Understanding & Managing the Mental Health Impact of Debt

Money doesn't just affect your financial well-being. It determines every facet of your life, where you live, whether you go to college, and whether you can retire comfortably.

According to the Federal Reserve Bank of New York, total household debt increased by $ 87 billion in the third quarter of 2020, totaling more than $ 14 trillion. With so much at stake about how we can afford basic things like housing and transportation, money is emotional. And we feel that emotion in many of the financial decisions we make.

If you've ever felt depressed or anxious about not having enough money to pay your bills and basic needs, you may want to find ways to manage the impact of money on your mental health. See how to perceive it and what to do if you have any of these feelings.

How debt weighs on mental health

Dr. Alex Melkumian, founder of the Los Angeles-based Center for Financial Psychology, said the pandemic magnified the emotional impact of finances.

"In normal times, financial stress is the most common type of concern among Americans," Melkumian told The Balance by email. "The pandemic has exponentially increased levels of financial anxiety."

This increase in stress was felt at the beginning of the pandemic: Nearly half of Americans reported experiencing "a lot" of financial stress last spring, according to a June 2020 survey by Edelman Financial Engines. Additionally, less than half of those surveyed said they would raise $ 2,000 in the next 30 days in an emergency.

"The feeling of debt is similar to the removal of safety and security, basic human needs," said Melkumian. "When not knowing where the next paycheck or meal will come from becomes a reality, stress and anxiety start to appear."

Anxiety and money

Anxiety is one of the first feelings you may face when it comes to money. If you tend to stress out thinking about money, being able to pay your bills, or not making enough money, you may be suffering from financial anxiety.

"The fear of not being able to pay [the money] and losing what you have can cause intense anxiety attacks that tend to strike at any moment," Melkumian said. "As a person gets into debt more or extends it through minimum payments, it can get very dark."

If you feel like you are suffering from financial anxiety, it can lead to other mental health problems, such as depression and suicide.

Insomnia and money

Financial stress not only damages your wallet, it also damages your ability to rest. You may be so worried about not surviving that you are losing sleep. If you have lost your job or are facing a reduction in working hours, you may stay up at night trying to find solutions to your money problems.

"Insomnia is a very common manifestation of both [anxiety and depression] and is a relatively milder symptom than something like suicidal ideation," Dr. Georgia Gaveras, chief psychiatrist and co-founder of Talkiatry, told The Balance via email. "Unfortunately, we saw successful people going through extremely difficult financial difficulties commit suicide."

Depression and money

Financial problems and depression are a potent combination, according to the UK Institute for Monetary and Mental Health Policy. The institute's research found that people with depression and debt are 4.2 times more likely to be depressed a year and a half later than people without financial difficulties.

"While there are typically practical solutions to debt, the emotional impact can be so great that sufferers cannot manage their finances logically, further compounding stress," said Melkumian. "A person develops an emotional relationship with money that can be marked by ups and downs (day after payday) that turn into cyclical patterns in his life."

Think about the causes of your anxiety and depression. Do you constantly look at your bank account and worry about not being able to pay the bills? Or do you ignore financial obligations in the hope that they will go away? Both of these can trigger depression and have a greater impact on your mental health.

Suicidal thoughts about money

In November 2020, the American Journal of Epidemiology published a report showing a link between financial suffering and a suicide attempt.

"Debt and financial crises, unemployment, lower incomes and homelessness in the past have been significantly and positively associated with subsequent suicide attempts," the report says. "The predicted odds of suicide attempts (and suicidal ideation) have increased substantially with each increase in financial stress."

"There is a recent story of a 20-year-old who committed suicide after seeing a negative balance of more than $ 700,000 [on his] investment application," Gaveras said. “Studies show that debt is a risk factor for suicide and, again, the opposite is true. Those who have had a recent suicide attempt are more likely to have financial problems in subsequent years. "

Warning signs that debt is affecting your health

Gaveras has an easy way to tell if your finances are starting to hurt your mental health.

"When someone comes to see me with symptoms of anxiety and difficulty sleeping, I ask what they are thinking about when they are trying to sleep," says Gaveras. "Even if the answer is not specifically about money or debt, sometimes it is something that is indirectly related."

You may think that money is not seeping into other areas of your health, but it is enough. Melkumian said there are two main ways to know if you are suffering from the mental health impact of debt.

"The biggest red flag [is] whether you're constantly thinking about your money or never thinking about it," says Melkumian. "If this behavior is combined with anxiety attacks, it is quite easy for someone to connect the dots as to what is causing their anxiety and depression."

Other warning signs Melkumian shared with The Balance include:

Avoid conversations about money

“Since finances are a taboo subject in our society, you cannot share what is happening to them financially, so they can get stuck in their own heads with no one to talk to. This creates anxiety, panic attacks, and even suicidal thoughts. "

Change in financial behavior

"Are they spending more for no apparent reason? Are they turning down restaurant invitations? They may be spending a lot but getting into debt, all due to anxiety caused by something like job insecurity. "

Suppress negative feelings related to money

“The cultural narrative of emotional positivity can lead to judgment and shame. This creates an unrealistic expectation that happiness is the most important emotion. When circumstances do not align with positivity or happiness, there is a significant decline in mental health. "

Managing the Impacts of Debt on Mental Health

If you are suffering from emotional debt that is affecting you and your life, there are ways to manage it.

Get help

Whether you suffer from financial anxiety or have suicidal thoughts, talking about it with someone can be one of the best ways to help yourself. Both Gaveras and Melkumian recommend seeking the help you need and finding someone you can talk to about your problems and concerns. This can be done with a financial therapist or with a different type of specialist to suit your needs.

Reframe your approach

Melkumian notes that many people feel ashamed if they are not happy all the time. Try changing your perspective to be more receptive. “If you normally say to yourself: 'I should be happier,' use a reframing technique to change your perspective: 'I am willing to face my financial situation as it is, so that I can get to a happier place in the future. "

Create a plan

Money worries go far beyond your wallet and profoundly affect your mental health."Create a personal care and debt reduction plan while working on self-esteem and breaking the subconscious blocks that have existed since you were young," says Melkumian.

Your financial fears don't need to dominate your life. If you need more help, talk to a therapist or counselor who can help you find the best path for you. Not all experts are suitable, and if you don't connect well with one of them, don't be discouraged. Instead, find someone who meets your needs. Explore the Financial Therapy Association or find a professional near you.

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Source: Real Life Psych

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