A Closer Look at The Impact of Debt on Mental Health

Getting your Trinity Audio player ready...

Open conversations about this widespread issue can create a more compassionate society

By Anastasia Miller, PhD

Debt is a pervasive issue that affects millions of individuals worldwide. While it is often viewed primarily as a financial problem, the effects of it are felt far beyond the checkbook. It can significantly impact mental health. The constant stress, fear, and uncertainty surrounding debt can lead to significant mental-health challenges, affecting not just individuals but also families, workplaces, and communities.

Understanding the relationship between debt and mental health is crucial, as it can help individuals implement strategies to alleviate its consequences. We are going to explore the psychological effects of debt and practical ways to address the mental toll of financial strain.

Speaking as someone who has dealt with student loan debt for 20 years and who is rebuilding financially post-divorce, I am well aware that debt can create a persistent source of stress that can feel overwhelming and unrelenting.

The weight of unpaid bills, looming deadlines, and the fear of falling further behind can take a heavy toll. This stress can easily manifest physically, through symptoms like headaches, heart burn, or trouble sleeping. The emotional strain of debt can feel inescapable, creating a cycle of worry and exhaustion that leaves little room for relief.

Depression and Anxiety

These emotional and psychological effects of debt often lead to more serious mental-health issues. Depression is one of the most common outcomes, as the overwhelming nature of financial struggles leaves many feeling hopeless and unable to find joy in their lives.

Anxiety is another frequent companion to debt, with individuals experiencing chronic worry, difficulty concentrating, or even panic attacks as they try to navigate their financial situation. Sleep disorders, including insomnia, are also common, as the stress and fear surrounding debt can make it difficult to rest, further depleting emotional and physical reserves.

Debt can lead to a loss of autonomy, stripping away the ability to make choices freely. Decisions about careers, housing, or personal goals are often dictated by financial limitations rather than personal desires. This sense of being trapped can create feelings of powerlessness, making it difficult to imagine a brighter future. The uncertainty about how or when debt might be resolved only amplifies these feelings, leaving many stuck in a state of constant worry about what lies ahead.

For many, debt also carries a deep sense of shame. Social stigmas around financial struggles often lead people to feel embarrassed about their situation, as if being in debt reflects a personal failure. This perception can make individuals reluctant to talk about their struggles, isolating them from the support of friends and family. As feelings of shame and isolation grow, they compound the emotional burden, leaving people feeling increasingly alone.

In some cases, the pressure of debt can lead to harmful coping mechanisms, such as substance use, overeating, or excessive gambling. While these behaviors may provide temporary relief, they often worsen both financial and mental-health problems over time.

Developing healthier coping strategies, such as seeking professional financial advice, engaging in regular physical activity, or connecting with supportive friends and family, can help individuals regain control and address the underlying issues contributing to stress.

Addressing the mental-health impacts of debt requires a multipronged approach. On an individual level, seeking support from financial counselors or therapists can provide both practical guidance and emotional relief. This does not have to cost money. There are free online resources, such as Debtors Anonymous or Upsolve, that can help provide free resources.

Learning about budgeting and debt management can empower people to take control of their finances and reduce feelings of helplessness. Sharing struggles with trusted friends or family members can also help reduce isolation and shame.

A Path Forward

Debt is a reality for millions of people, but its impact on mental health is often overlooked. By recognizing the emotional toll it takes and working to address both the personal and systemic factors that contribute to financial struggles, it is possible to create a path forward.

With the right tools and support, individuals can regain a sense of control and hope, breaking free from the cycle of stress and despair. Ultimately, reducing the stigma around debt and encouraging open conversations can foster a more compassionate society where financial struggles are met with understanding and solutions, rather than judgment.

Anastasia Miller, PhD, is program director and clinical assistant professor, Healthcare Leadership, University of Louisville