Debt is big this year. According to the Federal Reserve, both U.S. consumer debt and consumer credit card debt hit an all-time high during the fourth quarter of 2019, the most recent reporting period. Credit reporting agency Experian says Nevada residents are carrying a significant chunk of that debt: more than $138 billion worth.
We all know too much debt has significant downsides. Juggling debt payments each month is stressful. Carrying high interest debt means that even on-time payments don’t drop the balance much, meaning debt costs far more in the long run than your credit limit or loan amount would suggest. And, financial obligations that leave you stretched thin can seriously limit your options, whether that means making it impossible to stay home with kids or being unable to move because you’re underwater on your mortgage and can’t afford to buy your way out of the loan.
Unfortunately, it turns out that these direct consequences of debt are only the beginning. In fact, the real cost of financial difficulty can be higher than you ever imagined.
Financial Stress and Health
Salary Finance recently published a study revealing how much employee financial stress costs employers each year. Though the toll on employees wasn’t the focus of the study, researchers discovered that those struggling with financial stress took more sick days, were more likely to have sleepless nights, and suffered anxiety and depression at much higher rates than their co-workers who weren’t under financial strain.
While the mental and physical toll financial stress triggers came as a surprise to many, this information isn’t new.
A survey published in Social Science and Medicine in 2013 showed that high levels of debt relative to available assets were correlated with higher levels of self-reported stress and depression, a worse sense of overall health, and higher blood pressure. In 2014, the American Psychological Association (APA) subtitled its annual report on stress in America “Paying with our Health.” That report showed that in addition to the direct toll financial stress takes on health, money worries cause people to make decisions that are bad for their health, such as not seeking medical care because of the expense.
In 2019, researchers found that African-American men and women who reported moderate to high levels of financial stress were almost three times as likely as their non-stressed counterparts to suffer from heart disease, including heart attacks.
More generally, stress is known to contribute to depression, panic attacks, insomnia, lowered immunities, diabetes, and cardiovascular disease. It has even been suggested that stress contributes to susceptibility to some cancers. And, some of these effects in turn create additional health problems. For example, lack of adequate sleep can take a serious toll on health, mental clarity, and productivity.
To make matters worse, the APA’s 2019 report revealed that stress about healthcare costs has been added to the mix for more than half of those surveyed.
What Does this Mean for People Struggling with Debt?
If debt worries are keeping you up at night, you feel anxious when you open the mailbox, and you’ve come to hate answering the phone, you likely didn’t need a series of studies to tell you that financial stress takes a toll–not just on your health, but on your state of mind, your productivity, and even your relationships. Still, it’s important to look head on at these costs, because it can help you avoid two big pitfalls associated with debt stress.
First, do what you can to minimize the health risks. Prioritize sleep. Make sure you get regular exercise. Consciously avoid or minimize unhealthy stress relief actions like smoking, binging on junk food, or overindulging in alcohol. In short, take whatever steps are available to you to care for your body and your mind.
Second, take action. Most people who file for bankruptcy protection have already been struggling with debt for at least a couple of years–some for five years or more. In some cases, this is because the debtor has attempted other solutions before considering bankruptcy. But, in many others it is a result of the natural human instinct to avoid the things that make us anxious. The problem is, that doesn’t work–at least, not when it comes to an issue like debt.
Though it may be counterintuitive, the single most powerful thing you can do to reduce debt-related stress is to thoroughly assess your situation and make a clear plan of action. The right solution for you will depend on factors like the amount of your debt, the type of debt you’re carrying, your income, what property you own, and even your age and your long-term goals. Perhaps the answer is to take on a second job for a time to catch up, or to consolidate debts to get a more manageable monthly payment moving forward. Maybe the best option for you would be eliminating unsecured debt in a Chapter 7 bankruptcy case, or using a Chapter 13 plan to buy time to catch up past-due balances on a reasonable schedule without mounting late fees.
The one certain thing is that hoping the problem will resolve itself rarely if ever works. And, the stress of unmanageable debt impacts you even if you’re managing not to consciously think about your financial problems.
At Freedom Law Firm, we help people in debt through bankruptcy, enforcement of consumer financial protection statutes, and the mortgage loan modification process. We offer free consultations to help people suffering financial stress understand their options and make informed decisions. You can schedule yours right now by calling 702-803-9251 or filling out the contact form on this page.