Got Debt? Your Mental Health Could Be at Risk

As shopping season — err, the holidays — approach, we look forward to super savings on the perfect gifts. In all the excitement, it can be far too easy to spend money you don’t have.

Anyone who has debt knows living beyond your means can be stressful. About one-third of Americans have unpaid debt — to the tune of about $5,000 — reports the Urban Institute, most often in the form of unpaid utilities, medical bills and credit cards. But it gets worse. Buying stuff you can’t afford can be detrimental to your health — not just around the holidays, but well into the new year. If your accounts are perpetually empty and your credit card bills are piling up, underlying mental health issues may be to blame.

Debt has been linked to a wide range of mental health problems:

  • If you struggle with mental health issues like depression or anxiety, you’re three times more likely to be in debt than those who don’t have a mental health disorder.
  • If you’re in debt, studies show you’re more likely to engage in drug and alcohol abuse.
  • Those who commit suicide are eight times more likely to be in debt.

Some of the most common mental health issues that lead to compulsive spending are impulse control disorders, obsessive compulsive disorders, eating disorders and depression, says April Lane Benson, PhD, author of To Buy or Not to Buy: Why We Overshop and How to Stop. Terrence Daryl Shulman, LMSW, ACSW, CAADC, CPC, founder/director of The Shulman Center for Compulsive Theft, Spending & Hoarding, adds anxiety disorders, including post-traumatic stress disorder (PTSD), and attention-deficit/hyperactivity disorder (ADHD) to this list, and notes that many people suffer from several disorders, not just one.

A Complicated Relationship

When a person struggles with both mental health challenges and debt, it can be tough to figure out which came first. Some researchers believe the stress of having debt makes people more vulnerable to mental health disorders. Others theorize that mental health problems make it difficult for people to properly manage their spending, create a budget and maintain consistent employment. For many people, the reality is that debt and mental health disorders feed each other. Debt can cause anxiety and depression, and a number of mental health struggles lead to money problems.

In Dr. Benson’s experience, mental health issues typically come first. “Debt can exacerbate an existing mental health issue,” she says.

Shulman agrees. “It’s sometimes hard to say which came first but I believe mental health issues, stressors, losses, traumas and, often, other addictions lead to compulsive shopping/spending and/or poor money management and debt. Then these conditions lead to more mental health issues.”

The ‘Smiled Upon’ Addiction

Lots of people love to shop. Lots spend more than they should. Does that mean they have an addiction that requires professional help? Not necessarily.

But unless someone explicitly brings up their shopping/spending as a reason for seeking therapy, “few therapists think to explore, let alone ask, about a client’s financial situation,” explains Shulman. “And if they do, they often don’t follow up or treat money problems as a separate issue.”

Topping Shulman’s list of must-ask questions are:

  • When did the shopping/spending start to become a problem?
  • Why do you think it became a problem?
  • Do you feel there’s a connection between the shopping/spending and your depression/anxiety?
  • What is your pattern and extent of shopping?
  • Who knows about this problem (if anyone)?

For those whose shopping is out of control and leads to negative consequences in their life, it’s important to see the issue for what it really is — an addiction.

“Compulsive buying disorder is called the ‘smiled upon addiction,’ ” says Dr. Benson. “It’s often hard for people to recognize this because it’s so condoned by society.” So people need to stay alert, be honest with themselves, and get help sooner rather than later.

6 Expert Tips on How to Stop Overspending

There are many steps you can take to protect your financial and mental well-being:

#1 Get educated.

Keep an eye out for warning signs like insomnia, alcohol or drug abuse, difficulty staying focused, excessive anxiety, persistent sadness, or trouble functioning at home, school or work. If you’re concerned about yourself or a loved one, an easy first step is to take a free self-assessment.

“Get educated about the risk factors for mental health disorders which include physical, relational, vocational, spiritual and other problems,” advises Shulman. “Know that not keeping on top of your money, spending and budgets will exacerbate your problems and stress.”

#2 Pay down those cards.

Create an action plan to pay down your debts. First priority: “Pay off all credit card bills right away,” says Dr. Benson. It’s a better investment than just about anything else you’ll do. It’s tax-free, and your interest rates are likely much higher than the return you can get on real estate or the stock market. The sooner you start tackling credit card debt, the quicker you’ll have extra cash to make other investments and start saving. If you run into problems creating or following a get-out-of-debt plan, speak with a financial advisor and/or a therapist who specializes in overspending.

#3 Keep thorough spending records.

Self-monitoring is a critical step, says Dr. Benson. You have to track your spending, including food, clothing, gasoline, entertainment, housing, utilities, insurance and other expenses, so you can figure out where you can cut back. This is the first step toward creating a budget. There are loads of tools and professionals who can help you do this, but a notebook and pen are all you need to get started.

In addition to keeping track of what you’re spending, be a smart shopper. “Due to the Internet and easy and ubiquitous advertising and access to shopping, we need to be very deliberate instead of impulsive in our shopping,” says Shulman. Do your research, plan your purchases in advance, and take some time before clicking “buy now” to make sure you’re making purchases you truly need.

#4 Ask for help.

At the earliest signs of a problem with overspending, reach out for help from loved ones, friends, and financial and mental health professionals. Avail yourself of support groups like Debtors Anonymous, self-help books, financial coaching and other resources.

#5 Balance spending and saving.

Spending isn’t bad if you have adequate funds and can save for the future. But many of us spend indiscriminately, preferring the short-term escape to long-term security and satisfaction. “Just as there is an obesity epidemic, there is a debt epidemic and a stuff epidemic,” says Shulman.

“Think about what we are modeling for our kids and what was modeled for us as kids,” he adds. “Healthy financial habits are all too rare in our society and we need to focus on this both individually and collectively.”

#6 Identify the deeper need.

It’s been said that “you can never get enough of what you don’t really need.” Most people rack up debt for things they don’t want, need or even use, warns Dr. Benson.

Instead of buying for the thrill, “it’s important to tease out the authentic underlying needs that the shopping and spending is a misguided attempt to fill and find ways to meet those needs that enhance your life rather than erode it,” she says. “These are the need for love and affection, the need to belong, the need for self-esteem, the need for this team of other people, and the need for autonomy.”

Talk to a mental health professional to uncover your unfulfilled needs and to develop healthier ways to meet them. This way, “retail therapy” becomes less rewarding and escape and distraction less necessary. Tackling debt on your own can be a challenge, especially if you’re also struggling with depression, anxiety or other mental health issues. These problems can make smart financial decisions tougher than simply making the choice to spend less. If you’re so deep in debt you don’t think you can afford treatment, know that seeing a therapist is more affordable than ever thanks to the Affordable Care Act.

“With the holidays upon us, this can be the best and/or worst of times for many people,” says Shulman. “We need to watch our shopping as it’s often excessive and destructive, and that’s no way to bring in a new year.”

By Meghan Vivo


Ratcliffe C., McKerman S., Theodos B. “Delinquent Debt in America.” The Urban Institute. 2014.

Taylor MP, Pevalin DJ, Todd J. “The psychological costs of unsustainable housing commitments.” Psychological Medicine. 2007 Jul;37(7):1027-36.

Richardson T., Elliot P., Roberts R. “The relationship between personal unsecured debt and mental and physical health: a systematic review and meta-analysis.” Clinical Psychology Review. 2013 Dec;33(8):1148-62.

Berger L., Collins J., Cuesta L. “Household Debt and Adult Depressive Symptoms in the United States.” Journal of Family and Economic Issues. 2015.

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