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Dealing with the Emotional Side Effects of Debt

Past due balances, collection accounts, wage garnishments, IRS troubles… it can happen to the best of us. Debt is certainly an easy thing to get into and a challenging thing to get out of. While there are many posts on how to deal with debt and effectively manage your money, there aren’t many posts that talk about the emotional effect debt can have on an individual. I have personally seen people go from happy, upbeat, and positive, to stressed out, depressed, and even worse – using drugs and alcohol to pacify their pain.

The truth is that financial troubles can eventually affect your emotional well-being. You become stressed at the large amounts of debt in your life. You become stressed wondering how you will pay down such a large amount of money while still maintaining your day to day expenses. You become anxious when receiving notices in the mail or phone calls from 800 numbers. You become depressed when it seems like there is no way out. Money troubles definitely reach havoc on you financially, but if you’re not careful, they can also damage you emotionally.

Below are the three most common emotional effects of debt:

  1. Stress

At the top of the list for emotional side effects of debt and money issues is stress. Seeing large dollar amounts, reading notices of collection, hearing the phone ring every other minute…all of this can stress the average person out. You’re trying to keep a roof over your head, clothes on your back, and food in your stomach. You may even be trying to support a family, and for whatever reason you’ve fallen behind on your bills, it’s starting to catch up and you don’t see a way out. Naturally, you become stressed. Most people aren’t aware of how to handle stress properly and some look to drugs and alcohol as a means to simply make negative feelings go away. If this happens, Hotel California By the Sea recommends professional treatment that can tackle substance abuse before it gets out of control.

Solution: Debt is certainly overwhelming, and while the ultimate fix to dealing with stress as it relates to money troubles is to eliminate the debt, this is not something that’s going to happen overnight. In the mean time, the best thing you can do for financial related stress is not to pacify it with drugs or alcohol, or to internalize it and pretend everything is okay. To combat stress you should start devising a plan of action. Look over all of your expenses, determine a debt payment plan that is comfortable for you, and contact your creditors to see if this plan works for them. Having a plan in place takes away the stress of dealing with debt and certainly lightens the load.

  1. Anxiety

Anxiety is best defined as a fear or worry about a circumstance that has an unknown outcome. Many people experience a sense of fear or anxiety when it comes to dealing with finances – particular with debt. You fear what you don’t know. The phone rings and it’s an unknown caller. Do you pick up the phone? Are you going to be sued? Will they garnish your wages? Will they take your assets? These are all very real fears when it comes to dealing with debt. Fear or anxieties can be endless and if you’re not careful can also cause you to depend on substances or internalize it.

Solution: What’s the best way to deal with a fear…face it head on. Instead of silently wondering about how much you owe, how the bill collector is going to retrieve their money, and what will be the outcome of the entire ordeal…take control of what you can. Pick up the phone when it rings, write down what the creditor is telling you, ask questions about the collection process, and come up with a plan of action. Sometimes you’ll be surprised to find that most companies aren’t looking to go to court. It costs them money just as well. Many will work with you in coming up with a feasible way to repay what is owed.

  1. Depression

Last on the list of emotional side effects of debt is depression. Whether the debt you’re dealing with is a direct result of your own negligence or because of some life altering event (loss of a breadwinner, loss of job, etc) it can be downright depressing to deal with it all. You become overwhelmed, and when you feel as if you’re at your wits end, you begin to feel like life is no longer worth appreciating. You feel hopeless in a web of debt. As a result, you become depressed and simply stop trying.

Solution: When dealing with large amounts of debt sometimes breaking it down into smaller pieces can help you feel more encouraged. Hopelessness is the feeling that there is nothing you can do, but as you’ve read above, there are things you can do. Sit down, evaluate what must be paid, evaluate your personal budget to see what you can afford, and talk with your creditors. When you take a large monster like debt and break it down into smaller pieces it becomes easier to manage – thus making you feel better about life in general.

Debt is a common struggle for most individuals. While there are ways to effectively manage your debt and resources to help those struggling to get out of debt, sometimes the emotional side of things can get the best of you. As you work your way towards financial freedom, take each of the above solutions and apply them to your life. By devising a plan, getting all the facts, and controlling what you can, you can eliminate a lot of the emotional burden that comes with debt, making it much easier to get back to life as you once remember it.


  1. Debt can lead to a lot of problems. Always best to eliminate it! 🙂

  2. Debt can also cause embarrassment. Having money is (unfortunately) a common measuring stick used to judge whether a person is successful or not. Admitting to having, or dealing with debt can make a person feel unsuccessful, and worthless.

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