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

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.

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.

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.

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.

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.

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.

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.

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.