Debt & Depression: How the Two Are Linked & What You Can Do About It

We’ve all heard the phrase, “money can’t buy happiness.” And while that may be true to a certain extent, anyone who’s repeated it enthusiastically or as a point of personal integrity definitely hasn’t experienced personal debt.

Like it or not, money’s a central theme in our lives. We need it to feed, house and take care of our bodies and minds. If we have a family, the needs only multiply.

If you’re deep in debt and have been suffering mentally as a result, rest assured that you’re not alone, and there’s always something you can do about it.

How Debt and Depression Are Linked

According to a study published in 2015 that interviewed people over two separate two-year periods (1987–1989, and 1992–1994) on how often they felt each of 12 depressive symptoms on a weekly basis. Researchers found a significant relationship between depressive symptoms and short-term debt (i.e. credit cards and overdue bills). Longer-term debt like mortgages, auto loans and education loans debt didn’t result in the same frequency of depressive symptoms.

It’s worth noting that depressive symptoms and clinical depression are not the same thing. Anyone suffering from clinical depression and debt won’t magically solve all their mental problems by curing debt (though I suppose it can’t hurt).

Even though the study doesn’t reflect the 2008 housing crisis or two decades of bloated student loan debt in this country — overall, long-term debt is usually tied to things we need and use in our daily live; whereas short-term debt is from things that don’t show value in our lives, and oftentimes reflect our poor decisions, only devaluing self-worth.

That’s not to say long-term debt doesn’t affect our mental well-being—far from it. Another study looked at student loan debt among 25–31 year old in relation to their psychological functioning, finding that the higher the debt, the more the individual suffered from depression. The study postulates that a big reason for the stress and subsequent depression is that student loans cannot be deferred. Instead, they follow a debtor the rest of their lives.

But in all cases, large debt bleeds into every facet of our life, from relationships and professional life to taking care of ourselves and self-improving. It’s no surprise that many people dealing with credit card debt and depression only make it worse by doing things like compulsive shopping. The shopping and spending are a release, even if it’s ultimately making things worse. 

How to Overcome Depression (Through Debt Relief)

As stated above, while debt and mental health are certainly linked, clinical depression is an entirely different thing, and will not be solved by solving debt. If depressive episodes have been triggered by growing debt, however, take solace in that the troubles can be solved.

Getting better is a two-pronged approach: talking to a doctor about your depression (even if it costs money and feels stressful) will help in the form of medication, therapy or support groups.

The other part of the puzzle is making a plan to get out of debt. The very act of crafting a plan might make you feel better. Depending on your level of debt, you’ll have different routes available for how to solve it.

The Federal Trade Commission (FTC) advises debtors to develop and follow a budget, contact creditors to explain your situation and understand your rights regarding debt collectors. Seeking the help of a debt management company can also help debtors that still have manageable levels of debt. If you’re past the point of no return, the options become narrower: bankruptcy and debt settlement really become the main two options. Both routes could destroy your credit for years to come and are not quick fixes, but they can help discharge most or all of your debt and get you back on a track to financial health.

The FTC warns debtors against debt settlement scams, and undoubtedly many exist, but so do legitimate providers. Keep the following criteria points in mind to avoid falling victim to a debt settlement scam:

  • The company should only charge fees after debt has been settled and you’ve agreed to pay the settled amount.
  • They have a long track record in business with many successfully settled debts under their belt.

You can get a feel for each company by a) calling them, and b) reading online reviews on the Better Business Bureau (BBB) and other review sites. For example, a quick scan of Freedom Debt Relief reviews gives you the answers to the above criteria as well as contextual information from thousands of debtors who’ve used the service.

Getting out of debt isn’t simple, but you also don’t need to magically solve this problem to start feeling better. Even small strides can do wonders for your mood. The more you make progress and see the light at the end of the tunnel, the closer you’ll be to financial freedom, and hopefully, a better overall state of mental health.

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