Good debt needs to be managed well in order to remain “good”. Bad debt can lead to serious consequences like eviction, foreclosure, and bankruptcy. Good debt or bad, the truth is, any debt can cause serious emotional and physiological effects.
Some money problems are self-inflicted or caused by emergency and hardship, while others are investment related like school. Regardless of how someone gets into debt, once there, being in debt can lead to emotional and psychological concerns.
A University of Nottingham study examined the direct correlation between carrying debt and depression. In the study researchers found, those who struggle to pay off their debts are more than twice as likely to experience mental health concerns, including but not limited to depression and severe anxiety.
Other emotional effects of an uncomfortable level of debt can include fear, panic, resentment, denial, shame, anger, embarrassment, regret and more.
The average American holds just under 16,000 dollars in credit card debt, and 39 percent of Americans carry some amount of credit card debt from month to month, according to CreditCards.com.
The average college student will graduate with a whopping 40,000 dollars in student loans, 5.6 percent of borrowers owe 100,000 dollars or more in student loans according to a Federal Reserve Board survey.
A British psychiatry journal, The Royal College of Psychiatrists, collected and examined the findings of more than fifty research papers over time, and found that people with high-risk credit behavior are also more likely to report symptoms of depression and anxiety.
In addition to the stress and turbulence a student may feel internally, can affect and/or be exacerbated by their surrounding environment. For example, having substantial debt can also increase your stress level at work, since a job loss would be even more catastrophic to your financial position.
So shopping for a new pair of shoes or an electronic device or even having dinner with friends, which ordinarily would increase a person’s levels of happiness, may actually cause more negative responses about these situations because of debt.
For a student, even purchasing food for daily use can become a high-stress situation if it requires additional or unplanned spending. 64 percent of graduate students admit that they are in a constant state of concern over debt. These emotional and psychological distractions can interfere with a student’s optimal level of functioning, according to a study by the American Psychological Association.
The impact of debt on a student’s ability can be alarming. As the student stresses over their financial situation their cognitive ability suffers. As their cognitive ability suffers, their ability to study, focus and retain information can be decreased causing grades to slip. This slip in grades may create more stress, adding to the student’s emotional concerns continuing the cycle.
To find relief, a person in debt needs to take practical steps to deal with the problem. Whatever circumstances may have plunged someone into debt, they have two major choices to consider. One, how are are they going to deal with the challenges of their financial stability? And how will they handle its effects on their emotional well-being?
The way you answer these questions will set the tone for the health and well-being of your bank account, your personal life.