decision-making, unwise investment practices, procrastination or behavioral rigidity that can sometimes cause financial problems. The name for this set of skills is “psychological flexibility,” and it’s the smallest set of processes that is known to do the most things in all of behavioral science. Life is asking you to learn to be more psychologically flexible, and there’s no better time than now. If you are in debt, you are not unique, and you are not alone. Many thousands of people have faced exactly the situation you are in, and they have prospered as human beings. Sometimes they even ultimately prospered financially, and they often look back to such times to explain their success. But you cannot learn the full lessons from difficult times unless you learn to be open, aware and actively engaged in the life you’re living.
If you understand that mental health problems evolve when difficult challenges are unmet or adjusted to in psychologically inflexible ways, you will know my answer. You should do both. Why? Because the most important psychological steps you can take are ones that apply with equal force to each of these issues. Don’t believe me. Believe the World Health Organization. About a decade ago, a war broke out in South Sudan and raged for several years. Refugees poured out of the country. Millions arrived in Uganda and elsewhere with nothing but the clothing on their backs. They had lost everything except their lives. A similar story was told in Syria. Nearly 6 million people escaped from war and violence to Turkey, the European Union or anywhere else that would take them in. The World Health Organization (WHO) created a cartoon book and audiotape (most of the refugees were illiterate) to teach psychological flexibility skills using methods I’ve originated. Over the last five years, they have tested it in three very large and very well-done studies with over 1,500 refugees. Most had severe psychological problems: from PTSD to depression, from explosive anger to an inability to sleep. Others were at major risk of developing them. All were impoverished. The result? They attained mental and behavioral benefits as large or larger than the self-help programs from the prosperous people of the developed world. Despite their poverty and violence and other stresses at a level few of us will ever face, significant reductions were found not just in current mental health problems but the prevention of the development of mental health problems. Future mental health problems were cut by nearly one-half. The WHO now distributes this <a href="https://www.who.int/publications/i/item/9789240003927" target="_blank">self-help program</a> in 20 languages worldwide for free. The WHO says it is for: “anyone who experiences stress, wherever they live, and whatever their circumstances.” This amazingly broad recommendation by one of the premier scientific and public health organizations in the world makes sense because literally thousands of studies have shown that psychological flexibility can change the trajectory of human lives. If you are in debt up to your ears and struggling mentally, you might start with the free resource above. If it resonates, there are myriad high-quality but inexpensive books that can help teach you psychological flexibility skills. I originated this approach, and my own popular books (“Get Out of Your Mind and Into Your Life” or “A Liberated Mind: How to Pivot Toward What Matters”) have been tested and shown to be useful. But there are many other good ones, such as the books from Russ Harris. If life has given you a gut punch, it’s time for a gut check. Both financially and in mental health areas, there is no better time to begin than now.
Janet Hoy-Gerlach
Janet Hoy-GerlachProfessor in the Social Work Program at the University of Toledo
The most dangerous mental health side effect of debt is suicide. While it is difficult to ascertain the causality of debt for suicide completion in research, considering the high correlation between death by suicide and struggles with debt within a lived experience context strongly suggests a causal component. People who struggle to pay debt may experience hopelessness and low self-esteem, both of which are suicide risk factors.
If a person is safe/not at risk of suicide and is not overwhelmed with mental health symptoms to the point where they are having difficulty functioning or carrying out simple tasks, these debt and mental health issues may be addressed simultaneously. If a person is feeling suicidal, they can call the National Suicide Prevention Lifeline 24 hours a day, 7 days a week, to get immediate help and be connected to local resources. Anxiety and depression can impair one’s ability to concentrate and one’s motivation and ability to carry out tasks. The National Alliance on Mental Illness (NAMI) has local chapters and provides referral information and support groups and would be a good resource to contact for assistance in finding local affordable mental health services. A person’s primary care doctor (if one has a primary care doctor) would also be a great person to contact for help. If not at risk of suicide and not so impaired by mental health issues that basic functioning is severely impaired, the first steps include reaching out to both mental health help as suggested above and financial health help sources. There are national nonprofits such as Apprisen that help increase financial health through debt management programs and other services. Setting up an appointment with a nonprofit that can assist with debt repayment is another excellent first step.
Dov Cohen
Dov CohenProfessor of Psychology at the University of Illinois at Urbana-Champaign
Debts can cause stress. Stress can cause all sorts of health problems, including mental health problems. But everything can cause stress, so that's not a terribly informative answer. A lot depends on how burdened people feel by having debt, how long and how intense the stress is, whether there is an end in sight, and how susceptible people are to stress-related problems.
Mental health problems and debt have at least one thing in common: they compound over time. Debts literally compound over time. Mental health problems can figuratively do so. That is, for many mental health issues, the longer they go on, the harder they are to treat and the more likely they may be to recur. I am not qualified to give either financial or mental health advice. And it is hard to make a blanket statement. But one principle to remember is: you are always your greatest asset. In terms of paying down debt, strangely, when people pay down debt, what feels best psychologically and what is best to do financially can be two different things. For example, some people want to just take some loans "off their plate," and so they'll pay down small loans first in order to have one less loan to repay. Financially, this isn't the best strategy because you'd want to make payments on your highest-interest loans first. Likewise, it may not make financial sense to have both savings (which in this environment is earning next to nothing) and high-interest debt. But psychologically — and practically — it may make sense to keep money in savings because that is cash that you know you have access to. Our brains did not evolve to operate in the modern economy. So sometimes, what "feels" like the right thing to do may not be the best thing to do financially. Ideally, what you want is a solution that makes the most psychological and financial sense. Qualified professionals can consult with a person about his or her unique situation and try to design a plan that optimizes both stress reduction and debt reduction. Ideally, one qualified professional would be able to give both psychological and financial advice. But if you can't find it all in one person, then find two.
Beth A. Trammell
Beth A. TrammellAssociate Professor of Psychology at Indiana University East
There are a number of negative consequences of financial stress, including debt, which could be symptoms of depression, anxiety, low self-esteem, low self-worth, substance abuse and thoughts of suicide. Any of these symptoms could be significantly impairing in a person's life depending on the severity or chronicity of the financial situation.
This is a tough question because it can vary depending on the person and/or the severity of the situation. For some, the mental health struggle is the culprit for the debt (e.g., potential gambling addiction, substance use that kept a person from going to work, etc.), and sometimes the debt is the reason the person's mental health declined. Either way, identifying the reason for the financial stress might inform the first steps toward treatment. For instance, if a person's substance use has kept them from getting to work, it might be most important to manage the substance abuse issue first. Alternatively, if a person lost his/her job and then became mentally/emotionally unwell, seeking methods to decrease debt first might be more advantageous. One final consideration could be to examine if there are any potential solutions that would be less complicated to try first. In other words, in either domain (debt relief or mental health relief), are there things a person could do to alleviate the stress quickly and effectively? A person may choose to start there and then tackle more complicated aspects afterward, almost like a short-term plan of treatment, as well as a longer-term plan of treatment.
Stacey McElroy-Heltzel
Stacey McElroy-HeltzelAssistant Professor of Counseling Psychology at the University of Iowa
As recently as 2016, researchers identified some 65 studies on the relationship between mental health and debt. The most common mental health concerns associated with debt were depression and substance misuse. Most alarmingly, debt has been associated with suicide contemplation, attempts and dying by suicide. It’s important to note that debt is a broad term, and the type of debt may play a role in whether or not and to what extent it impacts mental health. For example, one study demonstrated that consumer credit and late mortgage payments were associated with depression but not secured debt (i.e., a mortgage), so long as payments could be made on time.
First and foremost, if someone is experiencing thoughts of suicide, they should absolutely seek help as a first step. The National Suicide Prevention Lifeline (800-273-8255) provides free and confidential support 24/7, including crisis counseling and helping you connect with a local provider. Even if not in crisis, your mental health is important independently of debt. Being in debt is not a moral failure, and everyone deserves a meaningful and healthy life regardless of debt status. A therapist or counselor can provide a non-judgmental space to discuss your mental health concerns. If you believe that reducing your debt or managing it differently should be part of your healing journey, I would encourage you to concurrently seek out guidance on debt management. Most of us are not taught these skills in school or within our families. Educating yourself can be empowering and provide hope and a roadmap for reaching your financial goals.
Dr. Shelly Rauvola
Dr. Shelly RauvolaAssistant Professor of Industrial & Organizational Psychology at DePaul University
There can be many side effects of debt for individuals and their families and communities. Of course, debt comes in a variety of forms and may be more or less impactful depending on circumstances. When it manifests negatively, the stress and strain of debt can be both acutely harmful and cumulatively fatiguing. This limits individuals’ resources for income-generating activities (e.g., paid employment) as well as family, friends, health and other fulfilling and self-affirming aspects of daily life. Moreover, feeling powerless and lacking a sense of agency or control over your life is detrimental to psychological well-being. Debt weighs on people — their minds, their plans, their relationships — and it can feel like a very isolating and even shameful experience. And this is not even mentioning the potential grief and trauma surrounding debt in many cases (e.g., job loss, unexpected medical expenses)! Reducing debt stigma and other structural changes will go a long way in addressing debt and its side effects.
This is a challenging question to answer, as everyone needs to make the best decisions they can about priorities based on their personal circumstances. Ideally, individuals would have access to resources that help them address both financial and mental health. Fair compensation and benefits from employers and accessible, well-funded social support programs (for developing healthy relationships with personal finance) would make a big, systematic dent in this issue. This would also help us move away from a model of placing responsibility for recovery on individuals alone. All that said, I recommend that individuals focus on identifying ways to get themselves stabilized, safe and secure as quickly as possible. What are their immediate, mid-term and long-term needs and goals? What skills, supports and other resources can they draw on to meet these needs and overcome barriers? Trying to strike a balance between small wins and self-care on the one hand and longer-term efforts and planning on the other is a good strategy, though self-compassion along the way is paramount.
Paul (Ted) Klontz, PhD
Paul (Ted) Klontz, PhDAssociate Professor of Practice of Financial Psychology and Behavioral Finance at Creighton University’s Heider College of Business and Co-Founder and Director of the Financial Psychology Institute®
The most dangerous side effect is depression, which can lead to suicidal ideation and anxiety, which can lead to substance abuse/addiction.
I'd say addressing mental health issues if they can afford it — most can't — because they can be addressed more readily than typical financial issues/complications such as long-term/significant debt. First steps? Contact their doctor and see if a medication can reduce symptoms, and then do an online search for "financial therapy providers."
Phoebe C. Ellsworth
Phoebe C. EllsworthFrank Murphy Distinguished University Professor of Psychology and Law at the University of Michigan
Emotion theorists have long distinguished between problem-focused coping and emotion-focused coping. Typically the first and best response to a bad situation is to deal with the situation itself. The best treatment for anxiety and depression from a pending home foreclosure is to renegotiate the mortgage. If that cannot be done, the person focuses on coping with their emotional response. They may change their motivational structure by giving up certain goals (e.g., a new car) or by deciding that the situation is bad but not intolerable, and they can live with it. Regulating their emotions (e.g., by taking antidepressants to relieve the pain) can sometimes enable the person to think more clearly about the situation and their emotional response to it.
Kate Mielitz, PhD
Kate Mielitz, PhDAccredited Financial Counselor; Special Groups Manager at AFCPE® (Association for Financial Counseling and Planning Education®)
Mental health issues surrounding debt include anxiety, depression and suicidal ideation. I’m certain there are others, but these are the most serious that I can identify. Financial concerns, particularly concern about the debt load in relation to the monthly budget, can lead to distraction at work, which can further result in physical injury, additional mental strain and overwhelming feelings of not being able to cope. Different types of debt (e.g., credit card debt, being upside down on a car, underwater on a mortgage, etc.) all have similar connections to stress, anxiety and depression. But they typically result in different levels of stress, anxiety and depression. That said, if I have a very low tolerance for debt, a $500 balance on a credit card could have the same negative mental health consequences to me as that of someone who has $10,000 worth of credit card debt but a higher debt tolerance level, as one example. Debt affects people along a spectrum from “not at all” to “I want to end it all.” People <a href="https://www.health.com/money/financial-stress-suicide-risk" target="_blank">die by suicide</a> every year due to financial strain.
This may be a chicken and egg scenario. If I decrease my debt, I’ll feel better, but do I have the mental fortitude to make the needed changes in my spending plan to decrease the debt load? The very first step is recognizing that the debt is causing a problem. There are financial professionals who specialize in helping people mitigate their debt loads while respecting the mental health impact of that debt. These professionals can help identify and develop positive mental health practices in relation to debt and other challenging financial situations. I highly recommend Financial Therapists through the <a href="https://financialtherapyassociation.org/find-a-financial-therapist/" target="_blank">Financial Therapy Association and Accredited Financial Counselors (AFC®)</a> through the <a href="https://findanafc.org/" target="_blank">Association for Financial Counseling and Planning (AFCPE)</a>. Also, if the COVID-19 pandemic or another situation has caused financial stress in your life recently, you can use <a href="https://findanafc.org/pro-bono/covid19/" target="_blank">this link</a> to receive a free financial counseling session.
Daniel Rodriguez
Daniel RodriguezProfessor of Public Health at LaSalle University
Stress. When one makes a purchase, one feels amazing about getting a tremendous item. After the initial euphoria comes the realization that one must pay for the item. Initially, individuals feel it's not a problem because they'll pay the bill as soon as it comes due. However, the problem is that bills pile up, and with interest on borrowed money, what was once a small amount accumulates into a debt that one too often cannot manage. This causes tremendous stress, along with its negative health and psychological consequences.
One should focus on mental health first. However, working on one's mental health will immediately turn to the sources of stress, which, in the case of debt, means managing one's finances to alleviate the debt. Thus, focusing on one realm will concurrently focus on the other. The initial steps to recovery include practicing cognitive skills that teach one to deal with the urge to spend. Spending money is an addiction, and like any addiction, self-control is key. Most of us lack self-control in some domain of life. For the chronic shopper, it's spending money. Thus, working on self-control is an essential first step. Mental practices, such as mindfulness, are helpful here. With mindfulness, one accepts one's urges unconditionally but then lets them go. Thus, I'd encourage practicing mindfulness as a first step.
Sandro Galea
Sandro GaleaDean at the Boston University School of Public Health
During the pandemic, our research team <a href="https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2770146" target="_blank">found</a> that having a lower income and having less than $5,000 in savings were linked with a greater risk of depressive symptoms. This suggests the importance of financial stability in supporting mental health and how depression can be a consequence of financial vulnerability.
Rather than either/or, I would say the answer to that question is both/and. Those with mental health challenges should be able to receive the treatment they need even as we work to create the conditions for all to access the resources necessary for health. I say “we” quite deliberately. There is no separating the challenge of debt from the systemic drivers of financial inequality in our society. Addressing these foundational issues will take our collective effort over the long term, even as we work, in the near term, to ensure mental health support is readily available to all.
Alan B. Young
Alan B. YoungProfessor of Sociology at MidAmerica Nazarene University
If I were to frame the point, it is that sometimes we get so focused on the strategies of debt reduction (like paying down the highest interest accounts first) that we neglect the mental health aspects. While strategies are important, debt can feel so overwhelming that it is hard to take any steps at all. For that reason, I think that the powerlessness we feel when facing a large pile of debt is the most dangerous mental health impact. It convinces you that there is nothing you can do to fix the problem, so why even try? The first step towards good mental health is to recover your sense of control. Once you get some “wins,” you can build confidence that you can fix the situation.
Starting with one or two small “wins” can greatly increase a person’s sense of power. Practically speaking, I would suggest the following three steps: - Take a few minutes to envision the life you could have with less debt. I’m not suggesting a “millionaire fantasy,” but something more realistic, like having an extra $50 per week or life without a car payment. This “vision” is key for helping you deal with the frustrations you will encounter along the way. It is hard to maintain daily disciplines if you can’t see them as part of a larger picture. - Pick one thing you do that would help move you toward that goal and do that one thing. The smaller and easier, the better. The point is not to fix your debt; the point is to give you back your sense of power. Once you get some momentum, you can focus on more strategic moves. - Start a list of steps you have taken and post it where you can see it regularly. This could be a list on your phone or a whiteboard in your kitchen. Take the action you did in step #2 and write it down as a “win.” From that point on, when you feel overwhelmed by how much debt you have, stop thinking about the debt and look back at that list to remind you of the steps you have already accomplished. Over time, the pile of debt will go down, but more importantly, your sense of personal power will go up.
Indigo Stray Conger, LMFT
Indigo Stray Conger, LMFT
Anxiety and depression are both common and debilitating results of experiencing debt. The more significant the debt on a person's finances, the higher the danger of mental health repercussions. The amount of debt is less relevant than how the debt affects a person's quality of life. For one person, a couple of thousand dollars may feel insurmountable and lead to a significant loss of opportunity, whereas for another person, a few thousand dollars in arrears does not create significant stress or shifts in lifestyle. Anxiety results from the stress of not knowing how to overcome debt, from imagining other future ramifications of continued debt and from the fear of others' judgement. Depression arises from a hopelessness corresponding to debt and a helplessness to confront the debt and find a path forward. Once anxiety or depression takes root, they can interrupt a person's ability to make headway on their financial situation, which in turn may increase symptoms of anxiety or depression. It is imperative to stop this cycle before mental health issues become entrenched.
Addressing the mental health difficulties associated with debt requires dealing with the debt itself. This does not mean that the debt must be cleared in order to alleviate mental health concerns. The most important aspect of tackling debt is cultivating a clear, manageable plan to move forward. This may involve budgeting, consolidating debt and/or collaborating with a financial planner or other knowledgeable professionals. The overwhelm which arises from feeling out of control financially is the biggest contributor to stress, anxiety and depression related to debt. Begin by clarifying your financial situation, including all debt, bills and income sources. Assess which debt holds the highest interest and whether these debts can be paid off first or consolidated at a lower interest rate. Often when a person has struggled with debt for some time, assessing the facts can be overwhelming. Looking into debt consolidation, financial planning, or simply asking a trusted and financially savvy person in your life to help can make the task of assessment and planning feel more manageable. The amount of debt carried and the length of time it will take to pay the debt off is typically less impactful on mental health than whether a person feels in control and has a clear plan to move forward.
Ron Blake
Ron BlakeDirector of the American PTSD Association
Debt is a stressor. It can exacerbate a mental health condition. But it does not cause mental illness. The most dangerous side effect of debt is loss of hope. It can all feel overwhelming.
You always deal with the mental health problem first. Always. You deal with everything else after that. Debt is never fun for anybody. But it is better to have debt, be healthy and be around for 40 years to pay it off than it is to lose your focus and die by suicide, for example, and be debt-free. It's kind of like when the flight attendant tells you to put on your oxygen mask first in an emergency before focusing on and helping those around you. Nothing else matters if you are not alive. So, emphasize getting healthy again. The first step is simply acknowledging there is a mental health problem. The next step can be meeting with the family doctor. He or she can work with you to determine the next best steps for recovery. These steps can include counseling sessions, EMDR treatments, medication, group therapy or a variety of other options. Everyone will have a different path to recovery. You are in control.
Brian Wind
Brian WindChief Clinical Officer at JourneyPure
Depression and anxiety are some of the most dangerous mental health side effects. Some people deny or avoid the issue to cope, while others struggle with insomnia, isolation and withdrawal, among other symptoms of depression and anxiety. This can also lead people to turn to substance abuse as an unhealthy coping mechanism. It's also a vicious cycle where mental health issues can lead to more debt. People who turn to shopping for short-term relief from depression and anxiety may exacerbate their debt problems, leading to more mental health issues. Mental health issues can also worsen physical health, where people start to experience headaches or poor digestion as a result of anxiety or depression. This can lead to higher medical expenses needed to treat these symptoms, which can put a person in more financial difficulty. Many people also put off seeing a doctor due to concerns about medical costs, which can lead to more serious complications that can cause even higher out-of-pocket costs and worsen stress.
Recognizing that they have a problem with debt and learning to find ways to manage it can greatly help to improve psychological well-being. Get a greater sense of control over your debt through lifestyle changes that help you lower expenses or increase income. You can then seek ongoing psychological support to help you manage some of the daily stresses and anxiety you feel as a result of shouldering your debt. Some warning signs that debt is becoming a problem for you is if you find yourself only making the minimum payment on your credit cards and you have no savings. You might also find yourself in a constant cycle of using cash advances, overdrafts and balance transfers to meet the next debt payment. You might also be intentionally hiding your spending from your family members. Get a greater sense of control over your debt through lifestyle changes that help you lower expenses or increase income. Write down every single income source and all your monthly expenses. Start identifying things you can cut back on to reduce expenses or things you can do to increase your income if you struggle to reduce expenses significantly. You can seek the help of a credit counselor to help you through the process. You can then seek ongoing psychological support to help you manage some of the daily stresses and anxiety you feel as a result of shouldering your debt. There are many virtual and in-person options now for psychological support that you can turn to.
Joyce Marter
Joyce Marter Psychotherapist, Entrepreneur, National Speaker and Author of “The Financial Mindset Fix”
Accruing debt can decrease self-esteem and increase stress, anxiety, depression, substance abuse, relationship conflict and even lead to suicidal thoughts and feelings. Many people struggling with debt feel paralyzed with fear and suffer in silent shame and isolation. Financial distress accounts for 16 percent of suicides in the US and correlates with lower life satisfaction.
You should absolutely address your mental health first because not caring for your mental health could cost you relationships, employment or even your life. Also, having positive mental health will better enable you to overcome the debt because you will have greater self-worth, coping skills, assertiveness and resilience. It's important to know you are not alone. According to a 2017 report, 39% of Americans have zero money set aside, and 57% have savings of less than $1,000. Therefore, two- thirds of Americans do not have financial resilience and could not withstand a significant money challenge like what has occurred for many during the pandemic. In my upcoming book, I share twelve mindsets empirically proven to lead to improved mental and financial health. The book includes practical tools and strategies and empirically supported exercises from psychology to improve your psychology of money — your emotions, behaviors and relationship with your finances. The mindsets include: - Abundance: Not thinking small or setting your own ceilings. - Awareness: Financial consciousness. - Presence: Applying mindfulness to financial situations. - Essence: Detaching from ego and remembering you are not your debt and are infinitely worthy. - Self-love: Practicing financial self-care instead of self-harm. - Resilience: The ability to bounce back from challenges and persevere.

Additional Resources for Debt and Mental Health

Help for debt and mental health comes in all shapes and sizes. Seeking assistance is the easiest way to start taking steps to overcome mental and debt health challenges. The below resources offer a variety of places that can assist.

  • Anxiety and Depression Association of America (ADAA): You will find resources and support for treating anxiety and depression, including links to local resources in your area.
  • Centers for Disease Control and Prevention (CDC): Look to the CDC for articles, guides, quizzes and other resources to help identify and manage mental health issues.
  • Community Mental Health Centers: You can use this Health Resources and Services Administration (HRSA) searchable database to find mental health centers across the United States.
  • Consumer Credit Counseling Services (CCCS): Find resources for working with and finding consumer credit counseling services which are nonprofit organizations that help find workable solutions to financial problems.
  • Daylio: You can use this mobile app to track your moods and other variables such as exercise, sleep, nutrition and socialization or hobbies.
  • Employee Assistance Programs (EAP): EAP is a benefit program offered by employers that will help cover your copays or bills for mental health treatment.
  • Federal Trade Commission: The FTC offers a valuable guide to help people cope with debt. It includes links to debt relief services, credit counseling, debt management plans and more.
  • Financial Therapy Association: Find a therapist specializing in financial therapy who can help you think, feel and behave differently with money.
  • State Consumer Protection Offices: Search this database to find consumer protection offices in each state. You can check with your local consumer protection office to see if complaints have been filed against creditors who may be contacting you.
  • Substance Abuse and Mental Health Service Administration: Part of the U.S. Department of Health and Human Services, this site provides articles, guides and resources related to substance abuse and mental illness.
  • United States Trustee Program: This program provides a list of credit counseling agencies that are approved to provide pre-bankruptcy counseling.

About Sara East

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Sara East is a contributing finance writer at MoneyGeek, with over 15 years of experience in public relations, content and digital marketing. She has published articles in national news sites including Mashable, The Muse and The Next Web, covering finance, business, entrepreneurship, education, travel, real estate and insurance for the past decade.

East completed her journalism degree from the University of Nevada, Reno.

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