The Emotional Toll of Insurmountable Debt

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Most people consider debt a necessary evil. For them, it’s a source of money to pay for a certain class of living. However, some borrowers fail to control their reckless spending until they are underwater and are on the verge of breaking their banks.

Debt facts that confirms dangerous levels

  • According to the Federal Reserve reports published in 2010, the country is reeling under $2.4 trillion unsecured consumer debt. Hence, each individual owes around $7,800 debt. (FinanceSuperhero note: Recent estimates indicate much higher figures!)
  • At least 1 out of every 10 person owns more than 10 credit cards.
  • Almost 2.5 million Americans take advantage of the credit counseling agencies each year to avoid bankruptcy.

To climb out of the debt hole, one of the foremost tasks is to understand the emotional distress it causes to its victims and how to deal with them successfully.

Debt and Its Emotional Manifestations

Emotional Effect #1: Depression

Even though you’ve worked hard in developing a debt repayment plan, your debt woes could land you in a tight spot. For example, your car may need an urgent repair and you may find yourself back to square one.

In this situation, you could feel depressive and may become hopeless about your goal to become debt free. Your depression could prevent you from taking further progressive steps that would have removed your financial hurdles.

Dealing with Depression

  • Positivity – While hurdles are part of life, don’t let them ruin your finances and your retirement as a result. You must acknowledge all the progressive steps you’ve made to date and how you plan to continue doing so. Once you start paying off your debts one by one, a sense of achievement will grip you. This will inspire you to push for better debt management efforts.
  • Cost reduction – One of the most crucial steps in dealing with debt is to reduce your personal as well as household costs. You’ll have to identify and plug the holes in your budget to stop money from slipping out of your pocket unnecessarily.
  • Safe credit – To become better at managing your insurmountable debt, you can look for safe credit or get a new credit card with lower rate of interest. If your credit score is good and you’ve been making regular monthly repayments, then you can request your creditor to reduce the interest charged on your balances. Alternatively, you may seek to transfer your outstanding balances to a 0% balance transfer card. The lower your card’s interest rate, the lower your monthly debt repayment amount will be.
  • Debt repayment – You’ll have to set a debt repayment date and make it your goal that has to be accomplished under a stipulated time frame. You must calculate how much debt payment you can afford based on your total monthly household expenses to that of your monthly disposable income.

Emotional Effect #2: Anxiety

The moment you’ve got a clear understanding of your indebtedness, anxiety may creep in and you could fear for the worst. These emotions can arrest your senses, but you can’t let that happen to you. Hold on to your nerves as much as you can. Debt problems, though they are menacing, can still be tamed.

The antidote to anxiety 

  • Minimum payments – Make minimum payments to keep your creditors happy. If you miss a payment deadline or are late for payments, then inform your creditors about your hardships. You can request to skip a payment or negotiate for an extension, citing your favorable payment history.
  • Budget – Follow a budget, even when you’re not in debt. More so, if you fear that you’d default on your loans in the near future. Mostly, your debt problems could arise because of absence of a budget and not due to cash crunch. When you have a budget, you’ll have a real place to keep track of your income as well as your expenses.
  • Financial cushion – You’ll have to ensure you have a cash reservoir to cope with emergency costs. It can be done by selling off your unused household/personal items or by working on the side after regular working hours. Say, you’ve taken up a side gig where you’re making $150 per week. Summing them all you’ll have a neat $600 extra under your belt. Stash that money away as an emergency fund.
  • Cash transactions – Avoid using the plastic money as much as possible and use cash to pay for most of the items. Credit cards are expensive and they can adversely affect your FICO score. The reason is your credit utilization ratio (it’s the ratio of your credit card debt and credit limit) will increase with the frequent use of credit cards. You needn’t cancel any of them, but keep them lying idle.

Emotional Effect #3: Debt denial

Suppose you’re using your credit card to make new purchases. On the other hand, you’re just making the minimum payments thinking that your finances are under your control.

But, in reality, your financial condition is turning from bad to worse with each new credit card purchase you make.

Denial can be defined as a defense mechanism wherein you fail to acknowledge reality and evade accepting mistakes you’ve committed. Some instances of debt denial are: scores of unopened bills, lack of awareness about total outstanding balances owed and living life as per the adage: You only live once.

Some proven ways to overcome debt denial

  • Accept and don’t duck your responsibilities – Face the reality, even if it’s harsh and don’t just attempt to save your face. Go through your credit card statements or online accounts. Jot down all your financial liabilities like current balances, total debt owed, and other account details. Organize your documents and work out a proper debt repayment plan. Talk to a financial planner, if needed.
  • Face your challenges head-on – Once you’ve acknowledged your debt problems, it’s time to take stock of the situation. You know that behind all your lame excuses stands a real demon called debt. You’ve maxed out your credit card accounts, missed payment deadlines, owe steep credit card balances, and so, it serves as a premonition of an impending financial disaster.

The bottom line here is that you’ll have to stop being reckless with your money. You must identify the factors that triggers you to spend. It could be your urge to keep up with the Joneses or your financial frenemies.

Lastly, don’t expect your ride through your debt repayment days to be peaceful. Instead, it’s more of a roller coaster ride of emotions, but thrilling, nevertheless. The silver lining here is that you’ll be reassured after having seen your debt burden go off your shoulder.

Today’s guest post was contributed by Barbara Delinsky, a financial writer who has written for several blogs. She specializes on ghost writing and has an active social media presence. For any query, you can email her at

How has debt affected your emotions?


4 thoughts on “The Emotional Toll of Insurmountable Debt

  1. Anxiety is definitely something that a lot of people dealing with debt have to work through. When I was deep in student loan debt, I had a ton of anxiety because it required me to maintain a certain level of income in order to live the way I wanted to live. It’s part of the reason I went all out and paid my students loans off as fast as possible. The anxiety really lifts off your shoulders once you have that debt gone.

    1. Yeah! you got it right Financial Partner. It’s always best to make as much larger payments as you can. The faster you get rid of your debt, the better you’d be, both financially and emotionally.

  2. In a previous, pre-Mustacian life, as a result of trying to live a Champagne lifestyle on a beer budget, I found myself living in constant debt. I ended up pretty much living off the bank overdraft and each fortnight when I got paid, my pay would repay the OD back to $0 and the cycle would start all over again.

    This constant living on borrowed money, as well as realising that you don’t any spare cash for fun stuff, or even a few beers, wears you down after a while. I’d say that I experienced all of the emotional roller-coaster ride you describe in your post, as a consequence.

    Eventually, I wised up and did something about it, paid off the OD, cancelled it, and have never been back there since.

    I can therefore, attest to the fact that having enough money to live on is far better than not.

    Whether you are a high earner or not, it’s all about living the lifestyle to suit your budget, and making regular savings no matter how small. And you’ll save yourself a whole lot of emotional pain as a result.

    1. It’s not only you Martin. Many youngsters get trapped into debt cage in this way. The fact is that, It’s not about living life kingsize. It’s about living life comfortable, enjoying beautiful moments with your family and saving money. I feel you can have wine and have great vacations even with moderate income. All you need to do is little planning.

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