The Psychological Effects of Debt: How to Cope

There is no doubt that money has an effect on every aspect of our lives, and for most of us, debt is a common consequence simply of living. Whether debt comes from student loans, medical bills or everyday spending necessities, being financially indebted can not only put a strain on your financial responsibilities, it can also bring forward feelings of fear, stress, failure and inadequacy, to name a few.

With the average American household owing more than $15,000 in credit card debt alone, it is understandable that many face the psychological effects of debt. It is important is to identify these effects and find a way to deal with your financial instability.


The 2014 study from the American Psychological Association found that the main reasons for stress in Americans are finances and job pressure. When considering the factors for job pressure, money definitely plays a role, just as it does with everything else in our lives. If you are under overwhelming debt, stress is almost an immediate response. You worry about how you will make the payments, how long it will take you to pay off your debt, and how debt will affect your life.


While it isn’t fun, fear is a natural response to any measure of debt. We fear what we can no longer control or change. While you are responsible for your purchases and spending habits, once the debt has incurred, you have little control over your financial future. That financial instability is scary, and the resulting fear can eat away at you, causing an array of other health problems. Some of these can include stress, fatigue, stomach ulcers, migraines and more.


We have met people who feel stress over $1,000 of debt as well as people who don’t think twice until they have racked up hundreds of thousands of dollars in debt. For the latter, denial is a serious side effect. For example, many students don’t think about loans or credit cards until after graduation (for some six months after when the payment due dates arrive). At that point, base loans have increased substantially due to interest. Denial can be one of the most dangerous psychological effects of debt as interest will cause the amount owed to skyrocket over time.


Everyone feels regret after making a poor decision or mistake. With debt, regret often follows as we ask ourselves why we made this purchase or continued spending past beyond our budgets. We question our ability to make healthy decisions. The only positive with this psychological effect is that you can use the regret as fuel to change your spending habits. When presented with another opportunity to spend beyond your limits, remember the nagging feeling of regret you had the last time you read your credit card statement and make the best decision possible.


Take action! While you might not have any control over the amount you owe, you do have control over how you repay it. You can create a detailed plan to tackle your debt and eventually become financially stable again. If you have a significant amount of money owed or feel financially unstable due to your debt, a debt consolidation program might be the right choice for you. Combined with credit counseling, you can change your financial status and move toward a healthier physical and financial future.

Have more questions regarding debt consolidation programs or credit counselors? We have answers on our debt consolidation page.


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