Being in debt can feel like drowning. At first you don’t realise it’s happening and you’re sort of numb to the consequences of your actions. Then there’s the blinding panic that sets in when you start to become too transfixed in the whirlpool of sleepless nights and muscle aches, too tired to know where to begin taking any viable actions to better your circumstances.
Eventually, you give in to your new cruel master and become compliant with the cycle, sinking deeper and deeper into the bottomless pit of debt.
One issue is that the ‘buy now, pay later’ mindset is so pervasive and ingrained in today’s spending habits, reinforced by 0% credit cards, car finance deals & personal contract plans.
Consumers start believing that what they are doing is financially wise and money well spent when in reality they have been trapped.
The reality is the debt epidemic in the UK has become so topical, due to the millions of people struggling, it was only a matter of time before the conversation was going to turn to the relationship between mental health and debt.
There has always been an interdependence between mental health problems and financial hardship or money worries, with one feeding off the other. This creates a vicious cycle that can quickly become unmanageable.
So, how does debt make us feel?
- Suffocated by the weight of our own failures
- A cloud over you wherever you go
- Dread, guilt & shame like someone else is controlling your means of happiness
- Trapped in a vicious cycle we can’t escape
- Overwhelmed by the scale of our problem
- Helpless, with no control over the situation we are in
It’s clear that there is more than meets the eye when it comes to financial hardship, and therefore we must develop knowledge and strategies on how to combat the problem before it gets out of control.
The starting point of losing the shackles of debt and rising to the surface is getting the initial emotion of entrapment and hopelessness out of your system.
You really need to face up to reality, recognise your body’s physical warning signals, and then you can begin to take action.
A survey released in August 2018 by Neyber – a provider of employee financial benefits – has revealed more employees are currently worried about their finances than their health. 30% named finances as their biggest worry compared to 25% who named their physical health.
Research conducted by YouGov concluded that 17% of people in the UK don’t actually know the sum of their total debt, suggesting that at least 17% of the population are not effectively managing their finances and facing financial hardship.
There is a strong correlation between debt and mental health, which means that financial worries can impact negatively on your mental wellbeing.
When we look at individual debt and the amount where it starts to cause distress, it is very much unique to each person who is struggling. After all, a £100 debt to one person can cause as much of a sleepless night as someone with £50,000 debt. The amount owed is relevant to the income and circumstances of each person to clear it.
When you find you are losing control of your finances and creditors, you will find that you become blinkered by the worry of your debts and consumed with the thought of someone banging on your door. This can prevent you from managing the money you do have and start the vicious cycle of debt.
Common signs to watch for:
- Change in mood
- Increased tiredness or lack of sleepBeing anxious, stressed or lacking the confidence to directly contact the bank or financial service providers
- Spending more money than is available
- Not opening bills or post
- Feeling like there is a lack of control over money
- Avoiding talking about money
- Avoiding answering the telephone
- Not checking bank balances
- Forgetting to pay bills
- Changes in spending behaviour
- Avoiding making important financial decisions
Of course, everyone reacts differently to money worries. What’s most important is recognising the signs in yourself and someone else, and asking the question, “is everything okay?”
Research has shown that people in debt are more likely to suffer from mental health problems. In addition to this, mental health conditions such as depression, drug dependence and psychosis are thought to be more likely to occur in people struggling with their mental health.
In a 2013 study by The University of Southampton, it concluded that people in debt are three times more likely to have a mental health problem than those who were not in debt. This suggests that debt can cause or aggravate mental health issues.
Less than 9% of participants with no mental health problems were in debt, compared to more than a quarter of participants being in debt and with a mental health problem.
A 2016 survey by debt counsellors Christians Against Poverty found that 46% of those seeking debt help had been prescribed a medication by their GP to help them cope, 78% of those couples surveyed said debt affected their relationship and 38% of those couples had considered or attempted suicide.
A 2018 survey conducted by the Money and Mental Health Policy Institute advised 100,000 people attempt suicide every year because of their debt, 420,000 contemplate suicide because of their debt and people in debt are three times more likely to consider suicide.
It also advised mental health problems can also make it difficult to deal with money from day to day: it is a two-way relationship. They can affect your motivation, judgement and income, as well as your ability to do things like make calls or open post.
The irony of the marriage between mental health and debt is that having poor mental health stops people from taking action to solve the problem of debt. For most people, dealing with a mental health condition alone is draining enough without the added pressure of debt.
This is leading to unhealthy behaviour.
People who have had money problems revealed that they drank more alcohol and smoked more to cope. They also reported feeling more stressed, anxious, angry, isolated and depressed as a result of their money worries.
Money issues are widespread, with nearly 3 in 10 people have struggled to pay bills or rent.
Mental Health UK estimates that four million people in the UK are at risk of mental health issues because they’re having financial difficulties.
Bipolar disorder is characterised by periods of depression interspersed with mania. This can make the sufferer become impulsive and overspend when they are on a high, leading to a ‘mania hangover’ when they return to depression.
Tips on managing debt when you have bipolar disorder:
- Keep a close eye on bank balances to avoid overdraft charges.
- Stick to one or two debit and credit cards at a time.
- Consider a basic bank account with no facilities.
- Hand over cards to a trusted friend or family member, especially cards with the highest credit limit.
- Put as many concrete blocks between you and spending as possible, eg, use parental controls to make internet shopping harder.
- Buy most goods online and Consumer Contracts Regulations give you 14 days to change your mind, with 14 days to return.
For more information about debt and mental health visit money and mental health
Citizens Advice Bureau has set out a Five-Step Plan you can follow to work through your debt more easily.
They recommend gathering together all of the information you have on each of your debts and putting them all in order of priority.
Then, work out how much you can afford to pay. Once you’ve done this you can start contacting your creditors to set up payment plans for your ‘priority’ debts. You can do the same with your ‘non-priority’ debts.
When you have a plan in place, it will all feel more manageable.
- Step 1 – Gather information for each debt
- Step 2 – Check which ones are ‘priority’ debts – A priority debt would be mortgage, rent or bills that enable you to live. A non-priority debt might be a gym membership, phone or store card.
- Step 3 – Work out what you can afford to pay
- Step 4 – Negotiate with your creditors for priority debts
- Step 5 – Negotiate with your creditors for non-priority debts.
‘Knowing your money’ is not just about knowing what you earn but more about where your money goes daily. Although monitoring your money daily may seem a little extreme, micro-managing your finances is essential for regaining control.
The first step is to complete a budget, outlining and calculating your income. If your income is received on a weekly basis and not managed properly, this can often be a cause of losing control of your money.
The second step is to complete your expenditure, outlining and calculating everything that you pay out monthly. When completing this exercise, use your bank statements, ensuring the figures are accurate. Separating your expenditure into sections (priority & non-priority) will allow you to prioritise your bills & outgoings.
For more information visit: How to get a debt management plan (DMP).
Managing a solely weekly income or a mixture of weekly and monthly incomes can often be a difficult task. In this case, it’s best to get help.
Having someone help you put together a manageable and sustainable budget plan can take the pressure off you and offer reassurance. If you receive a monthly income, the task of completing a budget plan becomes a little simpler. However, remaining disciplined and within your budget would appear to be the initial challenge.
Once you have worked out your income, minus your expenditure and arrived at your disposable income you can move forward. If you are in debt, this disposable income is what you would share between your creditors. If you are not in debt, this should either be saved or spent responsibly.
If you are in debt crisis and can see no way out, the following solutions may be appropriate to you:
- Debt relief order – A DRO provides a solution for those who cannot afford to repay the full amount they owe. It works a bit like bankruptcy however a DRO is only available to those on a low income with assets of less than £1,000. Find out more about Debt Relief Order .
- Bankruptcy – For most, bankruptcy is often the last resort. It’s the solution that most people come to the conclusion of when either they cannot see a light at the end of the tunnel or it is forced upon them. Find out more about Bankruptcy .
- Debt management plan – Debt management is a re-structured repayment plan that enables you to pay one monthly payment to your unsecured creditors, ensuring your household bills are maintained. Your one monthly payment is distributed out to your creditors on your behalf, ensuring that all contact and future dealings with your creditors are managed by your chosen company. Find out more Debt Management Plan.
- Individual voluntary agreement – An IVA (Individual Voluntary Arrangement) is a legally binding agreement between you and your creditor and is managed by an Insolvency Practitioner (IP). The IVA allows you to consolidate your unsecured creditor commitments into 1 monthly payment and usually lasts for a period of 5 years. At the end of the agreed time period, the remaining debt is written off with a certificate of completion being issued at the end. Find out more about IVA.
Before moving forward on any of the above ensure you take advice from a qualified professional who will guide and work with you every step of the way.