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

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.

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.

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.

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.

Developing behavioral symptoms

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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. For example, conditions like bipolar disorder can affect spending habits, so addressing mental health can be key to managing debt.

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.

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.