The Psychology of Debt

The Psychology of Debt: Debt is a common financial burden that can have a significant impact on an individual’s emotional and psychological well-being. According to a study conducted by the University of Nottingham, people who struggle to pay off their debts and loans are more likely to undergo mental health issues such as depression and anxiety. In fact, debt is much more than just money and being in debt can lead you to a host of psychological issues. It does not matter if you term it as ‘good debt’ or ‘bad debt’ because both have the potential to adversely affect you¹.

The emotional strain of dealing with debt can be almost damaging as getting your electricity cut off or having your car repossessed or seeing your credit score plunge to where you’ll struggle to get another loan. The University of Nottingham conducted research under the leadership of Dr. John Gatherwood. He studied the correlation between carrying debt and any potential depression and anxiety associated with it. In his study, it was found out that, people who struggle to pay off their debts and loans are more likely to undergo mental health issues such as depression and anxiety. There is an array of emotions that can arise due to triggers, like constantly worrying about money, overwhelming feelings having no end in sight, extreme hopelessness, and severe anxiety.

Debt can also have a significant impact on relationships. According to a survey by Credit Karma, more than half of millennials in relationships agree that they don’t want to get married until their finances are in order. Debt can lead to stress and depression, which can increase headaches, affect sleeping patterns, and impact a person’s ability to focus. This type of physical stress on the body can result in more frequent colds and infections and affect a person’s ability to go to work, which further enhances financial struggles.

Here are some tips for managing debt-related stress and anxiety:

1. Create a budget: Creating a budget can help you understand your financial situation and identify areas where you can cut back on expenses.
2. Prioritize your debts: Prioritizing your debts can help you focus on paying off the most important debts first.
3. Seek professional help: If you’re struggling with debt-related stress and anxiety, consider seeking professional help from a financial advisor or a therapist⁵.
4. Take care of yourself: Engage in activities that help you relax and reduce stress, such as meditation, yoga, or exercise⁶.

Remember, debt is a common financial burden that many people face. However, it is important to take care of your emotional and psychological well-being while managing your finances. By following these tips, you can manage debt-related stress and anxiety and improve your overall well-being.