The Impact of Debt on Your Life


Whoever first said that “money can’t buy happiness” probably didn’t have experience managing debt. Living with financial trouble is about more than just juggling monthly payments and dodging calls from creditors: It has a far-reaching impact on your happiness, health, relationships, and overall quality of life.

Having the funds to pay bills and afford occasional luxuries can reduce our stress and help us focus our energy on things other than our finances. But for those who live with crippling debt, it’s easy to feel as though life revolves around money.

Debt Impacts our Mental Health

Studies have shown that we feel the effects of debt emotionally – often for years at a time. A 2012 study published in the European Journal of Public Health identified a link between debt and mental health disorders, explaining: “Adults in debt were three times more likely than those not in debt to have CMD [common mental disorders]. The increased likelihood of CMD among those in arrears was found for all CMD and was irrespective of [the] source of debt – housing, utilities, and purchases on credit.” The study concluded that debt was one of the major triggering factors for the development of common mental disorders.

Another study, from Northwestern University, determined that consumers who fell into debt reported a 13.3% increase in symptoms of depression. For every ten percent increase in debt, the study found that depression symptoms worsened by fourteen percent.

Debt Strains our Relationships

In addition to increasing our risk for depression, stress, and other mental health disorders, mounting debt can strain our relationships – particularly for those in married or romantic relationships. According to a report from Lending Tree, 21% of those who’ve been divorced cite money as the triggering factor for their marital problems.

The Lending Tree survey cites the following numbers showing that as debt increased, the likelihood of divorce increased:

  • Two percent of respondents said they had $500 of debt or less.
  • Thirteen percent said they had between $500 and $4,999 in debt.
  • Fourteen percent said they owed between $10,000 and nearly $20,000.
  • Twenty-three percent reported owing $20,000 or more.

Additionally, for younger couples with lower incomes, debt can strain the ability to stay on top of bills and necessary monthly expenses like food and housing – which can then cause arguments, blaming, excessive stress, and sometimes break-ups.

Debt Decreases our Quality of Life

When you’re living with staggering debt, it becomes increasingly difficult or even impossible to enjoy certain activities without guilt – or even at all. When you’re fighting to stay on top of mounting interest rates and monthly payments, occasional splurges like dinners out with friends become impossible to manage. As a result, we can become more and more reclusive, feeling that our entire lives – and spending habits – are controlled by our spiraling debts.

Additionally, debt negatively impacts credit history. If you hope to obtain a home loan in the future, for instance, you may find it difficult to locate a lender who’s willing to risk working with you. You will also find it difficult to get the credit needed to start and fund a new business or venture or to even secure a car loan.

Finally, when your resources are all funneled into paying down debt, you have little left to save for retirement. With the Social Security Program projected to be insolvent by 2034, it is increasingly important for millennials to pad their retirement accounts as early as possible to plan for a healthy, safe retirement.

Debt Leaves a Negative Legacy

If you have children or grandchildren – or hope to someday – consider the legacy you are leaving behind. Are you teaching them to be responsible with what they’ve earned? With what they’ve been given? Or are you demonstrating a pattern of reckless indulgence and poor decision-making?

If you have children, think about whether you’d like to support them by funding their college education or helping them make a down payment on a first home. If you’re steeped in debt, this will be difficult – or even impossible – to achieve.

On the other hand, if you live debt-free, you have the freedom and ability to not only counsel your children and grandchildren about how to spend and save responsibly, but you’re also free to help them financially should they need assistance down the road.

Saying YES to Your Best Life by Saying NO to Debt

Whenever possible, aim to live debt-free. To live without relying on credit. To live on your income, not on savings. When you cultivate the discipline and forethought to budget and save rather than spending and borrowing, you’re not just setting yourself up for a better life – you’re also setting an example for those who look up to you and preparing yourself to be a generous counselor and guide to those who come after you.