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How Can Debt Affect the Mental Health of a Person?

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Debt is something that almost each and every person goes through at a certain point in their life. While some people prefer clearing their debts before spending money on any other things, some completely forget about their debt amounts. However, when they start receiving the calls from the collection agencies and their mailboxes are filled with a huge number of emails, they start realizing that it is high time that they clear all their loans. However, arranging a certain amount of money at any given time is not an easy job. Thus, it is rightly said that debt is capable of negatively affecting the financial health of a person. Apart from that, it also affects a person mentally to a great extent.

If you are currently experiencing feelings of depression, read this article from BetterHelp to learn more.

The relation between mental health and excess debt

According to, the chances of having mental issues are almost three times higher in those people who have a huge amount of withstanding debt. It is crucial that you have proper knowledge as to why debt is responsible for affecting mental health in a negative manner. The first thing that you should know is that the society that you are living in is not going to talk highly about a person who is in a lot of debt. A huge number of labels constantly swirl around people who have a huge amount of debt. These labels include failure, impulsive, immature, and the list is never-ending.

According to a number of health counselors, the person who is in debt is normally internalizing all these feelings. He ends up creating an identity based on the self-imposed labels. He considers himself to be a complete failure and believes that all the decisions that he has taken are completely wrong. These negative assessments can help in making it even more difficult to take action for eliminating the withstanding debt amounts and can also lead to numerous health issues, which include anxiety and depression.

For making things worse, studies have shown that people who are struggling constantly with mental problems like depression, addiction, or anxiety are going to struggle with more debt. Considering the fact that one in every five adults has mental health problems, this is going to contribute to an extremely vicious cycle. Someone who is already struggling with anxiety and depression can fall in debt. Anxiety and depression can make things extremely hard and it is going to become difficult for them to work on eliminating their debt. The financial stress associated with debt can help in exacerbating the pre-existing conditions and the cycle is going to start again.

The financial cost associated with mental health conditions

A mental health condition is responsible for leading to huge financial stress for a number of reasons. Illnesses, which include addiction, anxiety, and depression, can make managing bills, holding a job down, and taking care of the other financial aspects an extremely daunting challenge. Mental illnesses are responsible for causing the American economy almost $193 billion every year.

You also cannot avoid the medical course. People who are suffering from depression are going to spend a huge amount of money at the end of every month on medicines, extensive therapies, and various other medical treatments.

Rebuilding and managing the finances

When you are suffering from any mental issues like anxiety and depression, rebuilding the finances can seem as if you are climbing the mountain, which is extremely high. While it is going to take a lot of time as well as patience, eliminating the excess debt and establishing financial independence can affect health in a positive manner. Given below is a list of the tips that you should follow in order to ensure that you can rebuild and manage your finances in a proper manner.

Ensure that you are taking care of the mind

A great way of rebuilding financial health is by ensuring that you are not neglecting mental health. In order to do this, you have to ensure that you are visiting your doctor on a regular basis, going to the therapist, or talk to the experts regarding the symptoms that you have and how they can be treated. It can be extremely difficult to address the financial issues if you remain constantly anxious or depressed. It is a good idea to go through debt reviews.

Ensure that you are setting up an ideal budget

Budgeting is definitely an important thing that you should be doing when you are trying to control your finances. Most of the financial experts are responsible for advising to stick to the 50-30-20 model when you are setting up the budget. 50% of the budget has to be allocated for all the necessities, which include rent, utilities, groceries, and various other important bills. 30% of the budget has to be dedicated to the expenses, which include planning weekends, shopping for new clothes, and various other requirements. This category tends to be overlooked but this should be included when you are planning a budget because shopping or planning weekends can help in taking care of your mental health.

The next 20% should be set particularly for certain financial goals, like, staying out of excess debt, setting up retirement funds, or putting away money in emergency funds. It is crucial that the budget is crafted in accordance with the lifestyle that you lead and on the basis of the things that are going to work in the best possible manner for you.

Rebuild the credit score

If you are constantly struggling with a huge amount of debt, the credit score can be damaged easily. A low credit score means high rates of interest as well as unfavorable terms when you are going to take credit in the future. This is why you should work towards rebuilding the credit score so that you do not face any issues in the future.


Debt can lead to numerous health problems but mostly it affects mental health to a great extent. It is essential to avoid falling in the debt trap in order to ensure that your mental health is not affected in any manner.

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