The effect that debt can exact on mental health can be staggering and deeply personal.

For many Americans, debt has become an integral part of their daily lives. According to a report, 8 out of 10 Americans have some form of consumer debt. Whether refinancing a home, getting a loan for a car, or taking out loans to further education, there are many reasons why we get into debt. Some even go into debt to purchase food, clothing, and other necessities.

However, regardless of the reason we incur debt, it’s a financial obligation that must be repaid. Otherwise, it can spawn trouble not only in your finances but in many aspects of your life. When you are in debt, it holds you back from achieving your financial goals and making progress in your career. Even worse, that debt will follow you for decades and, if you don’t do anything about it, it will keep growing.

The burden of debt is heavy. It’s more than a number on a credit statement; it can affect us emotionally, physically, and financially. Debt can also be a source of stress, worry, and even shame or embarrassment.

With that said, we want to discuss the hidden cost of debt and how it impacts us in many ways. Debt can cost you more than interest rates, which most people aren’t aware of. After reading this, you will have a better understanding of the consequences associated with debt.

A Growing Burden: Debt Can Ruin Your Mental Health

As the world becomes increasingly complex and financial conditions become more uncertain, it’s crucial to understand how our emotional health can be impacted by the stress of debt. Many people in debt may not experience any emotional difference at all. However, others may suffer symptoms, such as depression and anxiety, due to the financial strain of debt.

We don’t like talking about it, but high levels of household debt and payment difficulties can negatively impact our mental health. Studies revealed that once a person has debt and problems with repayments, it can cause anxiety. In another report, research shows that people who are in debt are more likely to suffer from depression and anxiety than their peers without it.

Debt has a way of making us feel like we are drowning. Sometimes you have to take on debt to get what you want. However, the fact is, when you are in debt, it can be detrimental to your mental health.

Usually, the anxiety comes from the uncertainty about how you’ll meet your financial obligations or make ends meet while paying off your debt. Meanwhile, depression often sets in when you realize you may never get out of debt. As such, you succumb to feelings of despair and hopelessness. These conditions can interfere with your ability to pay off debts.

Debt, Depression & Suicide

Although suicide isn’t a common response to uncontrollable credit, it remains a leading cause of death in the US, according to the Centers for Disease Control and Prevention.

A sense of hopelessness might sometimes lead debtors to develop suicidal thoughts. This is because debt levels feel too high for them to manage, let alone resolve.

Please, if you think suicide is an option for debt, please call the suicide hotline in your country (988 in the US). To find real and practical solutions to overwhelming debt, it’s best to ask for help from professional counselors like Money Fit. They can advise you on the best ways to manage and overcome your situation.

Debt Impacts Physical Health, Too!

When we think of all our financial stress, this too can take a toll on our physical well-being. Many people don’t realize that stress can be a significant factor in developing certain chronic illnesses. When you’re stressed, your body releases chemicals (such as cortisol) that prepare you for action by increasing your heart rate, blood pressure, and blood sugar levels.

This is normal and natural. However, if you experience constant stress, these chemicals can become toxic to your body over time. This can lead to serious health problems like heart disease, diabetes, muscle tension, insomnia, or hypertension.

Furthermore, because you are focused on paying your debt, you can’t afford to seek quality medical care or prioritize things that will improve your physical health. According to a study, people with debt are less likely to go for regular checkups or visit a dentist even if they are sick.

Building Wealth Becomes Tough

Debt is one of the biggest obstacles to building wealth because it takes away the money you could be saving or investing in yourself or your future. When you are in debt, you can’t keep as much money, because a large part of your income goes to repaying your debt. Regardless of the repayment terms of the loan, the time you spent paying would have been used to build your wealth. In short, when you are paying for a loan, saving or investing may seem impossible. This is especially true if you live paycheck to paycheck.

For instance, if you are paying at least $500 a month for your credit card debt, you could have earned a significant amount in investment. When you invest your $500 at 5% for five years, you could have an ROI of $38,748. Yet, you lost this amount because you were paying for your debt.

However, take note that debt can also be a tool to build wealth, depending on your purpose or type of debt. For instance, a mortgage loan is like building your assets. It’s a long-term investment that will provide a stable return for years. This is because, as you pay for the house, its value is increasing, meanwhile, a car loan is the opposite. You are losing money as you pay for it because vehicle values depreciate over time.

Opportunity Cost

Another hidden cost of debt you might not think of is opportunity cost. Opportunity costs are the sacrifices we make to pay off debt. Yet, the term is relatively unheard of in the real world.

A typical example would be going on a vacation or deciding to get a Ph.D. You want to achieve such things, but you can’t because you are still repaying your loan. In this case, you need to consider the cost you’ll spend for such a pursuit. However, you need to delay or just forget about it because your debt is the top priority.

When you are in debt, you often have to make some difficult decisions because you need to prioritize the debt. You have to forego some of your priorities or choices, and it’s not easy to just do the things you want. In short, being in debt often limits your ability to pursue opportunities that would otherwise improve your life.

Strains Relationship

A Harvard Study revealed that the debt collection process strains or damages valuable interpersonal relationships, potentially harming employment and promotion prospects. The stress and anxiety can make it harder for you to focus on work, which may give you a negative impression. When things get worse, it may even impact your employment performance and eventually, your chance for promotion.

In addition, debt can also strain personal and family relationships. When people are stressed out, they may lash out at their friends or family members, which can cause tension and resentment between people. This is true if one person has more debt than another, as this may lead to feelings of guilt and shame about the situation. According to a survey, 54% of Americans believe that debt can be a significant reason to consider divorce. As such, the cost of debt in relationships is inevitable.

Uncertainty in Making Financial Decisions

Financial plans for your future are inevitable. For example, developing a solid plan to secure your retirement years or married life. Yet, with personal debt draining your bank account, planning doesn’t seem like a priority. You prefer not to spend money because you never know when your bills will pop up.

The instability makes it difficult to save for things like a downpayment on a house or obtain insurance for retirement. Unfortunately, financial uncertainty brought about by paying debt can stop you from spending money and living life to the fullest.

Feeling Stuck

How many people do you know are unhappy in their jobs, but can’t quit? Burdened by debt, many people find themselves working a job they dislike. Their credit card bills, auto, or personal loans force them to stay in that work, so they can generate income for their monthly payments.

Though they like to pursue other careers, they can’t because those careers don’t pay well enough to pay off loans and other debts. In some cases, they don’t want to waste time finding another job because they need to consistently earn. As a result, they feel stuck in life and unable to move forward with their dream career.

Final Thoughts

The above-hidden costs of debt are real and have significant consequences on the physical, financial, and emotional aspects of your life. To this end, it’s critical that you take steps to eliminate debt as quickly as possible.

Meanwhile, if you’re experiencing chronic stress as a result of your debt or other factors, we recommend seeking help from professional counselors at Money Fit. Speaking with a counselor can be an effective way to deal with stress and move forward as they can help develop a plan to help you regain control of your debt.

If you or someone you know is experiencing depression you may want to look into professional counseling as a helpful means to cope while your situation is resolved.

If you or someone you know is experiencing suicidal thoughts or a crisis, and you are located in the United States please reach out immediately to the Suicide Prevention Lifeline at 988. These services are free and confidential. If you are outside of the United States, please visit for a list of hotlines and resources in your area.

debt and mental health

Finny the Finance Bot says…

How can I deal with the negative mental aspects of being in debt?

Being in debt can have a significant impact on mental health and well-being, leading to feelings of stress, anxiety, and hopelessness. Here are some strategies that can help deal with the negative mental aspects of being in debt:

  1. Acknowledge your feelings: It’s normal to feel overwhelmed, stressed, and anxious about debt. Acknowledge your feelings and give yourself permission to feel them.
  2. Create a debt repayment plan: Creating a plan for paying off your debt can give you a sense of control and help you feel more in control of your financial situation.
  3. Prioritize your debts: Focus on paying off high-interest debt first, such as credit card debt, to minimize the amount of interest you’ll pay over time.
  4. Be honest with yourself and others: Talk to your loved ones about your debt and ask for support if you need it. Be honest about your financial situation and your goals for paying off your debt.
  5. Seek professional help: If you’re feeling overwhelmed, consider seeking the assistance of a financial advisor or counselor. They can help you create a debt repayment plan and offer strategies for managing your finances.
  6. Practice self-care: Make time for activities that bring you joy and help you relax, such as exercise, meditation, or spending time with friends and family.
  7. Focus on progress: Celebrate your progress as you pay off your debt, no matter how small the amount. This can help boost your motivation and confidence.

Remember, it’s important to be kind and compassionate with yourself as you work to pay off your debt. Small steps toward paying off your debt and improving your financial situation can lead to significant improvements in your mental health and well-being.

The author generated Finny the Finance Bot’s text in part with GPT-3, OpenAI’s large-scale language-generation model. Upon generating draft language, the author reviewed, edited, and revised the language to their own liking and takes ultimate responsibility for the content of this publication.

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