Debt Causing Stress And Anxiety? Tips For Managing Debt And Mental Health

Financial burdens like debt can affect both financial well-being and mental health. Financial worries over concerns like unpaid bills, the cost-of-living crisis, high credit card interest, and fear of financial instability can lead to stress, anxiety, depression, and other effects. A 2024 study reports that financial stress is one of the leading causes of anxiety for individuals and families today, with up to 42% of adults in the US saying money negatively impacts their mental health. 

That said, there are some practical steps a person can take to manage debt and promote mental well-being. Here, we’ll explore the connection between debt and mental health, share some tips to help you regain control of your finances, and offer strategies to reduce the emotional strain debt can cause. 

Feeling the effects of financial stress?

Therapy can help you cope

Psychological effects: debt causing stress and anxiety

Debt and stress share such a strong relationship that experts have coined the term “debt stress syndrome” to describe it. Debt stress syndrome is different from the stress of general economic hardship. One reason may be because debt has a relational aspect. Owing a debt to another may "imply obligation, dependence, an asymmetric relationship, and relational power asymmetry that undermines mental health.” This may be part of why debt can impact mental health in unique ways compared to other financial worries. 

The relationship between credit cards, stress, and mental health

Regardless of the underlying reasons, debt creates a constant worry and fear for the future for many people. In particular, credit cards and other debts on which one must pay interest can be a considerable source of stress because interest rates are subject to shifts in the country's economic state, adding an extra sense of financial uncertainty and lack of control. Credit card debt is typically expensive too, often creating significant challenges in budgeting and saving for milestones like college and retirement.  

Beyond debt causing stress and anxiety: depression, low self-esteem, and other effects

Financial stress and its effects on relationships 

According to various studies, financial stress is a common and potentially significant contributor to relationship conflict. Statistics suggest that around 40% of disagreements in long-term relationships are primarily caused by money issues, and up to 25% of couples identify finances as their biggest relationship challenge. 

Debt can affect relationships in many ways. For example, worry about debt payments can manifest in irritability, mood swings, and difficulty relaxing, impacting partner or family interactions. People with debt may avoid discussing their financial situation with their partner or family members due to shame or fear of conflict, leading to a lack of transparency and trust. Additionally, if one partner carries a more significant debt burden than the other, it can lead to feelings of resentment and blame, especially if it impacts shared life goals.

The link between debt, credit cards, stress, and physical health 

Research indicates a bidirectional relationship between mental and physical health, including a relationship between debt-related stress and physical conditions. For example, studies suggest that people with high debt levels have higher average diastolic blood pressure (DBP), which can increase the risk of hypertension and stroke. 

People with high debt stress are also more likely to have ulcers or digestive tract problems and migraines or headaches. 

Understanding the cycle of debt and mental health

For many, the debt-stress relationship creates a “vicious cycle” where the stress of problem debt can worsen mental health conditions like anxiety and depression. In contrast, mental health challenges can sometimes impact work, increase spending, or make it more difficult to manage finances, potentially leading to further debt accumulation. One problem can exacerbate the other, making it harder to manage both simultaneously.

For example, anxiety can lead to poor financial decisions or avoidance of addressing debt, which then contributes to more anxiety. Mental health challenges can also reduce earning capacity or productivity, potentially reducing the income needed to pay bills and reduce debt, creating more debt and more stress around it.

Fostering open conversations and reducing stigma

Research reveals that many individuals experience the effects of social stigma associated with debt and financial difficulties, particularly in situations where individuals view their social class as a factor in how their debt is judged. The fear of being judged negatively by others due to their debt (called anticipated stigmatization) is a significant driver of concealment behaviors, in which people actively hide their financial situation from others. Similarly, many people experience stigma around mental health conditions like anxiety and depression, meaning that emotional challenges caused by financial difficulties may be doubly hard for some to open up about.

How stigma impacts mental and fiscal health

Stigmas like the ones mentioned above can be a serious hindrance when individuals need financial assistance and/or support from a mental health professional. People influenced by stigma may be less likely to seek help and, therefore, less likely to effectively address their economic and mental health challenges. To overcome judgment and stigma, it may help to normalize discussions around both money and mental health. 

Financial management tips for reducing or eliminating credit card debt

Although credit card debt can seem overwhelming and, at times, insurmountable, it can be possible to reduce and eventually eliminate it. Some people use the debt snowball approach, while others prefer the debt avalanche method. Some people prefer to create a realistic budget, prioritizing debt repayment in a different way. Many experts recommend paying more than the minimum monthly payment and automating your credit card payments to avoid additional fees. 

Seek professional guidance to decrease financial stress

Credit counseling services, financial advisors, and social workers specializing in financial distress help individuals struggling with debt to take control of their finances. Such financial professionals can advise you on managing money and help you develop a realistic and achievable budget. Most credit counselors will schedule follow-up sessions after your initial appointment and guide you in establishing a plan with structured goals to repay your debt. 

Before consulting with a professional, it’s advisable to do research and be sure they're working for a reputable organization. While most credit counseling services are nonprofit, they may still charge high fees and might not tell you about them until you're enrolled in the program. Consult your state attorney general’s office or a local consumer protection agency to check for potential complaints against a prospective organization.

Explore credit card debt-relief options

Debt consolidation, negotiation, or forgiveness programs are other tools that some people use to get their debt under control. With a debt management plan, a credit counselor may negotiate with creditors to consolidate your credit card balances at a reduced rate. 

With a consolidation plan, individuals pay a fixed amount each month, their accounts are typically closed, and they may not be eligible for new lines of credit for a set period. Although they work for some, debt settlement plans might not be the best option for everyone. Keep in mind that it can be expensive to hire a debt settlement company to negotiate with creditors on your behalf, and it isn’t always guaranteed to work. 

Coping with emotional stress 

Given the potential for a self-perpetuating cycle of debt and mental health challenges, caring for your emotional well-being can be an integral part of building a plan to pay off your debt. A strong mental self-care practice often begins with eating nutritious foods as often as possible, getting enough sleep, and exercising regularly. It may also help to build mental resilience and good mental health by cultivating a mindfulness practice or doing things you enjoy like spending time in nature, journaling, or engaging in creative activities. 

Seeking support 

Support from trusted friends and loved ones can significantly impact one's journey to managing financial stress. Or, if you don't feel comfortable talking with loved ones about your financial or mental state, support groups are available online where you can speak with others in similar situations, share experiences, and receive encouragement. 

You might also consider speaking with a therapist who has experience addressing issues of debt-related stress. A therapist can listen with empathy and provide practical strategies for coping with stress as it arises in daily life. 

Budget-friendly options for therapy 

Money concerns can be a barrier to seeking help from a mental health professional. For example, many people assume they can't afford therapy. With the rise in popularity of telehealth services, however, online therapy has emerged as a potential solution to financial obstacles for many people. Virtual therapy is often more affordable than in-person treatment without insurance, and some platforms like BetterHelp may offer financial aid for those who qualify.

An abundance of research over the past few years suggests that online therapy interventions—particularly those based on cognitive behavioral therapy (CBT)—can be effective for many people living with anxiety and depression linked to financial stress. For example, in one study, researchers in the UK and Ireland report “statistically significant improvements in symptoms of depression and anxiety and improved perceived financial well-being” in participants. Each participant took part in a four- to eight-week online CBT intervention designed to help address the link between financial and mental health challenges.