Your debt may cost you more than just interest. Research shows there's a clear link between your financial health and your mental health, and your debt may serve as a tangible representation of your psychological state.
Approximately 35 percent of Americans have delinquent debt, according to a 2014 report published by the Urban Institute. Overdue debts average around $5,178 and usually include a mixture of credit card balances, medical bills and unpaid utilities.
And that's just personal debt. Most small business owners also have some form of business debt. A 2012 Wells Fargo/Gallup Small Business Index poll found that 36 percent of business owners are uncomfortable with their company's debt.
Debt And Mental Health
Approximately one in five U.S. adults experiences a mental illness each year according to the National Institute of Mental Health. And multiple studies report people with mental health problems are more likely to be in debt.
Researchers from the University of South Hampton examined 65 studies on debt and mental health. Their report, which was published in Clinical Psychology Review, found a correlation between mental illness and financial problems.
Researchers concluded the likelihood of having a mental health problem is three times higher among people who have debt. Depression, anxiety disorders and psychotic disorders were among the common mental illnesses people in debt experienced.
There was an even higher link between suicide and debt. People who complete suicide are eight times more likely to be in debt.
Additionally, people in debt are more likely to experience problem drinking and drug dependence. The researchers did not find a link between debt and smoking.
Short-term debt may place people at the highest risk of depression. A study published in the Journal of Family and Economic Issues found that unmarried people, people reaching retirement age, and those who are less educated were particularly vulnerable to the harmful effects of stress associated with credit cards and overdue bills.
A Mortgage Could Be Good For Your Mental Health
While unsecured debt has been associated with an increased risk of mental health problems, a separate study reports mortgages aren't linked to increased mental health problems. In fact, the 2004 study published in Housing Studies found that homeowners have lower levels of psychological distress compared to renters.
The decreased risk of mental health problems only applies if you have sufficient funds to pay your mortgage payments, however. A 2007 study published in Psychological Medicine found that difficulty paying for housing has a major effect on mental well-being. The researchers concluded that people who struggle to pay for housing experience distress levels similar to someone experiencing divorce and job loss.
Which Comes First?
Although multiple studies show a link between financial health and mental health, causation isn't clear. Some researchers theorize that worrying about debt leads to increased stress and reduced resilience against mental health problems.
Other researchers hypothesize that mental health problems interfere with financial management. Mental illness may decrease self-control and lead to more spending. Additionally, a mental health problem may interfere with employment, which could lead to increased difficulty paying bills.
There's also a good chance that debt and mental health problems fuel one another. Going into debt may increase your chance of a mental health problem, but a mental health problem may exacerbate your risk of falling deeper into debt.
Reduce the Psychological Cost Of Debt
Debt is a solvable issue. However, if you're struggling with depression or anxiety, your mental health issues may impair your ability to solve the problem. Similarly, if you're drowning in debt, paying for mental health treatment may not seem like a feasible option.
No matter which comes first -- the debt or the mental health problems -- the solution may be to address both problems simultaneously. When you're mentally healthy, it's easier to attack your debt. And when you're getting your finances in order, it's easier to improve your mental state.
Even if you aren't experiencing problems at the moment, it's a good idea to observe your bank account and be mindful of your mental health. Simply recognizing the link between debt and psychological distress can help you monitor your financial health and your mental health.
Amy Morin is a psychotherapist, keynote speaker, and the author of 13 Things Mentally Strong People Don't Do, a best-selling book that is being translated into more than 20 languages.
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If you -- or someone you know -- need help, please call 1-800-273-8255 for the National Suicide Prevention Lifeline. If you are outside of the U.S., please visit the International Association for Suicide Prevention for a database of international resources.