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Published on April 27, 2023

Strategies for Overcoming the Psychological Impact of Debt

The Holmes–Rahe Stress Inventory, which is used to rate different stressful life events, indicates that debt, major financial changes, taking on a mortgage, and similar financial stressors can have a big impact on your health and wellbeing. Being in debt can trigger anxiety and depression. It can also put relationships to the test, leading to arguments, tension, and emotional breakdowns. If you are in debt, and you’d like to reduce the effect it has on your physical and mental health, the following strategies will help.

Develop a Payback Strategy

Now is not the time to passively pay all debts at the same rate or leave a few financial loose ends. Crunching numbers and analyzing all your sources of debt—and the interest on each of your loans—will enable you to create a payment plan that ensures you don’t end up paying more than you owe. Prioritize high-credit card debt, personal loans, student loans, medical debts, and secured debts such as mortgages or car loans. Secured loans have lower interest rates than unsecured ones, but they are tied to assets and cannot be defaulted upon.

Exercise Self-Care

Money problems can harm mental health in many ways, increasing the likelihood of anxiety, depression, and burnout. They can also lead to unhelpful coping behaviors such as substance abuse and drinking. If you are stressed because of money, commit to regular self-care practices. These include regular exercise, a healthy diet, and learning to reframe negative thoughts into positive ones. There are many online worksheets on reframing. Complete them in your journal and reflect on your progress. Finally, try to include scientifically proven stress busters like yoga and mindfulness meditation in your weekly routine, and spend at least 10 minutes in a green or blue area every day. Cornell University researchers have shown that just 10 minutes in a park can significantly lower levels of the stress hormone, cortisol.

Be Patient and Non-Judgmental

Eliminating debt takes time. Sometimes, doing so may require several years. Don’t blame or judge yourself if your payback plan takes some time to complete. Use the power of affirmations to remind yourself that your identity is separate from your debt. A 2015 study published in the journal Social Cognitive and Affective Neuroscience found that self-affirmations can reduce the brain’s responses to threatening feedback, suggesting that it may help individuals better cope with stress and anxiety. Try the following affirmations: “I am capable of managing my finances well and paying off my debt.” “I am taking daily steps to reduce my debt and improve my financial situation.” “I trust myself to make responsible financial decisions.”

Debt is part and parcel of everyday life for most adults. It can, however, cause stress, anxiety, and depression. To minimize its effect on your life, pay your debts back wisely, make self-care part of your daily routine, and don’t expect more of yourself than you can reasonably give.

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