Dealing with debt can be a significant stressor for many Americans. Credit card debt can be particularly problematic, as high interest rates make it feel like achieving financial freedom is impossible, leading to stress for many. High-interest debt may seem only like a math problem; it’s also an emotional one that can cause great anxiety.
Debt, financial worry, and mental health are deeply interconnected, and ongoing financial worry can negatively impact your overall well-being, affecting not just your emotional state but also your relationships and physical health.
You don’t have to sacrifice your well-being to get out of debt. It is possible to balance debt and stress while caring for your mental health.
Understanding the emotional toll of debt
Debt doesn’t just show up on a monthly statement or in your bank account. Debt, along with other risk factors like socioeconomic status and economic hardship, can contribute to mental health problems such as depression, anxiety, and stress. It reveals itself in your thoughts, your sleep, your mood, and even your physical state. Understanding these effects of debt on your life is the first step towards changing the situation.
How debt stress affects your daily life
Dealing with debt stress is often easier said than done. Financial strain and feeling stressed are common experiences for those dealing with debt, as the pressure of financial obligations can weigh heavily on mental health. You must constantly do mental math to ensure you can make a purchase. It’s also likely you may face persistent worries about a bill being late each month. You may also be quick-tempered with loved ones and friends.
“Debt is a real trigger for anxiety because it so directly affects the ability to cover everyday expenses for so many people,” says Austin Kilgore, analyst with the Achieve Center for Consumer Insights. Triggering is bad enough, but it’s easy to believe that you are the problem behind the debt. That’s not necessarily the case, and being gracious to yourself is important.
The link between debt and depression
It’s easy for chronic debt to turn into hopelessness. Pervasive thoughts may tell you that you’ll always be in debt or that you need to be ashamed of it. Many people feel embarrassed about their debt, which can negatively impact self-esteem and contribute to depression and anxiety.
Shame can be especially problematic. “Shame doesn’t tell you that you made a mistake. It tells you that you are the mistake: ‘I didn’t just get into debt – I’m the type of person who gets into debt.’ Shame can hinder our ability to change or take action,” says Dr. Erika Rasure, chief financial wellness advisor at Beyond Finance. Taken to an extreme, the stress from debt can lead to significant inertia.
Physical symptoms of debt stress syndrome
Debt stress syndrome doesn’t just impact your thoughts; it can also harm your physical health. You may think that lying awake at night is the only symptom of debt and depression. It’s not. There’s also the physical toll to consider.
Physical health problems, such as chronic illness or injury, can also contribute to financial difficulties and worsen both physical and mental health.
Headaches, high blood pressure, aches and pains, lack of hunger, and more are all side effects of stress, according to the Cleveland Clinic. It’s not just “in your head” as some cynics might say. The very real consequences of debt become a physical problem that can cost money to treat, worsening the circumstance.
The vicious cycle: How mental health and debt feed each other
Debt and mental health rarely exist separately. Credit card debt stress can worsen your mental health, and mental health challenges can make it harder to manage your money, creating an inescapable loop.
How anxiety can lead to poor financial decisions
Shame can be debilitating because it convinces you to avoid the problem. At least half of Americans admit to actively avoiding looking at their bank statements due to debt, according to American financial services company, JG Wentworth. Such avoidance makes it easier to miss problems in your account or make ill-informed spending choices.
Anxiety may also cause you to miss work, potentially leading to a reduced income. In some cases, severe mental health issues may leave individuals unable to manage their finances effectively, requiring others to step in and make decisions on their behalf. A recent report from the TIAA Institute reveals that mental health and debt resulted in a 34% increase in absenteeism and tardiness. Unfortunately, that only strengthens the loop.
When mental illness makes money management harder
Dealing with debt and depression can be an overwhelming and intense experience. For those struggling with mental health conditions such as anxiety, difficulty concentrating or lack of focus is common and understandable. Opening bills or contacting creditors may feel daunting, potentially exacerbating the situation. Taking time to make sense of your emotional state and financial situation can be an important step toward recovery, as understanding what you are experiencing helps you manage stress and move forward.
This isn’t a character flaw; it’s a symptom of debt stress. It’s understandable to isolate yourself during such times, but isolation can intensify the problem. “Be honest to people you trust about what’s going on because shame thrives in isolation. Know that anyone judging you is just operating from their own black and white worldview,” notes Dr. Rasure. Rather than blame yourself, seek support to get on the road to recovery, mentally and financially.
Breaking the stigma around debt and mental health
High-interest debt feels heavy because we often carry it alone. Shame only keeps struggles in the dark. Bringing the challenges into the light is vital to overcoming debt-causing stress and anxiety.
Why people feel ashamed of debt
Credit card debt often signals a problem with us as individuals. That’s simply not true. Money is still a taboo topic for many Americans, so it’s understandable, on one level, that people feel ashamed of debt, but being in debt doesn’t reduce your personal worth. Many people also feel anxious about discussing their debt due to the stigma attached, which can make it even harder to seek help or support.
“Some of the shame stems from the idea (in this country) that money is a measure of personal worth. Not only do some people in debt worry about what others think, they consider themselves to be less worthy or more inadequate if they are carrying debt,” says Kilgore. Shame often turns the situation into an identity. Being honest with a trusted friend or family member is a practical way to bring the shame into the light and subdue it.
Normalizing conversations about financial struggles
You’re not alone in dealing with debt and mental health. Many Americans balance the two, and current economic headwinds are making it worse. Some might believe all people in credit card debt are there because of poor spending habits.
While true, on some occasions, 48% of Americans polled have relied on credit cards in the past year for essentials like food and utilities, according to Zety. Economic hardship is defined as the experience of not having enough financial resources to cover basic expenses. Every situation is different, but honesty is a good first step to bring the problem out into the open and begin paying off debt. Open conversations about finances and financial health can help people better understand and improve their financial situation, reducing stress and supporting overall well-being.
How stigma prevents people from seeking help
Shame is a powerful emotion that can keep you from seeking helpful resources. Even calling creditors or reaching out to a mental health professional can be difficult. Knowing that you’re not a failure is essential to finding help.
“Losing the shame doesn’t mean losing responsibility. You can still take ownership of your choices but you can also recognize that if you made mistakes, it doesn’t make you a bad person. If you’re feeling shame, defend yourself to yourself. Repeat affirmations as much as you need to, to counter those negative internalized messages,” says Dr. Rasure.
Steps you can take to regain control
When you’re trying to determine how to handle debt stress, deciding which steps to take is a wise way to balance your mental well-being and indebtedness. Taking steps to manage debt can have a significant effect on your financial well-being, helping you plan for a better future. Debt can also affect your ability to reach major life milestones, such as retirement, making it even more important to address these challenges proactively.
Acknowledge the problem without blame
Simply admitting there’s a problem is a prudent first step to tackle the situation, without immediately placing blame. Kilgore concurs, arguing that this is a vital first step toward addressing the issue. “Admit that you have debt and that you want to do something about it. It’s just looking at the facts and deciding there’s an issue,” he says.
If the cause of the debt is unwise spending, admit it and work to implement changes. No one is perfect, and we all make mistakes.
Create a simple budget to reduce stress
Budgeting can be a powerful way to achieve financial goals. Inflation has had a dragging effect on most people’s finances, reducing discretionary spending and making it harder for many to set and stick to a budget. You don’t need to start with a rigorous budget, though. Write down your income, essential expenses, and minimum payments, and see if you can identify any unnecessary costs you can quickly cut and apply those funds to debt repayment or savings. Building an emergency savings fund can also help buffer against unexpected expenses.
Drastic cuts may seem wise, but they may not be the best in the short term and may backfire. Don’t overlook setting aside a small amount for something fun each month. Life is meant to be lived, and allowing yourself something can keep you going in tough times.
Reach out to a credit counselor or debt advisor
Timely, minimum payments are important to preserve your credit score, but if that’s all you’re able to do, consider working with a non-profit credit counseling agency. Consulting a financial professional can help you explore alternative debt management solutions that may lower your monthly payments and help you better understand the impact of debt on your credit scores. A reputable firm can help you formulate a plan to attack the debt using a solution like the debt avalanche or snowball method.
You may also identify a personal loan to consolidate the debt and repay it. While that may provide some interest rate relief, it can backfire if you don’t address the underlying issue.
Use mental health support services
Reducing anxiety is imperative to begin focusing on debt repayment. There’s no reward for attempting to walk through the trial on your own. A therapist or mental health professional can be a helpful resource. Support services can be especially helpful for those experiencing generalized anxiety or other mental health conditions.
If your company offers an employee assistance program, that’s a good option. Most are free to use, and they can help you get on track.
Talk to creditors about your situation
Although understandable, keeping your creditors in the dark is not a good way to handle your debt. Many credit card companies offer hardship programs to help cardholders through tough times. These programs can provide important benefits, such as temporary payment reductions or reduced interest rates, which can ease your financial burden and help you get back on your feet.
Making the call isn’t an admission of failure, but a sign of strength. It’s bringing the situation into the light and seeking a way forward.
Conclusion
Your credit card balance doesn’t dictate your worth. You don’t have to choose between your mental health and debt. It’s possible to help one without sacrificing the other. Solving significant high-interest debt and the associated anxiety doesn’t often happen overnight, but it is possible to begin removing shame from the situation. Doing so is the best first step toward promoting healthy mental well-being and overcoming debt both now and in the long run.
