Being in debt isn’t necessarily a bad thing. Debt allows us to purchase cars and homes, go to college, and buy things that we can pay for in the future. It’s part of everyday life. It’s only an issue when it becomes unmanageable and starts taking a toll on our quality of life and mental health — and this happens more often than we think.

Recent analysis revealed that people with debt are 4.2 times more likely to be depressed than people without financial difficulties. The link between both is undeniable.

The relationship between debt and mental health

Debt leads to poorer mental health

Several studies compiled by Healthline point to debt as a cause of worsening mental health. For instance, one study revealed that debt most likely leads to deteriorating mental health due to the stress it causes.

This is supported by a recent study that showed how the current global economic downturn (which led to a 37% global unemployment rate and more debt) also caused an 8.8% rise in suicides in the U.S. and Canada. A similar phenomenon was observed in the 2008 economic crisis, when depression rates soared. There was also increased use of antidepressant medications by people with the greatest stock holdings.

Mental health issues lead to debt

A proponent of a previously mentioned study and clinical psychologist, Dr. Thomas Richardson, states that the relationship between debt and mental health goes both ways. He cites erratic employment in those with mental health problems as a causative factor to debt.

A decline in mental health can impact day-to-day living. It makes it difficult to concentrate and focus on tasks. This is a hindrance when we need to tackle bills or call the credit card companies to address late payments. High levels of anxiety also lead to an avoidance of financial responsibilities altogether. Mental health issues make it difficult to create financial plans, let alone take action to pay off mounting debt.

Managing debt and mental health together

It’s important to know that there are things we can do to take control of the situation. Here are some tips we can start with:

Acknowledging the fear and anxiety

Debt can be overwhelming even to those without mental health issues. It’s okay to feel anxious and scared, but it’s not okay to give in to these feelings. During these stressful times, we need to watch how we talk to ourselves. We should avoid using words like “never” and “always,” especially when talking about financial hardships. Instead, we need to realize that these struggles are temporary.

Another step we can take is answering our “what if?” questions. These push us to look into the future which might create anxiety, but we can also take charge. We can explore different solutions and see which the best ones are— and we can stick to those. This lessens fear and anxiety levels.

Consolidating debt

Having to pay several creditors at a time can be an ordeal. It requires us to focus on several accounts. A better option may be to take out a single loan to pay off all other balances through debt consolidation. It may seem counterintuitive to accrue new debt, but this may actually help us lower interest rates. More importantly, it will make debt payments easier to manage.

While it doesn't eliminate debt, consolidation merges multiple individual debts into one. With this arrangement there is only one recurring monthly payment. Plus, it helps build a healthy financial habit.

Seek credit counseling

Some of us may need help in figuring out our finances, and that’s absolutely fine. There are credit counseling programs run by lots of nonprofit organizations, such as the National Foundation for Credit Counseling or the Financial Counseling Association of America.

These counselors can assist in sending monthly payments to creditors. They can also help people manage debt and their finances.

Once we break debt management down into parts, it is easy to realize how we have the ability to manage it well.

About the Author

Reena Jaimie is a freelance writer and wellness advocate. She is passionate about helping other prioritize their mental health. She enjoys learning new things and occasionally goes on hikes with her Labrador, Max.