Mental health problems can be the result of many and varied causes but research has shown a clear connection between money worries and mental health problems; and, indeed, poor physical health. Add to that the ease with which almost all of us can borrow money if we want to and you can see why high levels of debt can have terrible effects on the lives of anyone but particularly those with mental health issues.
It is still surprisingly easy to get a credit card, and once you have one to get a higher credit limit. Often higher credit limits are automatically applied if you have had a good history of paying off regular amounts. The credit card companies are tempting you to spend more. Many times you need do nothing to obtain high levels of credit once you are the customer of a credit card provider.
The problem is not obtaining the credit in the first place but building up an unmanageable amount of debt that you cannot easily afford to pay back. High levels of debt that cannot be managed easily can lead to a bad credit score and having to seek loans for people with bad credit, which causes anxiety and depression. And those with existing mental disorders are three times more likely to get into debt than those with no history of mental illness.
So it's clear that those with existing mental health problems have difficulty managing their money anyway – add to that the ability to borrow money and take out loans and the problems increase and become more serious.
But there are also people who have not previously had any form of mental health issues who are developing mental illnesses exactly because of high levels of debt. Not the regular debts like a mortgage or a car loan or paying your car insurance monthly (yes that's counted as debt too) – but rather the debt that may not be necessary but is used to fund a lifestyle they cannot afford.
Of course, there are situations where money issues are not because of irresponsible borrowing. People can lose their jobs, become too ill to work, get divorced. But there are also those who regularly borrow and spend beyond their means. Take buying a new car, for example, which is now a regular habit for many every 3 or 4 years and with new financing methods this habit could mean that car loans will be the next financial crisis.
A simple way to recognise if you have too much debt is if you are borrowing more than 10% or your net income once you have deducted mortgage or rent payments. If you include mortgage or rent payments then too much debt is if you are borrowing more than 36% of your net income.
Regardless of how a serious debt problem has developed – whether because of bad spending and borrowing habits or because of a job loss or other major event – that debt will negatively affect your mental well-being. It will cause anxiety, resulting in loss of sleep and stress. Increasing levels of stress can in turn lead to more serious issues such as depression.
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