How Debt Affects Our Health and How to Avoid It

The Australian Bureau of Statistics has found that Australians have a record level of debt. A survey of wealth and income carried out by the bureau shows that in 2017-18 Australians owed $1.10 of debt for every dollar they earned. Our level of debt has increased by 20 per cent in six years.

Most of that debt comes from the big mortgages people have taken out. House prices have risen dramatically in Australian capital cities while wages have not risen much. Unfortunately many Australians are now in mortgage stress.

What is your attitude to debt?

Is debt a good thing or a bad thing? Do you try to minimise your debt, or are you comfortable carrying a large debt? In German, the word for debt is Schuld, while the word for guilt is also Schuld. Clearly the Germans dislike debt.

I am not in favour of buying lots of luxury goods on credit cards. I think if you can’t afford it, don’t buy it. It’s an old fashioned outlook but I do believe that people should live within their means. I am a big advocate of hard work. I encourage people to always be looking at how they can maximise their income. Turn your hobbies into a profit if possible. Get a second income stream. Buy a house you can afford to pay off. Studies find that high levels of debt can trigger anxiety and depression. Having said that, I know that sometimes things go wrong and people find themselves in debt.

Be slow to judge people in difficult financial situations

There is a misconception that people get into debt because they live an excessive lifestyle, and go crazy with their credit cards. This is not the case. Debt is usually caused by unemployment and redundancy. Other variables linked to debt are poor physical health and divorce. These major life changes result in people being unable to pay their bills and they descend into debt.

Mental illness can also lead people into debt. People diagnosed with mental health problems like bipolar and depression are more susceptible to debt problems. Poor mental ill-health can affect the management of finances. People buy goods they don’t need in the hope it will make them happy. A lack of energy can also make it harder to keep track of money, and unwise decisions can result in spending money on things people can’t actually afford. In more serious cases, taking time off of work may cause a sudden reduction in a person’s income and being admitted into hospital can also make it harder to keep up to date with bills. For older people, dementia may also result in people having difficulties making decisions about money.

A 2010 study from the UK Royal College of Psychiatrists found that half of British adults in debt also had mental ill-health issues. These ranged from a constant feeling of anxiety and low moods, to recognised mental health disorders, such as bipolar disorders. Sometimes it is hard to say if people got into debt because they had poor mental health or if their debts eroded their mental health.

Some research found that worrying about debt triggers stress, which reduces your resilience against mental health problems. Other studies show mental health problems decrease self-control, increase spending and basically mess up a person’s financial judgment. Regardless of how someone falls behind, being in debt can trigger negative feelings.

Debt is just straight out bad for your health

A study of 33,720 American households published in the January 2016 edition of Psychology Science found that people in debt were more likely to buy pain killers. The researchers also discovered that just thinking about the prospect of financial insecurity is enough to increase people’s pain. People reported feeling almost twice as much physical pain after recalling a financially unstable time in their life compared to thinking about good times.

You are very lucky if you have never had money problems. Things go wrong, jobs disappear, marriages fail, bills pile up, and we all make bad decisions sometimes. No one is immune to debt. It’s a bit like cancer – sometimes it just comes down to bad luck.

Debt isolates people

People in debt often feel socially isolated. Creditors and family, friends and employers are judgemental and unsympathetic. Debt anxiety often impacts on people’s ability to sleep. A lack of sleep further undermines mood and energy which in turn can cause problems in your career and with your family.

A 2016 report from the Federal Reserve Bank of Atlanta linked debt to higher death rates. Getting into debt increased one’s risk of dying by five per cent in the first three months.

Are you in financial stress?

Often people refuse to admit they are under financial stress. Symptoms of debt denial are:

• Underestimating how much you owe.
• Not answering the phone when you suspect a collection agency is calling.
• Leaving bills unopened or just stuffing them in a drawer.
• Opening a new credit card when your old one is maxed out.
• Telling yourself that everyone is in the same situation.

Denial leads to more debt as the interest on your credit cards keep climbing and late fees pile up.

Questions to ask yourself if you think you may have a debt problem

1. Do I often feel anxious when thinking about how I will manage my repayments?
   
   
2. Am I struggling to or do I routinely miss the minimum payments towards utility bills, credit cards or rent?
   
   
3. Do I avoid telephone calls from unknown numbers and ignore letters from creditors?
   
   
4. 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 getting help.

There is always help if you find yourself in debt

The treatment for debt is pretty simple. You just need to reduce the amount of money you owe, which I know is easier said than done.

I strongly recommend getting some professional help, and there are community services out there to help you. Community financial counsellors work with you to help you set up a budget. They then work with your creditors to reduce interest rates. That mountain of bills is consolidated into one monthly payment, and the community agency distributes the funds to creditors. By starting to dig yourself out of a financial hole you will feel better.

Remember, creditors may be unaware of your distress. They can act in inappropriate and sometimes upsetting ways. Having a community financial counsellor means you no longer have to deal with those creditors.

Just by contacting a community debt counsellor you will help you feel better.

I wish you all the best.