Why & how do people get into debt?
Medical debt is the number 1 source of personal bankruptcy filings in the US, with an estimated 40% of Americans in 2014 with racked up debt resulting from medical issues. There seems to be a misconception that people are in debt due to overspending and living an extravagant lifestyle, but the truth is: it can happen to anyone. The biggest changes that lead to debt are: poor mental or physical health, separation from a partner, and job loss. Having to adjust to a financial change can be difficult and effect your mental health.
How can mental health problems affect your finances?
There are many reasons why mental health can affect the management of your finances, but those diagnosed with bipolar and depression have the highest susceptibility to debt problems. While going through a high of mania or low of depression, it may be harder to keep track of money, which results in spending money on things people cannot really afford. In serious cases, people who need time to treat their mental health issues may need to take time off of work, which can cause a sudden reduction in income. Not to mention, the time off (if in a hospital) can make it harder to keep track of due bills.
How can debt affect your mental health?
Living with debt can leave those with a consistent feeling of anxiety and low moods surrounding their finances and stability. This, in turn, then results in constant worrying and lack of sleep. Much of the debt-related anxiety can be due to a lack of support from creditors, family, friends, or employers. Dealing with debt is stressful enough, but when forced to handle it alone, the burden becomes much more considerable. When the stress of carrying debt becomes worse, it can impact other areas of your life, such as relationships and your career.
Questions to ask yourself if you think you may have a debt problem:
Do I often feel anxious when thinking about how I will manage my finances?
Am I struggling to or do I routinely miss the minimum payments towards utility bills, credit cards or rent?
Do I avoid telephone calls from unknown numbers and ignore letters from creditors?
Am I unable to set aside money for a sudden and unexpected reduction in my income such as redundancy, car expenses or emergency repairs?
If you answered ‘yes’ to any of these questions, then you may want to consider reaching out for help.
How do I get help?
A financial coach will take a closer look at your budget, make a plan for your money, and work with you to get out of debt. Although it may feel like paying for coaching when you are living with debt is counter-productive, ask yourself: “Can I afford not to take charge of my finances?” You have to make your financial future a priority. If you are ready to start working with a financial coach, click here.