Debt isn’t just about money – debt affects your life in any number of ways.
It can weigh on your mind, take a toll on your health, strain your relationships, and even limit your future choices.
At first, it might seem manageable – just another bill to pay.
But over time, it can feel like a heavy burden, making it harder to sleep, stay motivated, or enjoy life. Debt can also hold you back from opportunities, whether it’s buying a home, pursuing a dream job, or simply having financial peace of mind.
The good news? Understanding how debt affects you is the first step toward regaining control.
In this article, we’ll explore eight tough but important ways debt impacts your life – and what you can do to break free from its grip.
Let’s dive in and take the first step toward financial freedom!
8 Tough Ways Debt Affects Your Life
1. Debt affects your physical health.
Debt has a negative effect on our well-being because it induces stress, which then affects our physical health.
According to a 2013 study conducted at Northwestern University, researchers discovered that those who felt overwhelmed by debt had instances of high blood pressure.
Findings from the survey further revealed that a higher debt-to-asset ratio (How much you own vs. how much you owe.) was associated with:
- higher perceived stress and depression
- worse self-reported general health
- higher diastolic blood pressure
These findings are the first to scientifically link debt to one’s health status, thus giving weight to the assumption that there is a correlation between high debt and poor physical health.
2. Debt affects your mental health.
There are many studies which have linked debt to mental well-being.
A survey conducted in 2015, published in Social Science & Medicine found a link between student borrowing and the mental health of young adults.
The report associated student loans with poor psychological functioning.
The conclusions of this study were further validated by a separate study published in the Journal of Consumer Research, which showed that perceived financial well-being is a key predictor of overall well-being.
This implies that feeling good about your finances is an essential factor in mental health.
3. Debt affects your social relationships.
Money is a double-edged sword which can work for or against you.
When you have a mountain of debt to handle, this can cause severe strain in your social relationships.
Maybe you’re hiding a debt from someone.
Or perhaps the debt is preventing you from saying yes to weekend trips with friends, a family vacation or even going out for dinner.
Any of these situations can have a significant impact on your relationships.
This is especially so if you don’t tell your friends or loved ones about it. And a lot of us who carry debt feel ashamed or defensive about it – so it’s more likely you won’t tell them – miss out on time with them and potentially bring conflict.
Debt is also the cause of many arguments between partners, creating a toxic environment of mistrust, communication breakdown and blame.
Overcoming Financial Stress: Essential Steps to Restore Your Health and Well-being
4. Debt can deprive you of sleep.
A lot of people lose sleep over their debt situation.
According to the American Psychological Association’s 2017 Stress in America survey, one-third of Americans admitted losing sleep over debt, while 62% said their financial state was a common source of stress.
Poor sleep patterns have harmful ramifications for our physical and mental health. It is a sure sign of depression and can lead to heart attack, diabetes or obesity.
5. Debt affects your life choices.
Debt has made people put off achieving life milestones like:
- buying a car
- getting married
- purchasing a house
Debts like student loans have forced people to enter into low-paying careers in public service so that they can have their debt written off.
This is particularly alarming, especially when you consider the fact that the reason people accumulate student debt is to earn their college education, which is supposed to give them a shot at a better life.
Paradoxically, the prospect of debt has also made people forego college education altogether.
The typical undergraduate accumulates close to $30,000 in student loan debt. When this amount is factored in, some people prefer to forego college outright. This implies that they can’t attend grad school and as such, reduce their chances of a high-paying job.
Even those who attend college also have their chances reduced because students who leave their undergraduate programs with significant amounts of debt often cannot afford to take out another. This shows that debt may be the most significant factor hampering the progress of millennials.
6. Debt affects your financial independence.
This is the most apparent effect of debt in our life.
Being riddled with debt means that you have less to save and invest. The high-interest rates accrued from debt, including the implications for your credit score and debt-to-income ratio reduces your chances of being financially independent.
For example, if you have a business idea but lack the funds, your credit score is a factor that lenders use to determine your loan eligibility.
If your score is low as a result of debt, this implies that you’d have no funding for your business idea and then, fewer chances of being financially independent.
7. Debt could disqualify you from a job.
Your debt profile could be the reason you did not get that job, despite being qualified.
According to a survey carried out by HR.com, companies frequently conduct credit checks as part of background checks on prospective employees, especially if you’re applying for a position in the financial industry.
Findings showed that:
- 95% of companies surveyed perform some kind of background check
- 16% of companies surveyed performed credit checks on everyone who applies
- 31% said they conducted a credit check on some job applicants
All of this points to the expectation that if you default in your loan payments, it could be a red flag to your prospective employer.
8. Debt can make you give up on your dreams and aspirations.
The greatest thing you can deprive someone is hope.
Depriving someone of hope is akin to robbing them of their dreams. Debt affects your financial independence, which in turn influences your life choices and what you choose to prioritize.
Sometimes, we’re pushed to make choices that don’t align with our dreams because we need to repay our debt.
We might take up jobs we don’t like.
We might give up on building careers in areas we find fulfilling in exchange for options that solve our immediate financial problems.
For example, you may want to volunteer for a cause, or spend time travelling the world. The constant reminder of debt would force you to forgo these plans in search of a job.
This way, we have allowed the financial burden of debt to put our dreams on hold, thereby robbing us of our aspirations over time.
The longer these dreams are put on hold, the lower the probability of achieving them.
The Ways Debt Affects Your Life
Debt can have many impacts on a person’s life.
It can:
- negatively affect your credit rating score
- stop you obtaining types of credit such as a credit card or loan
- prevent you from buying your dream home or even just renting an apartment
- significantly impact your mental health
Debt can have harmful effects that reach beyond our finances to affect every aspect of our life, including our future.
One sure way to hedge against this is having better control of our finances. If you want to loosen the load of the debt you’re carrying around, we recommend these helpful articles to get you started!
- The Financial Therapist: A Powerful Resource for Your Money Mindset
- Financial Stress: 7 Better Ways to Protect Your Mental Health
- Overcoming Financial Stress: Essential Steps to Restore Your Health and Well-being
Editor’s note: This article was originally published Aug 9, 2021 and has been updated to improve reader experience.
