Debt-Related Depression is Real: Are You in Over Your Head?

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Experiencing financial difficulty can not only cause stress but also trigger feelings of depression. A recent study suggests that having short-term household debt such as credit cards and overdue bills could cause an increase in depressive symptoms. This is not surprising considering total outstanding U.S. household consumer debt is currently $3.3 trillion, according to the Federal Reserve.

The study also says those who are not married, approaching retirement age, and less educated are more likely to experience depression as a result of debt. Among the 8,500 adults on which the study focused, roughly 79% had a total average debt of $42,000. Most of that total was comprised of long-term debt. Furthermore, the study showed that a 10% increase in short-term debt was associated with a 24% rise in depression symptoms.

“New debt contracts could be offered to vulnerable borrowers and the population sectors we identified could be targeted with help in building their financial capacity,” said lead author Lawrence Berger of the University of Wisconsin-Madison in statement. “The findings could also be used to help mental health practitioners better understand the impact of clients’ borrowing habits on depression.”

If you are struggling with depression as a result of debt, there are resources that might be able to help you cope. Here are four tips for handling debt-related depression.

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1. Get therapy

Your first step should be to seek help from a mental health professional. Talking with someone about what you are experiencing may help relieve some of the burden and help you find solutions to resolving your financial situation. There is a fairly new branch of psychology devoted to financial therapy. Consulting with a therapist can help you identify whether you might have an underlying disorder that could be affecting the way you handle money. The Financial Therapy Association can help you locate a therapist close to where you live.


2. Join a support group

If you are unable to attend regular appointments with a therapist, another option would be to seek out a support group. Three options are Debtors Anonymous, Shopaholics Anonymous, and Underearners Anonymous. You can also find a local support group through Mental Health America.


3. Hire a financial professional

Once you have addressed your depression, you need to develop a plan for getting your finances in order. You can do this by arranging a consultation with a certified credit counselor, a financial planner, or both, depending on your needs. A credit counselor can help you devise a debt repayment plan and learn skills for staying out of debt. A financial planner can help you with developing long-term goals for your finances and assist you with staying on track. You can conduct a search on the National Foundation for Credit Counseling website to find a credit counselor near you. The Certified Financial Planner Board of Standards also has a search feature on its website.


4. Create small financial goals

Know that you won’t be completely debt free overnight. It will take some time to pay what you owe. Start by setting a small financial goal each day or each week. The first step could be organizing your bills or setting up an appointment with a financial counselor.

“Another aspect of dealing with the sadness and stress of debt is to break the steps to freedom down to the smallest, most manageable pieces.  If it’s too big, the chance for failure is great; but if it’s small enough, it creates a more comfortable emergence from status quo to change. People need to see, tangibly, that their actions are bringing them closer to resolution,” Certified Financial Planner Michael Kay, president of Financial Life Focus, told The Cheat Sheet.

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