Debt in America
Debt in America is a multifaceted issue that comes in many shapes and forms. Individuals, corporations and organizations all carry debt. Currently, the average debt in America hovers around $104,215 across mortgages, credit cards and student and car loans. The types of debt are varied across households and corporations, but most commonly include student loans, auto title loans, credit card debt and personal loans.
Inflation, the rising cost of education and real estate are all argued to be contributing factors to debt. However, one thing is for certain, experts agree that debt and financial distress are on the rise.
Towards the end of 2023, a report by the Federal REserve Bank of New York reported that total household debt grew by $212 billion. With this in mind, it should come as no shock that in 2023, adults ages 35 to 44 experienced the highest increase in anxiety and mental health diagnosis. Dealing with debt does not just affect our finances. Financial wellbeing and debt can have a huge impact on our physical and mental health as well.
How Debt Affects Our Mental Health
Financial strain and stress does not just affect your wallet. Anxiety due to finances can have a significant impact on one’s mental state. A recent study by Forbes reported that 54% of respondents reported that they almost always feel stressed about their debt and financial circumstances.
It is important to have a full understanding of how debt affects our mental health if we are to combat this issue. The ways in which debt can seep into our psyche include:
- Stress and Anxiety
- Poor Self-Esteem
- Relationship Strain
- Physical Health Problems
Simply stated, we need money in order to live day to day. The ability to pay one’s basic expenses such as rent, food and transportation costs are necessary expenses in life. The inability to pay for basic expenses can lead to increased feelings of stress and anxiety. Worry over how to pay bills or pay off debts can lead to increased feelings of anxiety. The Sleep Foundation names anxiety as one of the leading causes of sleep issues.
While money can’t buy happiness, a recent study published in Psychological Science reported that individuals experienced a rise in self-esteem as they earned more money. Your self-esteem is the overall value that you place on yourself. Unfortunately, our self-worth is oftentimes tied to how much money we make, and contributes to our financial self-esteem. The inability to make ends meet, or the shame that comes along with having debt can greatly impact one’s self worth.
An additional jarring realization is that your finances do not just affect you and your life. Especially if you are married or have children, finances are a constant topic of discussion. A recent study reported that over one-third of couples cited disagreements about finances as the reason why their relationship ended. Differences in managing money, debt and saving habits can place an enormous strain on relationships.
Furthermore, all of these issues have a tendency to snowball. Anxiety, relationship stress and low self-esteem are all contributing factors to poor health issues. Poor health can also lead to stress, and at which point this can become an endless cycle of stress, debt and poor mental and physical health.
There is an unfortunate stigma that accompanies being in debt. This, in conjunction with the above side-effects can lead to a great deal of avoidance and denial. It is important to remember that the best way to tackle many problems is head on. The connection between debt and mental health is important to understand, because with this information you can gain the tools to combat these issues and take steps toward emotional and financial wellbeing.
Investing in Financial Wellbeing
Especially if your debt is a source of stress, it can be incredibly tempting to avoid or ignore the issue. However, this ultimately leads to more stress! There are practical strategies you have the power to implement to help take back control of your finances and your overall life. If you are struggling with debt, consider:
- Review Your Debts: It is important to have an accurate understanding of exactly how much debt you have, and where this debt comes from. While this can be a stressful exercise, consider asking a close friend or family member to sit with you while you do this. Make sure you take note of what debts you currently have, the interest rates on these debts, and exactly how much you owe.
- Budget Accordingly: While money may be a source of stress, the unknown can be far more stressful. You may find that having an accurate understanding of how much you can spend and how much you owe will actually reduce your stress about money. In addition, this can help you to compartmentalize and gradually reduce your anxiety about your finances.
- Communicate: It is important to communicate to those around you about your financial situation. Do not let the shame and guilt associated with debt keep you from getting the help and support that you need. Your support network wants to help you. Particularly if you are in a bad financial struggle, consider talking openly and honestly with loved ones about things like holiday gifts, wedding presents and dining out. Perhaps agreeing to take a year off of gifts in lieu of shared time together could be a simple way to get back on your feet. Your loved ones want to support you- not stress you out!
- Practice Self-Care: Trying to pay off debt while existing in an era of “treat culture” can be difficult. While debt elimination does require you to buckle down and spend money on necessary items, you do not have to live a completely Spartan lifestyle. Lean into self-care that is free or costs very little. Reframe what “treats” mean to you. If you are looking to “treat yourself” go for a long walk in a nice area with a friend. Make yourself your favorite dinner. There are countless ways you can lean into joy without necessarily spending money.
- Focus on Progress: Getting out of debt does not happen overnight. Be patient with yourself! Focus on progress, not perfection!
If you are experiencing mental health challenges, it is also important to reach out to a trained professional as well as your support network. Understanding the connection between debt and mental health is the first step that you can take towards making changes and creating an overall healthy lifestyle!
