Financial stress is the struggle to meet basic financial obligations due to a lack of funds. While debt may initially seem like a matter of dollars and cents, it can ultimately take a toll on your physical and mental well-being. Merely contemplating the possibility of financial instability can trigger stress, anxiety, fear, and panic.
If you have unmanageable debt, it’s important to understand the emotional effects it can have on your health and identify ways to reduce debt stress and find relief.
How Debt Can Impact Your Mental Health
Stress
According to the NAB Australian Wellbeing Survey Q2 2024, financial stress levels have remained high, with the NAB Household Financial Stress Index staying at 49.3 points, notably higher than the long-term average of 44.7. Despite showing resilience, many Australians are struggling with sustained cost of living pressures and financial strain. Ongoing financial difficulties have continued to drive elevated stress, impacting overall wellbeing, with anxiety levels rising for the fifth consecutive quarter. Stress can manifest in various ways, including:
- Difficulty sleeping,
- Withdrawing from friends, family, and loved ones,
- Reduced work performance and concentration, and
- Physical symptoms such as headaches or nausea.
Anxiety
As financial pressures continue to rise, anxiety remains a significant concern for many Australians. The NAB survey indicated that anxiety levels have been on the rise for five consecutive quarters, reflecting the ongoing impact of economic uncertainty, high living costs, and personal financial strain. These anxieties often stem from worries about the ability to manage debt, provide for family needs, and navigate unexpected financial emergencies.
Feelings of fear and panic can arise from triggers such as feeling overwhelmed, worrying constantly about debt, and believing there is no light at the end of the tunnel.
Depression
Debt can have a long-lasting impact on mental health, with the weight of financial burdens leading to feelings of hopelessness and despair. For some, being trapped in a cycle of unmanageable debt can trigger or worsen depression, creating a cycle where poor mental health makes it even harder to get back on track. In many cases, those experiencing depression may turn to impulsive spending or shopping sprees as a way to momentarily escape their emotional distress, only deepening their financial struggles.
Persistent debt-related depression can lead to withdrawal from social interactions, loss of interest in daily activities, and difficulty concentrating—symptoms that can further affect personal and professional life. If you or someone you know is feeling overwhelmed by debt and facing depression, it's crucial to take proactive steps:
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Reach out for support: Talk to a trusted friend, family member, or therapist. Organisations like Healthdirect list a range of national helplines and online resources specifically for mental health support.
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Take small, manageable steps to regain control: Focus on creating a debt management plan that prioritises achievable goals. Addressing even small aspects of your debt can make a difference in reducing feelings of helplessness.
Denial
Denial can be a common but harmful response to overwhelming debt. When financial problems feel too daunting to face, it’s easy to ignore them and hope they will resolve on their own. However, avoiding debt only leads to accumulating interest charges, late fees, and an increasing sense of anxiety as the problem grows. While denial may provide temporary emotional relief, it often leaves you in a more challenging position once reality inevitably returns.
Common signs of debt denial include:
- Underestimating the total debt owed, convincing yourself that it's not as severe as it is.
- Avoiding calls or letter from creditors, leading to missed payments and increased penalties.
- Paying only the minimum amount due, keeping debt at a manageable distance rather than actively reducing it.
- Applying for new lines of credit to cover old debts, perpetuating a cycle of borrowing.
- Normalising debt by telling yourself that everyone has financial struggles, downplaying the urgency and severity of the situation.
Facing the reality of debt is challenging, but acknowledging it is the first and most crucial step to regaining control. Recognising the symptoms of denial can help break the cycle and motivate proactive, healthy financial behaviour
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Ways to Reduce Debt Stress
1. Face Your Debt Problem Head-On
Confronting debt directly is a crucial step in reducing financial stress. Start by reflecting on your spending habits and creating a realistic budget. Identify areas where you can make adjustments, cut unnecessary expenses, and prioritise debt repayments. While acknowledging the reality of your debt may be uncomfortable, it can significantly alleviate the anxiety that comes from avoiding the issue.
2. Seek Financial Support
It’s best to talk to your creditors about financial hardship as soon as possible. They might assist you by organising a payment plan or temporarily pausing repayments, giving you time to get your finances in order.
The National Debt Helpline also offers a free financial counselling service. Speaking with a financial counsellor can help you:
- Gain a clear understanding of your financial situation,
- Explore the best debt relief options for your needs,
- Negotiate with creditors on your behalf, and
- Receive much-needed support.
3. Take Pride in Your Progress
Sharing the progress you make towards eliminating your debt with loved ones can help you feel supported. This can decreases your sense of isolation around being in debt and combat debt stress to keep you accountable and on track towards your financial goals.
Relieve Your Debt Stress Today
If you’re feeling stressed about debt, it’s important to remember that you’re not alone. Debt can happen to anyone at any time and it’s better to seek help now to get on top of your financial stress quickly, rather than waiting for it to get worse and have it negatively impact your mental health.
Get in touch with Revive Financial today on 1800 534 534 for a quick free consultation. Our friendly, professional team have years of experience helping Australians get out of debt, once and for all. We’ll take the time to assess your financial situation and recommend the best Debt Management Solution for your needs.
