How Debt Affects Your Mental Health – And What to do About It


While it may seem “normal” to stress over money, carrying debt can lead to severe and overwhelming mental health issues. In fact, studies show that debt can cause various mental health disorders such as stress, anxiety, and even depression. There are, however, ways to overcome these issues. In this post, we will discuss the main ways debt can affect your mental health and offer ideas on how to tackle these issues.

Please bear in mind that we are not mental health experts. If you find yourself suffering from anxiety, depression, or another mental health issue stemming from your debt, please reach out to a psychologist, psychiatrist, or licensed clinical social worker to discuss treatment options.

Mental Health Effects of Debt

People with debt often feel overwhelmed and hopeless by both the amount of their debt and a perceived inability to pay it off. If you constantly worry about money and stress over how you will be able to meet your family’s basic needs, it is likely you will show signs and symptoms of anxiety. In addition to anxiety, having debt is also linked to higher than normal rates of depression.

Debt can be isolating and at times it can feel all-encompassing. Those who do not have any sort of support from family or outside assistance may feel isolated and as if they are tackling their debt alone. This isolation and despair can cause or exacerbate mental health issues.

Debt can also affect a person’s physical health, which in turn can affect mental health. For example, stressing over debt can cause a person so much anxiety that he or she can no longer get a good night’s sleep or might lose his or her appetite. This creates a vicious circle of mental and physical health problems, both caused by debt.

In addition to stress, anxiety, and depression, other potential mental side effects of debt on your mental health can include anger management issues, panic attacks, insomnia, and suicidal thoughts.

How to Take Control Over Your Debt and Your Mental Health

The first thing to remember is that no matter your situation, there is help out there for you. If you are struggling with financial anxiety, depression, or any other mental health issue as a result of your debt, here are a few steps you can take to protect your mental health and your finances.

1. Seek Professional Help

Instead of suffering alone, reach out to a therapist. There are even therapists out there who are specially trained to address patients’ financial problems, such as carrying large amounts of debt. If you are interested in finding a therapist who specializes in treating patients with finance-related mental health issues, you can find one on The Financial Therapy Association’s website.

2. Reach Out to Your Friends and Family for Support

In addition to professional help, having the support of friends and family is crucial in helping a person recover from mental health issues brought upon by debt. Many times, debt can make a person feel isolated and as if he or she is struggling alone. 

By opening up to a trusted friend or family member, you can relieve some of the shame and loneliness surrounding debt. Others can offer their support and share a bit of the burden you have been carrying, relieving some of the isolation. As a bonus, a friend who is knowledgeable about personal finance could also assist you in developing better financial habits or help you come up with a financial plan for getting rid of the debt.

3. Address Your Debt Head-On

Hiding from your debt or pretending it does not exist does not fool anyone, including yourself. Even if you try to pretend for a while that the debt is not there, deep-down you will still know that it is, and covering it up can lead to the mental health issues we discussed above.

Instead of hiding the debt from yourself, vow to tackle it head-on. The first step in doing so is to assess where you stand. Organize all of your financial paperwork and go through everything so you know exactly what you owe and to whom. Once you have a clear picture of what you owe, you will be able to move on to the next step, which is tackling the debt and coming up with a plan to pay it off.

Without first taking stock of where you stand, it will be much more difficult to relieve yourself of the burden and it may continue to affect your mental health, regardless of whether you are aware of its effects.

4. Develop an Action Plan

Once you have a clear picture of what you owe, develop an action plan for paying off your debt. Set reasonable goals for yourself, track your progress, and reward yourself for your efforts. As you begin to pay off the debt, hopefully, your confidence will start to come back, you will have more hope, and the stressors and anxiety related to the uncertainty of your future will begin to disappear. For many people, the lack of control over their debt is a trigger for anxiety or stress. Once you have a plan in place for getting the debt under control, this anxiety should begin to fade away.

5. Seek Debt Relief

Even if you find yourself in a situation where paying off your debt seems impossible, luckily all hope is not lost and there are still solutions for paying off your debt and relieving yourself of this burden. For example, if you have missed many months of credit card payments or bills, you can reach out to a debt relief company for assistance.

Debt settlement, whereby a debt settlement company negotiates with your creditors on your behalf to pay off your debts with one lump-sum, might be a solution. Instead of struggling with debt for many, many years, debt settlement can wipe out your debt faster and leave you with a clean slate. For many people, this fresh start clears up not only their debt but also their minds and alleviates many of the mental health issues triggered by debt.

You Are Not Alone

The theme that runs through all of these tips is that you are not alone. Most people will carry debt at some point in their lives. Many of those people will also face mental health challenges related to the burden of carrying this debt. Luckily, there is always a way out. Friends and family members, as well as professionals, whether that be a therapist or a debt relief company, can help you tackle the problem.