THE EMOTIONAL EFFECTS
OF DEBT
Source: www.debt.org/advice/emotional-effects/
It’s unclear who first said “Money can’t buy happiness.”
Whoever it was, they probably weren’t staring at a tall stack of bills and an
empty checking account.
Money can’t buy happiness, but it is the only thing that
will pay those bills. Doing that may not trigger an endorphin rush of
happiness, but it sure beats the alternative.
It’s hard to imagine anyone feeling joy over not paying
their bills. Perhaps there is psychiatric condition that causes people to enjoy
bankruptcy proceedings, but nobody’s found it yet.
Having enough money to pay all our bills allows us to
provide for our families, plan for the future and enjoy our leisure time.
Not having money restricts our choices and wreaks emotional
havoc on our psyche. Borrowing money to pay those bills leads to debt, which
can lead to all sorts of problems that have nothing to do with accounting and
everything to do with psychology.
Among the negative effects are low self-esteem and impaired
cognitive functioning. That means you can’t learn, remember, be attentive or
solve problems as well when you’re freaking out over your water bill.
And get this – debt can hurt. I mean, really hurt.
A study of 33,720 U.S. households published in the January
2016 edition of Psychology Science found that those with higher levels of
unemployment were more likely to purchase over-the-counter pain killers.
That wasn’t particularly surprising, but a research team
discovered that simply thinking about the prospect of financial insecurity was
enough to increase pain. People reported feeling almost twice as much physical
pain after recalling a financially unstable time in their life compared to
those who thought about a secure period.
It’s rare for someone to never have money problems. Trouble
happens, jobs disappear, marriages fail, people get sick, their homes lose
value and bill just keep piling up. No one is immune.
So what came first, the pain or the debt?
Responding to Debt
Does debt cause mental illness, or does mental illness cause
debt?
Yes.
That’s the best answer researchers have come up with after
years of study. Some research found that worrying about debt triggers stress,
which reduces your resilience against mental health problems.
Other studies show mental health problems decrease
self-control, increase spending and basically mess up a person’s financial judgement. That would explain why Jack Nicholson didn’t have a checking account
in “One Flew Over the Cuckoo’s Nest.”
But when we say “mental illness” caused by debt, we’re not
talking about a full-bore disorder like schizophrenia that requires wearing a
straitjacket. The problems are less glaring, but they can still take you to
still tie you up in knots.
Behaviour patterns that compel some to spend without
restraint can drive a person into debt just as surely as a financial emergency
caused by a car crash. Regardless of how someone falls behind, being in debt
can trigger unsettling emotional responses.
Denial
No, it’s not just a river in Africa. It’s a way of fiscal
life in Washington D.C., where politicians have let almost $20 trillion in
national debt pile up and seem to think the bill will never come due.
Consumers don’t have the luxury of endless deficit spending,
though many act as if they do. They spend compulsively while ignoring their
deteriorating condition. They put off dealing with problems until some outside
event – credit denied, threat of foreclosure, legal action, harassing
phone calls from debt collectors – forces a change.
Some of the symptoms of debt denial
are:
·
Underestimating how much you owe.
·
Not answering the phone when you
suspect a collection agency is calling.
·
Leaving bills unopened or just
stuffing them in a drawer.
·
Opening a new credit card when your
old one is maxed out.
·
Telling yourself that everyone is in
the same situation.
Such behaviour just leads to more debt as interest charges
and late fees pile up. But ignoring reality is a handy defence mechanism for
the brain. It’s a way to rationalize mistakes and protect your ego. The problem
is reality always sets in.
Stress
It’s the opposite of denial, and there’s plenty of it based
on debt-management statistics.
Debt and stress are like co-joined twins. The average U.S.
household with credit card debt has balances totalling $16,748, and the average
household with any kind of debt owes $134,643, according to a 2016 Nerdwallet
study.
Conversely, 72% of Americans said they felt stressed about
money, according to an American Psychological Association study. And 22% said
they felt “extreme” stress over their finances.
So what exactly is “stress?”
The term was coined by endocrinologist Hans Selye in 1936,
who defined it as “the non-specific response of the body to any demand for
change.”
In modern financial terms, that means you hyperventilate
when the Visa bill arrives.
Stress may be hard to define, but it manifests itself in
obvious ways – lack of sleep, loss of focus, nagging worry.
It can affect big things like your job, since you fear
losing it would make your financial situation even worse. It can affect small
things like lunch, since you feel guilty for ordering a $2.19 iced tea instead
of water. You don’t need an endocrinologist to tell you that’s no way to live.
Fear and Panic
This is stress with the scab torn off. The thought of
getting a late payment notice doesn’t just make you uncomfortable, it gives you
a rapid heartbeat, shortness of breath, dry mouth, a headache and the shakes.
On top that, debt gives skittish people one more reason not
to walk down the marriage aisle. Researchers at the University of Wisconsin
found that high levels of debt contributed to reduced marriage rates among
young adults.
The National Institute of Mental Health estimates 40 million
Americans suffer from anxiety. Financial worries are a massive trigger for
those disorders.
You assume the worst, like that you’ll be homeless if your
house gets foreclosed, or your car is going to break down on the way to work
and you’re going to get fired for being late.
Nobody wants to live like that.
And apparently, they don’t want to marry anyone who lives
like that, either.
Anger
As the economy sagged, anger issues rose. The phenomenon got
its own name in medical circles: Debt-Anger Syndrome.
Instead of panicking or denying, victims get mad. They are
mad at creditors who continually send them bills; mad at the mailman for
delivering the bills; mad at their bosses for not paying them more; mad at
their spouses for not making more money; mad at their kids for needing new
braces; and mad at themselves for getting into this fix.
In short, they are mad at life.
This not only can ruin relationships, the physiological
effects can lead to migraines, heart disease and reduce your resistance to
infections.
A 2016 report from the Federal Reserve Bank of Atlanta
linked debt to higher death rates. Becoming seriously delinquent on a debt
increased the mortality risk 5% in the first three months after the bill became
delinquent. But a 100-point increase in a person’s credit score led to a 4.38%
decline in the mortality risk.
Depression
People deny, freak out and lash out over debt. After they
work through those stages, the bills are still staring them back in the face.
That’s when depression sets in.
People who struggle with debt are more than twice as likely
to suffer from depression, according to a study by the University of Nottingham
in England.
Hopelessness sets in, as does low self-esteem. It can lead
to even more debt, since sufferers sometimes try to relieve their depression by
treating themselves to a shopping spree or some other mental getaway.
But all that does is lead to more debt, which leads to more
depression and despair. At that point, people don’t care whether their pain is
caused by debt or debt is causing their pain.
They just want the pain to end.
Relief
The good news about debt and mental illness is the
treatment can be pretty simple. You don’t need to spend money on medication or
spend time on a psychiatrist’s couch.
You just need to get out of debt. Easier said than done, of
course. But it can be done if you get a plan and stick to it.
Whatever the cause of you plunging into an uncomfortable level of debt,
your goals should be to reduce your expenses, increase your monthly payments to
creditors, reduce interest rates and pay off your bills by a set date.
The mere act of starting to dig out of a financial hole is a
positive first step that will make you feel better. Many consumers have done
that by contacting a debt management agency.
Credit counsellors work with them to set up a budget, and
they work with creditors to reduce interest rates. That mountain of depressing
bills is consolidated into one monthly payment, and the non-profit agency
distributes the funds to creditors.
So, if debt is driving you crazy, take heart. Solutions
for your credit woes are within reach.
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