In recent years, financial stress has been identified as a significant contributor to mental health issues. This article delves into the intricate connection between debt and mental health.
A Snapshot of BC Consumer Debt
A recent study looked into the status of consumer debt in British Columbia and we examined the results.
The Financial Landscape in BC
The study found that a significant portion of participants (34%) had debts ranging from $25,000-$49,999, excluding vehicle loans and mortgages. Credit card debt was the most common type of debt, reported by 59% of individuals. Other common types of debt included payday loans (11%), tax debt (9%), and lines of credit (9%).
Interestingly, the use of payday or installment loans has shown a recent increase, indicated as the main type of debt by 11% of respondents in 2022, up from 5% in 2019.
Triggers for Accumulating Debt
The study identified several triggers for debt accumulation. Essential living costs that income could not cover were the main cause of debt for 20% of participants, while overextended credit due to general financial mismanagement was reported by 28%. Other causes included health-related issues (10%), marital breakdown (8%), and job-related problems (6%).
The COVID-19 pandemic was identified as the main cause of debt for 6% of respondents, highlighting its ongoing financial impact.
The Emotional Strain of Debt
Survey participants reported that the emotional toll of debt was a significant issue. Approximately 69% of individuals stated that overwhelming stress was an indicator that their debts were becoming problematic. Other signs included only making minimum payments (58%), debt balances remaining the same despite making payments (53%), and accumulating more debt on credit accounts (36%).
Mental Health Impacts
The study found that 79% of individuals reported that their mental health suffered due to debt. Furthermore, 63% mentioned that their self-esteem was affected, and 47% stated that their physical health was impacted.
Emotional Responses to Debt
A significant 82% of participants reported constant worry about debt. Additionally, 76% experienced anxiety due to the stress of debt, 66% reported feelings of helplessness and hopelessness, and 60% experienced depression. Alarmingly, about 1 in 7 people reported that debt-stress led them to contemplate suicide.
Effects on Personal Relationships and Milestones
Debt also had substantial impacts on personal milestones and relationships. Approximately 30% of participants reported that they had to put life events on hold due to debt. Similarly, 30% stated that their relationships suffered, 29% reported alienation from family or friends, and 25% said that debt caused arguments with their spouse or partner about money.
Barriers to Seeking Help
Despite the significant emotional impact of debt, only 5% of individuals sought immediate help from a debt professional. Common reasons for delaying professional help included feelings of shame (55%), embarrassment (51%), and worry about being judged (40%). Lack of information about where to seek help (28%) and misinformation about legal debt relief processes (15%) were also barriers noted.
Attempts to Resolve Debt
Many participants attempted to resolve their debt problems on their own before seeking legal help. Common strategies included trying to extend credit limits on existing debts (33%), borrowing from family or friends to make debt payments (29%), applying for consolidation financing (27%), and using payday or installment loans (23%).
Improved Financial Outlook
Despite the challenges, most participants reported satisfaction with the formal debt solution they chose. More than 73% of individuals reported improved budgeting and savings skills, and 57% felt more confident in their day-to-day financial management.
Conclusion
The 2022 BC Consumer Debt Study offers crucial insights into the emotional burden of debt and its substantial impact on mental health. The findings underscore the importance of financial literacy and accessible resources for debt relief.