What Is Financial Depression?
Millions of Americans are facing the realities of living with debt, as it continues to rise with record-breaking speed. High education costs, home loans, and rising credit card debt mean that most young families are juggling kids, career, and debt. For many, that balancing act quickly becomes overwhelming, with stress about bills and financial health eating away at their overall quality of life.
As debt rates rise, so do concerns about how debt and financial anxiety may impact mental and physical health. Feeling panicky about getting another bill in the mail and lightheaded when you see your account balance drop after your monthly student loan payment aren’t just symptoms of being a millennial, they may actually be symptoms of debt.
Research shows that your balance owed can negatively impact your sense of well-being, potentially causing a variety of emotional and physical issues. The bottom line is that the more stressed you are about debt and finances, the worse you’re probably going to feel overall, both physically and mentally.
Financial Depression and Anxiety
Stress is an unavoidable part of life. We worry about work, about working out, about our relationships, and our futures. But for many, the most stressful part of life is managing money and debt, especially as debt grows.
If you’ve ever felt shame or anxiety about the numbers lurking on your online accounts, you’re not alone. In fact, the American Institute of Certified Public Accountants (AICPA) found that 56% of Americans felt that their debt negatively affected their lives.
This type of financial depression and anxiety has wide-reaching impacts: 21% of people in the same AICPA survey said that their debt made everyday financial decisions more stressful and 21% of people said that their debt had contributed to tension with their partner.
Debt stress can even impact your ability to think clearly. If you’ve ever found yourself paralyzed trying to decide whether to pay your student loan bill or your credit card bill, you may be able to relate. The stress of managing debt can cause real mental anguish.
Debt Stress and Physical Health
Debt stress doesn’t only affect your mental health. Worrying about debt, bills, and finances can also impact your physical health.
The American Psychological Association found that 62% of Americans are stressed about money, and that stress can increase the risks of serious physical side-effects. Research shows that financial anxiety can contribute to physical symptoms , from migraines and insomnia to cardiovascular disease.
Managing Your Financial Health
Ready for some serious financial self-care? There are lots of simple ways you can decrease debt stress and fight financial depression. First, remember that you’re not in this alone. Most Americans have debt, and many are struggling to manage the high stress levels that come with it.
Finding support through friends others struggling with the same situation can help lessen financial stress, which is one reason that SoFi is proud to bring together members to make connections and build community.
While financial depression and debt stress may make you want to permanently log out of your online banking and simply hope for the best each time you swipe your debit card, the reality is that taking stock of your situation in order to get yourself back on track can be a great first step towards tackling overwhelming debt.
Financial Fitness
Financial fitness is not an all or nothing proposition. No matter your income or levels of debt, you can probably take steps to more effectively manage your finances, which starts with knowing exactly where you stand. Plan a time to sit down and look at all your loans, credit card bills, and other monthly obligations to get a sense of exactly how much money you owe each month.
If the idea of seeing all these numbers in one place stresses you out, promise yourself a little treat afterwards, like a walk around the park or a latte to enjoy while soaking in the relief of taking steps towards a healthy financial future.
When you look at your bills and loan statements, make sure to note if any of your student loans are in forbearance or your credit cards in default.
Instead of hiding those bills at the bottom of the pile, you may want to deal with them first. There are usually steps you can take to get your credit card out of default. Calling the credit card company to understand what your options are can be a great first step.
Set A Budget
Once any acute financial crises are taken care of, it’s time to set a budget. Budgets often get a bad rap. We think of them as restrictions on what we can and can’t have, but the truth about budgets is that their goal should be to help you get what you want, whether that is plenty of cash to spend on eating out, a robust vacation savings, or an early retirement.
The other great news is that there is a budget to fit just about every lifestyle, whether you’re looking to scrimp and save to scrape together a down payment on your first house or looking to put a little more towards your credit card bills each month.
Whichever budget you choose, make sure it is realistic for your personal situation, if a budget is too extreme you may find yourself falling off track and abandoning it, which might lead to even more financial stress. To help with creating your budget, you can get started with SoFi Relay. It makes it easy to know where you stand, what you spend, and how to hit your financial goals.
Strategies to Tackle Debt
One other important thing to remember about working to become financially healthy is that there may be options to lower your monthly payments and the amount of debt you’re paying off.
For example, if you’re paying off credit cards with high interest rates, you might consider taking out a personal loan and using it to pay off your credit card balance.
Why trade one type of debt for another? Well, personal loan interest rates are often significantly lower than credit card interest rates, which means that you may be able to save hundreds or even thousands of dollars over the life of your loan and pay a lower monthly bill.
Likewise, you may not be getting the best deal on your student loans. Interest increases the total amount you end up paying back, of course, but you’re probably still repaying at an old interest rate that you received when you were a shiny-faced college freshman with little or no credit history.
Fortunately, if you’ve increased your credit score or used that college degree to land a higher-paying job, you may be able to refinance your student loans in order to secure more favorable terms, possibly including lower monthly payments.
The research is clear: debt and financial stress can cause real impacts on your mental and physical health but managing your finances can help. There are several simple ways to take control of your financial health and getting your financial health in order can potentially help to minimize a portion of stress in your life.
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit.
The information provided is not meant to provide investment, tax or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory and automated services offered through SoFi Wealth LLC. An SEC registered investment advisor. SoFi Securities LLC, member FINRA / SIPC .
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