Understanding the Emotional Cost of Debt + Financial Stress

There is a cost to being in debt and experiencing financial stress. Here’s why it happens, and what you can do about it.

key on a background that says finance


Bridget Houlihan


Jan 21, 2021

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Main image courtesy of Marriage Missions.

While no one particularly likes the thought of being in debt, the truth is most Americans have a significant level of it. Whether it’s student loan debt, medical bills, credit card debt, mortgage, or car loans, it seems we can never get out from under it. No matter if you owe a small amount, or you are deep in debt, there’s no denying that it can definitely have an effect on your mental, emotional, and physical well being. 

But why does debt and its emotional cost happen to people everywhere, regardless of race, region, economic level, or education level? We’re glad you asked because this is an increasingly distressing problem that seems to be growing larger each year. In this article, we’re going to cover:

  • How is debt related to mental, emotional, and physical health?
  • Are there strategies you can do to help lower your financial stress?

Why debt carries a significant emotional cost

There is a relationship between debt, stress, and health

person using a calculator to add up their finances
Debt and financial problems are a significant source of stress. Image courtesy of Vecteezy.

Debt is not something new to Americans, but it seems that the issues stemming from the Covid-19 pandemic have only made it worse. Whether it was shortages, job loss or reduction in hours, worrying about paying back rent, inflation, or the increase in gas prices, it seems that we’re all stretched a little more thin. Credit card debt is one of the most common types of debt, and Americans on average have around $6,200 in this type of debt alone. As if that wasn’t enough, student loan debt has been soaring for decades, all while wages have stagnated. 

As if the actual debt you have wasn’t enough cause for stress, it seems like just thinking about debt can trigger a negative and stressful reaction. Why is this and how can debt have such an impact on our health?

How debt affects mental and emotional health

When we think about debt it can make us feel overwhelmed and even helpless, which can trigger our stress response. Living with consistently high levels of stress can have a negative impact on our mental health, and make us more susceptible to anxiety and depression. Many people feel that there’s no way they’ll ever get out of debt, and can start to become hopeless when it comes to improving their financial situation. People with credit card debt have reported that it not only affects their general happiness in an adverse way, but it makes them fearful or embarrassed to speak about debt with loved ones.

When you’re afraid or embarrassed about your financial situation, you tend to hide what is really going on as it continues to spiral out of control. This can feed into feelings of denial, that you don’t have that much debt, or that everyone else is in a similar situation. Many people are afraid to reach out for help because they feel they’ll be judged for their past spending actions, which they may regret.

Keeping your debt to yourself can increase feelings of helplessness and continue to make anxiety and depression a part of your everyday life. 

Debt can also take an emotional toll on spouses and families. A lot of tension, anger, and resentment can build up between partners when money and debt become an issue. The anger associated with debt even has its own name, Debt Anger Syndrome. When you’re angry at yourself or your spouse/family because of debt, it can ruin relationships.

Because debt is responsible for so much stress in life, it can lead people to develop behavioral changes, such as avoiding financial conversations, changes in appetite, abusing drugs/alcohol, and even reckless spending issues. 

How debt affects physical health

In addition to mental and emotional health, debt and stress can take a toll on your physical health. When you’re chronically stressed your immune system suffers and your body is not able to fight off infection as well. The stress from debt can also make it harder to concentrate and remember things, which can be harmful when you’re trying to keep your job to pay down your debt. 

When you’re dealing with mental health issues such as depression and anxiety, it can have an effect on your sleep patterns, your appetite, and your mood. When your heart rate increases, your blood pressure changes, and you can’t focus, these are all very real physical signs of stress. Eventually these symptoms can develop into concerns such as insomnia, heart conditions, and increased infections. 

How to lower financial stress

Yes, you CAN work on lowering your financial stress and improve your debt

family having a picnic by a lake
It is possible to start to chip away at your debt and reduce financial stress. Image courtesy of National Parks and Wildlife Services.

Although debt can be intimidating, there is light at the end of the tunnel and you can lower your financial stress! One of the first steps to take is to acknowledge your debt and to write it down. This means all debt, whether it’s student loans, credit cards, or car loans. When you see a number, you can then work on lowering it. Just by writing that number down you have overcome any denial about its true amount. 

After you know what your true debt amount its, follow these steps:

  • Prioritize your debts in order of importance of what needs to be paid first, such as the rent, electricity, car, etc.
  • Set a budget and track your spending throughout the month. Tracking your purchases will help you determine where you can cut spending. Pro tip: There are all kinds of apps and resources to help you determine how many online subscriptions you have signed up for to help you reduce unnecessary spending.
  • Make an actionable debt repayment plan and start paying down debt. You can do this yourself, or seek out the help of a credit counselor.
  • Talk to someone and let them know what’s going on. Whether this is a friend, family member, or a professional therapist. Speaking about debt may help you reduce the stress and anxiety you have from it.

Debt is the source of a lot of stress for many Americans, and living with chronic stress can take a toll on our mental, emotional, and physical health. Recognizing the problem and getting help are two ways you can work to reduce the amount of financial stress you’re experiencing. 

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December 3, 2022
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