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Depressed About Debt? Expert Advice on How to Overcome Financial Anxiety (And Get Rid of Your Debt)

Depressed about your debt? Financial stress over big debts can cause anxiety and depression, raise blood pressure, or lead to insomnia or substance abuse. Here are one mental health expert’s tips for coping.

Tips on dealing with depression and anxiety brought on by debt or financial stress.You know debt hurts your financial health. But did you know that debt also hurts your mental and physical health?

For years, studies have shown people in debt have higher rates of mental health problems like depression and anxiety than those who are debt-free.

According to the Mayo Clinic, anxiety and depression can lead to serious problems like:

  • Headaches, weight gain, digestive problems and other physical problems
  • Insomnia or sleeping too much
  • Alcohol or substance abuse
  • Nervousness and panic disorders
  • Conflicts at work and home

Debt can also lead to serious health issues. A recent study found that young adults with large amounts of debt also have higher rates of high blood pressure, which can lead to heart attacks and strokes.

In other words, carrying debt leads to a lot more than just a low credit score. It could kill you, or at the very least, lead to a serious case of the blues.

Regular readers of Money Under 30 know what financial experts have to say about getting out of debt. But we asked Scott Rick, an Assistant Professor of Marketing at the University of Michigan’s Ross School of Business and the voice behind the Retail Therapy blog at Psychology Today, for tips on lowering debt-related anxiety and depression, and restoring order to your finances.

1. Face the reality of your situation, even if it upsets you.

Do you avoid opening up your credit card bills? When you finally get around to it, do you only glance fleetingly at the charges, because you don’t want to face how much you tacked on to your balance? Do you avoiding looking closely at how much interest you’re paying?

If you answered yes to any of the above, it’s because you’re depressed about how you much debt you acquired in the past, and anxious about how you’ll ever pay it off in the future.

But if you want to put an end to the depression, anxiety, and the associated health consequences, you have to closely examine all of those bills.

“Laying out all of your debts and understanding the terms, especially interest rates, is a good place to start,” says Rick. “But it’s also a difficult place to start if that reality feels overwhelming.”

Difficult, but doable.

2. Choose the debt- elimination method that causes you the least amount of anxiety.

Once you understand how much you owe and to whom, it’s time to choose between one of two repayment methods:

  • Snowball Method: Making the minimum payments on all of your debts, then throwing any remaining money towards your smallest balance
  • Debt Stacking: Making the minimum payments on all of your debts, then throwing any remaining money towards the debt that carries the highest interest rate

From a purely financial standpoint, debt stacking is your best bet because it saves you the most money in interest payments. “For those inclined to play around with Excel, you can total up your debts each month and estimate what you’re saving by focusing first on the high-interest debt,” says Rick. “That can be rewarding.”

But the mind doesn’t operate on logic alone. If you have a large balance on your highest interest loan, it will take you a long time to eliminate that debt. The process can leave you feeling frustrated. For others, just using Excel or one of the many online debt payoff calculators causes too much anxiety. “If you’re really overwhelmed and not inclined to do the math, then focusing on paying off small debts is certainly better,” says Rick.

3. To avoid future debt, be mindful of the link between happiness, sadness and shopping.

Using either method, the day will come when you finally pay off one of your debts. From a psychological standpoint, this can be a dangerous moment.  “Once people achieve a subgoal, like paying off a single debt, they might celebrate and relax in their pursuit of the larger, overarching goal, like getting out of debt,” says Rick.

In other words, once you see a zero on your credit card statement, you might be tempted to put a new TV or an airplane ticket on your Visa.

Or perhaps one day, you’ll find yourself bummed out over something else and indulge in a little “retail therapy” to feel better. In his research, Rick found that shopping can be an effective cure for sadness. “It restores a sense of personal control over one’s environment,” he says.

Either way, whether happy or sad, the day will come when you want to buy stuff because it feels good. By all means, shop away, but avoid purchases you can’t pay for in full at the register. Because if you find yourself back in debt, the cycle of anxiety and depression will start all over again.

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Published or updated on March 13, 2014

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About Patty Lamberti

Patty Lamberti is a freelance writer and Professional-in-Residence at Loyola University Chicago, where she teaches journalism and oversees the graduate program in digital media storytelling. If she doesn't know something about money, you can trust she'll track down the right people to find out. You can learn more about her at www.pattylamberti.com. And if you have any story ideas, or questions about money etiquette that you'd like her or an expert to answer, email her at moneymannersqs@gmail.com.


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  1. Astrid says:

    I have debt in student loans. I feel so overwhelmed( i have a debt over 19,000) For the longest time i thought if ignored it, it would go away. Now i need to face it and start paying off( i am still going to school because my college i went to most of the credits didn’t transfer. So i am so frustrated at the school systems( i feel in away i was robed from that money and now i have to pay it plus i had to pay of 2000 just to get those class transfer. I guess i just have to start over again.

  2. Marie Zalbe says:

    My mother in-law before has undergone depression because of their debts. She was so very irritable and easily got mad. They always had a bad fight with her husband, fortunately they managed to solve their problems. All their debts were already paid and they have a good job in Riyadh.

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