How Debt Can Affect Mental Health

The Emotional Effects of Debt

Every adult on the planet carries some degree of debt during their lifetime. In fact, the normal rite of passage for young people is to get credit cards or student loan debt as soon as that first paycheck is earned. As time passes, mortgages, auto loans and other types of credit is added to the pile of money owed to creditors. However, there is a possibility that debt can affect mental health when finances get out of control.

There are two ways that debt and psychological health can become intertwined. The first involves someone who is no longer able to effectively manage their finances due to a current mental health condition. The second is when heavy unpaid debt triggers depression, anxiety, and other symptoms in a normally healthy individual. Either way, there is no other option except to find ways to relieve both the debt and mental suffering.

Debt and depression

Debt Misconceptions

Society at large is quick to judge a person with high debt, bad credit, and no savings in the bank. Some people automatically assume a person that has a checking account overdraft or a credit card declined as a “deadbeat”. But just like people borrow money for a vast number of reasons, there are just as many situations that can lead to uncontrolled debt.

Without a doubt, millions of happy-go-lucky consumers go on shopping sprees and luxury vacations without a thought or intent to repay their debts. And only a very small percentage of these people are diagnosed with a true shopping addiction. But the truth is that the majority of people that find themselves in overwhelming debt have encountered issues that were not within their control such as:

Money depression
  • Physical illness or medical emergency
  • Poor mental health
  • Death or divorce
  • Job loss

An excessive lifestyle can be a financial disaster at any income level. The same goes for an unexpected crisis that results in a loss of money needed for household and other expenses. Suddenly, life becomes a struggle to survive with the added pressure of unpaid debt. The inability to repay debts can have a huge impact on the quality of life. 

When Mental Health Affects Finances

It is easy to imagine how a person incurs an abrupt physical injury would have a hard time making ends meet. A broken leg, arm, or worse can prevent a worker from performing their regular job. Tasks they breezed through on a daily basis become impossible to complete. Individuals with mental or emotional illness are equally debilitated, sometimes even more. 

Research reveals that people diagnosed as bipolar or with depression are more susceptible to having financial problems (some reports say twice as likely).  ~ Money and Mental Health

That is not to say that the majority of individuals with these conditions have uncontrolled debt. On the contrary, people who manage their mental health issues are very adept at handling their finances. 

People with specific medical diagnoses are not the only ones that are affected by overwhelming debt. Adults all over the world feel stress from struggling with paying back money they owe to creditors. Stress can lead to not only mental illness, but can cause adverse physical complications as well. Fortunately, there are many ways to get assistance with managing money and health, which should be done at the first signs of trouble.

How Financial Stress Affect Mental Health

The depth of negative effects from problem debt on mental health has been documented for over a decade. 

What are some of the reasons finances have such a bearing on how a person feels emotionally?

Anxiety related to debt can come from feeling alone in the situation. Creditors, family, friends, and employers may not be providing the support the borrower needs to bear the burden. Lack of sleep from worrying about money also increases anxiety levels.

Anyone who wonders whether their money issues may lead to mental or emotional problems in the future can ask themselves the following:

  • Have missing minimum credit card payments become routine?
  • Does thinking about paying bills cause a nervous or anxious feeling?
  • Is there consistent avoidance of phone calls from unknown numbers (thinking it’s a bill collector)?
  • Are utility bills and/or rent always behind or in payment arrangements?
  • Has there been a pattern of no money being left over to set aside for emergencies?

A yes answer to even one of these questions deserves attention. Two or more yeses indicate that help is definitely needed. There is no need to wait until matters get out of control. Help is available to address all issues related to mental health, money management, and any other situation that can lead to a life full of distress. 

What to Do to Prevent Debt Depression?

When debt affects mental health, it puts more than just the borrower at risk.

US businesses lose up to a reported $300 billion yearly in earnings due to stress related illnesses, with many reasons involving indebted employees. Families and relationships also become victim to symptoms and behaviors of loved ones struggling under financial burden.

Prevent debt depression

There are steps that can be taken towards getting out of debt far in advance of being overcome by debt, such as:

Making mental health a priority.

A counselor, therapist, or doctor should be consulted when any signs of anxiety or depression over finances show up.

Rebuild credit score. 

Rebuild credit score by taking small steps like paying bills on time with automatic payments. Study strategies on how to raise credit scores. 

Setting up a reasonable budget.

Sticking to a budget provides purpose, accountability, and structure. Research will help a borrower discover a number of types of budgets to fit different situations to set up for success.

Save for an emergency fund. 

Having an emergency fund will provide a measure of security that can lead to a more positive mental outlook. Regular automatic deposits should go into a savings each paycheck.

While this article makes no medical claims or offers, there are organizations and resources widely available for people who feel they need additional support. Mental health organizations and alliances often see individuals at low cost or on a sliding scale. Graduate training programs at universities also offer low cost mental health services. Private facility therapy is less expensive in group sessions. Most governments also offer mental health services for free or very low cost. 

So many people have reversed the negative effects of debt on their mental health by simply being proactive in turning around their finances. A sense of purpose and the feeling of accomplishment have done wonders. The key is to put up a fight at every turn. 

By many accounts, people who have a sense of financial well-being will probably end up with well-being in their lives overall, which is something to fight for indeed.

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Sheila Kay

Sheila Kay is an author, ghostwriter and editor residing in the Atlanta, GA area. Among her favorite writing genres are creative nonfiction, self-improvement, and finances. Her first published book, PTSD and the Undefeated Me, is a memoir which has been a stepping stone to her involvement with mental health advocacy for military and civilian men and women. She is currently working on the first fiction novel to be published under her name. For more information or to purchase her books, visit Sheila’s Author Page on