Being in Debt Could Seriously Screw With Your Mental Health

The longer you have until you've paid off your debt, the more anxious you're likely to be.

by Caroline Beaton
Oct 9 2017, 4:38pm

Joe Raedle/Getty Images

Debt is a burden that, for the average American, is getting heavier. In 1989, consumer credit card debt was $211 billion. In 2016, it was over $1 trillion—the same amount Americans also owe in student loans. Total household debt has tripled since the 1980s, while home foreclosures have quadrupled.

As our debt gets worse, research suggests that our health might, too. But researchers are "still in the phase of trying to map the pattern of association accurately," says Elizabeth Sweet, an anthropologist who studies debt and health at the University of Massachusetts, Boston.

Debt and poor health are plainly associated. But it hasn't been clear whether debt itself causes health problems, rather than something else related to debt, like poverty. For example, a study of 900 adults in Ohio found that credit card debt and stress about debt were associated with poor self-reported health. But the researchers couldn't prove causation; maybe both debt and poor health are just symptoms of poverty. After all, poverty is inextricably linked to health: worse healthcare, higher rates of stress, illness and chronic health conditions, and early death.

Furthermore, Sweet says, "many major life events that can result in debt—job loss, divorce, etc—can also independently impact health, so teasing apart those pathways and trajectories is important."

So that's what Sweet and others have begun to do. In 2014, Sweet and her collaborators discovered that debt itself might contribute to poor health. In their study, which used 8400 24-32-year-olds from the National Longitudinal Study of Adolescent Health, Sweet et. al measured the relationship between debt and health. But, unlike previous researchers, they controlled for socioeconomic status, economic conditions, household income, and preexisting health conditions.

They found, for one, that debt afflicts even this young population. More than 20 percent of respondents reported that they would still be in debt if they liquidated all their assets.

Secondly, how much total debt people had wasn't nearly as important health-wise as how much debt they had relative to their assets. Sweet found that a high debt-to-asset ratio was associated with higher perceived stress and depression, worse self-reported general health, and higher blood pressure. So people whose total debt equaled or exceeded their total assets were by far the worst off. But even young adults with more favorable ratios experienced the same effects to a lesser extent.

Research on mortgage debt echoes this finding. In one study, having higher mortgage payments as a percentage of income was associated with more negative changes in health, higher incidents of obesity and diabetes, and increased reporting of depressive symptoms.

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In short, the more debt you have compared to your income and/or assets, the unhealthier you're likely to be. John Wilson, a finance professor and researcher at the University of St. Andrews, and his coauthor Jose Linares Zegarra, now at Essex Business School, found that even one percentage point increase in debt-to-income was associated with a .075 percent decrease in life expectancy.

Is even a little bit of debt okay? Zegarra and Wilson believe that the threshold after which debt becomes unhealthy depends in part on the type of debt. For example, Zegarra and Wilson found that short- and medium-term debt—in contrast to long-term debt, like mortgage payments and unsecured aggregate household debt—actually seemed to benefit health.

Why? People with access to short-term funds like personal loans and credit cards have a backup plan in the event of a health emergency. Long-term debt like mortgages, on the other hand, may make people's health more vulnerable to unexpected shocks because they have less disposable income. Furthermore, long-term debts tend to have higher interest rates and larger amounts to pay back. The longer you have until you've paid off your debt, the more in debt you are and the more anxious—perhaps even sick about it—you're likely to be. (One study found that the relationship between debt and poor mental health was mostly explained by fear of never paying off one's debt.)

Sweet agrees that debt's effect on health probably varies by type. Home mortgages, student loans, and payday loans, for example, are all used for different purposes, entail different amounts, have different terms, and carry different levels of social stigma and stress.

But how exactly debt influences overall health is still unknown. So far, the most convincing and consistent research revolves around how debt impacts emotional health, which can have physical side effects. Sweet's latest research, not yet published, indicates that people with debt have "profound feelings of shame and guilt." Indebtedness is also associated with more symptoms of stress, depression, anxiety, and anger. Some research even suggests that indebtedness contributes to the development of mental health problems.

"The strong links with emotional health suggest that a psychosocial stress pathway to other outcomes is likely," Sweet says. For example, the stress of debt may trigger physiological changes that spur or hasten the development of metabolic conditions, heart disease, and autoimmune disorders. The stress of debt can also indirectly affect health by influencing health behaviors like diet, physical activity, skipping medical care, foregoing medication, and substance abuse.

Finally, research suggests that worry has a negative influence on how people manage their debt. A debt-poor-health spiral ensues: People in debt worry about it. Their worry dismantles their debt repayment strategies. Their undying debt compromises their health, or at least their ability to pay their healthcare bills. Worse health then sabotages their job performance and/or their ability to hold a job. Unstable work makes getting into worse debt more likely and more worrisome. The same thing could happen with debt-induced depression: depression thwarts people's job prospects, which reduces their ability to repay their debt, which exacerbates their depression.

The result is, as Wilson and Zegarra phrased it, "a vicious cycle where greater debt can be both a cause and consequence of poor health." More research is needed to figure out this relationship and ways to reverse the spiral. In the meantime, if you have a choice, avoid debt like the plague that it is.

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