The Emotional Effects of Debt

Personal debt is not bias, no one is immune. One day we find ourselves in the middle of a financial emergency, left to deal with an array of material and psychological consequences..

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It goes without saying that making money, spending money and thinking about money take up a substantial portion of our lives. It’s also safe to say that most people would like to have more money. Having enough money allows us to provide for our families, plan for the future and enjoy our leisure time. Not having enough money narrows our choices and restricts our ability to fully share in our society’s abundance.

Money helps shape the contours of our day-to-day lives. It dictates where and how we live, what and how much we buy and, to some extent, our position in the social order. Money is also intimately linked with our inner lives. Its presence, or lack thereof, has profound physical, mental and emotional repercussions. Perhaps in more ways than we would like to admit, money has tremendous power over us.

It's rare for someone to never have money problems. Trouble happens: jobs disappear, marriages fail, people get sick, homes lose their value and bills pile up. No one is immune. One day we find ourselves in the middle of a financial emergency, left to deal with an array of material and psychological consequences.

Responding to Debt

Some money problems are self-inflicted. Behavior patterns that compel someone to spend without restraint, or misuse money in a way that is self-defeating, can drive that person into debt just as certainly as any financial emergency. Regardless of how someone gets into debt, once there, being in debt can trigger unsettling emotional responses — especially if the debts are perceived as unmanageable or overwhelming.


And yet, for some people — even those under crushing debt — their initial reaction to being in debt is denial. These debtors simply find it too difficult to face the frightening financial facts, so they continue to spend compulsively while ignoring their deteriorating economic condition. They put off dealing with their problems until some outside event — denial of credit, threat of foreclosure, legal action, pursuit by bill collectors — forces them to change their lifestyle and begin making some long-overdue decisions.


On the other hand, many people in debt find themselves all too aware of their situation, making them continually worried and restless. They may be unable to fall asleep because they are thinking about how to pay the bills. Eating habits may also change due to worry. Eventually, the stress prevents them from functioning at work, at home and in their daily lives. Persistent stress of this kind can also lead to serious physical and psychological problems.

Fear and Panic

In some cases, worry can descend into fear or panic. The phone rings, and you don’t want to answer it because it could be a creditor. You won’t open your mail because it may contain a late bill notice. Regardless of who knocks on your door, you’re never home. You fear that you will never get out from under your financial obligations. You shun social contact, as your constant apprehension and paranoia cloud your relationships with your family, friends and co-workers. All aspects of your daily life become infected with anxiety.


Debt can also make you angry. You become angry at yourself for getting into this untenable position in the first place. You are angry at your boss for not paying you enough. You are angry at your creditors who charge too much interest, have too little patience or compassion, or are otherwise enjoying your predicament. You are angry at your loved ones because of the burden they have placed on you for their subsistence. You are angry at the world for not letting you win the lottery, which would put an end to all of your money problems. Anger can precipitate impulsive actions involving violence and/or illegal activities.


When negative feelings have built up over a long time and your debts have become the overriding issue in your life, sinking into a deeply depressed condition is a very real danger. Depression is a state of hopelessness with the feeling that things cannot be fixed or changed. A depressed person may withdraw from the world, stay in bed all day, weep uncontrollably, or turn to alcohol or drugs to numb the pain of perceived failure and disappointment. Depression and desperation over debt have been the cause of many suicides over the course of history, especially during times of economic upheaval.

Any of the aforementioned negative emotional responses to debt may be serious enough to require medical or psychological intervention. In addition to dealing with your debt, it's important to see a doctor about any physical or psychological problems that develop.


To find relief, a person in debt needs to take practical steps to deal with the financial underpinnings of the problem. Whatever circumstances may have plunged you into some uncomfortable level of debt, you have two major choices to consider: How are you going to deal with the challenges to your financial stability? And how will you handle its effects on your emotional life? The way you answer these questions will set the tone for the health and well-being of your bank account, your personal life, and your family’s future. A financial counselor or a mental health counselor can help you chart a path to a healthier future.

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Bill Fay
Staff Writer

Bill Fay is a journalism veteran with a nearly four-decade career in reporting and writing for daily newspapers, magazines and public officials. His focus at is on frugal living, veterans' finances, retirement and tax advice. Bill can be reached at


  1. “The Emotional And Psychological Effects Of Being In Debt,” by Julie Ashton. May, 2011. Downloaded from:
  2. “How Bad Debt Can Effect Emotional Well-Being,” by Dawn Hawkins. June, 2009. Downloaded from:
  3. “Increasingly in Europe, Suicides ‘by Economic Crisis, ’” by Elisabetta Povoledo and Doreen Carvajal. April, 2012. Downloaded from:
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  7. “Master Your Debt” by Jordan E. Goodman with Bill Westrom. Published by John Wiley & Sons, Inc. ©2010 by Amherst Enterprises Ltd. and Lynn Sonberg Book Associates. ISBN – 978-0-470-484241-1.
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