3 Emotional Side Effects of Debt and How to Handle Them

Credit: Art G.

Credit: Art G.

The tangible results of debt – calls from bill collectors, denial of loans, a growing stack of past due bills – may seem like the worst part of this ever-growing financial problem. But the reality is, these events would mean little if, underneath the surface, you weren’t dealing with the intense emotional effects of the issue.

Being financially indebted to someone doesn’t just put a strain on the funds you have coming in, it can trudge up fear, feelings of inadequacy, and many more emotions that can strain other areas of your life at the same time.

The purpose of mentioning these emotions isn’t to make your current debt appear to be even more of a burden, but instead to paint a picture of what might dissipate as your debt does.

Here are a few debt side effects that you might already be feeling the effects of.


A 2014 study by the American Psychological Association found the top reasons Americans experience stress is job pressure and money. It’s possible that job pressure, once drilled down, would also equate to money and the fear of losing said job and income stream.

And how does debt come into play? The feeling of being “in the red” can trigger intense feelings of scarcity which in and of itself is incredibly stressful – especially when there is no plan in place and no end in sight.

In addition, as if the psychological effects of stress weren’t enough, it can place an additional strain on your immune system and the rest of your body, potentially leading to anything from a cold to a heart attack.

Solution: Often times the most stressful part of debt is not having a full, levelheaded grasp of the situation. Without this, you can quickly catastrophize what your’e dealing with, believing it’s a sinking ship and not just a small leak.

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If denial has been your problem in the past, and bills have already piled up, it’s time to face the situation head on. If professional help is needed, seek it. But knowing exactly what you owe and what the options are is absolutely key to regaining stable footing.


Fear is often signaled by a loss of control or feeling you don’t know what lies ahead. While many forms of debt took some form of active participation to acquire, it is essentially a slow drain on your ability to dictate what your future financial picture will look like – and that, for many, is the ultimate loss of control.

According to the University of Minnesota, “Fear can…impact our thinking and decision-making in negative ways, leaving us susceptible to intense emotions and impulsive reactions.

In addition, several additional studies cite fear as a key reason why we make financial decisions that aren’t in our best interest.

Solution: You may have minimal to no control over the amounts that you owe, but you do have the ability to construct a plan with a specific debt freedom date in mind. You also have the ability to create a plan in which debt payments are made on time and in full every month. (This may include debt consolidation or other action items depending on your situation.)


Most decisions we come to view as mistakes fade rather quickly into the background (not to say they don’t routinely rear their ugly head). But debt tends to sit heavy on our minds for as long as we’re committed to handing money over every month. You may not see your debt as a mistake necessarily, but if you do, there are likely strong feelings of regret tied to it.

Regret can make you question your ability to make healthy decisions or retreat from making decisions altogether. And if you feel as if you can’t trust yourself of all people, self-esteem can quickly take a tumble as well.

Unfortunately, you must have those things to lend support in the process of paying off the debt you feel so poorly about in the first place. Cruel how that works, I know.

Solution: Researcher Neal Roese, Ph.D. says it perfectly, “Ride the wave of regret to fuel changes.” In other words, use regret as a jumping place to make different decisions and choose a different plan of action next time. You know this outcome – now find a better one.

Have you noticed that, for many people, once they’ve reached the other side of a tough situation, they often cite it is as something that changed them for the better, shaped who they’ve become, and made them see the world in a much clearer light? This too can turn into that – if you release the regret.

After all, it’s nearly impossible to appreciate something at the same time you’re regretting it.


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  • rockw

    Thank you so much for sharing all the emotions that I have been dealing with for the last 3 years–all true, all so real and all so debilitating. Throw in 3 deaths of family members in the last 2 of those years and so…..we begin to climb out–but I do feel like I am drowning

  • I’m glad to have found this article. It couldn’t have come at a better time for me. Lately, I have been feeling a lot of emotions described in this article regarding my indebtedness. Very encouraging and honest suggestions. Thanks.