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The emotional impact of debt


The coronavirus has upped stress levels for people around the world. If it has also caused you debt, it is important to acknowledge the problem and not to blame yourself says BRENDAN MCGRATH

In November 2018, Moody’s credit rating agency reported that Cyprus had a high level of household debt because of its small economy, elevated public/private debt levels and weak banking sector. Added to that the Covid-19 pandemic has created an unprecedented situation for the lives and livelihoods of people from all socioeconomic backgrounds, and though government measures provided a measure of security for many, the pandemic continues to impact lives significantly, putting some of the most financially vulnerable in danger of the most severe hardship.

The impact of financial debt goes far beyond a person’s wallet though; as debt may also carry an emotional burden that can weigh very heavily on a person’s psyche. It raises all kinds of anxiety: how long will it take to pay the debt off? Will I ever be debt-free again? How will this debt impact my children’s future? Will I earn enough money to make my payments, or pay back the debt I’ve accumulated? Will I have a home to live in?

We know that debt puts an immense strain on families, with debt collectors knocking at the door, a barrage of letters and phone calls, and the fear of eviction. It’s a terrifying situation for any parent, let alone a child, and it can have long-term consequences on their physical and mental health. The effects that trickle down as a result of a financial crisis can manifest in children as excessive fear, anxiety, depression, and other debilitating symptoms, as they observe their parents struggling.

It’s no wonder that debt can have a tremendous emotional impact on a person. It has the propensity to tap into virtually every known emotional response a person can have. For some it will evoke feelings of shame; feeling they have somehow failed or worse still, let their families down. This in turn can (and often does) trigger bouts of depression and/or anxiety, or a combination of both. It can impact a person’s pride and sense of dignity and self respect and oftentimes, lead to a sense of hopelessness and despair.

That’s why you need to know how to balance the emotional impact so you can deal with debt objectively and rationally. Panicking and responding from an angry or fearful place will be of no value to you (even where these feelings are justified) or help you to tackle your debt problem. What will help though, difficult as it sounds, is resolving to remain calm and working through the various elements of a plan that will eventually lead to helping you to address your emotional responses to being in debt, and the debt itself.

Acknowledge the Problem You’re Facing

First, it’s helpful to simply acknowledge that this is your reality for the foreseeable future. Ignoring your debt by pretending it doesn’t exist won’t work, because reality will come back to haunt you in the form of reminder letters, debt collectors, phone calls, emails etc. It may be hard to do so, however acknowledging that you have this debt is important for balancing its emotional effects.

Create a Plan for Handling Your Debt

Next, develop a plan for dealing with your debt. For example, if you have a loan, it comes with a repayment schedule detailing how much you are required to pay monthly. Make a budget and consider how you are going to repay the debt. Having a well-thought-out plan and communicating honestly with the people/organisations etc you owe money to while working out terms with them can really relieve the anxiety and stress associated with debt. Reaching out for support is critical so form as much of a support network as you can.

Avoid the ‘Blame game’

There are many reasons why someone acquires debt and it can be easy to blame and get down on yourself; however, this won’t solve the problem. Rather, it’s important to acknowledge the role you played while also recognising that sometimes we are powerless to stop the avalanche. It’s how we manage the emotional fallout that will ultimately impact our ability to address our financial situations openly and honestly.

Celebrate Milestones and Victories

Sometimes it takes years to pay off a debt. When you reach a milestone, celebrate the accomplishment, do something nice for yourself. Think of something you will appreciate that is low-cost—or even better, free!

Stay on Top of Your Debt

Make sure you are managing the progress of your debt. Naturally, you don’t have to check the amount you owe daily, as that won’t help with managing the emotional effects, such as anxiety. Yet, checking in monthly is a good idea. This is because it will help you feel more in control of your debt and staying on top of the process.

Pay It Off Early

The sure-fire way for managing emotions connected to debt is to be rid of it. So, if you can, make early payments on your debt if you are financially able to do so.

Unsurprisingly, debt is typically going to cause stress. However, if you can manage your emotions surrounding your debt, you’ll find you can better handle the situation – financially and emotionally.


Brendan McGrath is a psychotherapist/counsellor. (357) 97 629634 or email [email protected]

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