Debt can control your life. It impacts what you buy, where you can live, your sleep, mental health, and personal relationships.
However, paying off debt has many psychological advantages, including boosting confidence, lower stress levels, better future planning, improved confidence, and emotional resilience to avoid slipping back into debt.
According to a Planning Progress Study by Northwestern Mutual in 2018, a whopping 69% of workers in America felt stressed by financial burdens. So, whether you are almost out of debt or just starting, reducing debt is a realistic goal that can help restore mind and body balance while empowering you financially.
Find out how getting out of debt can affect your mental health by reading about these ten emotional benefits of being debt-free.
1. Lower Stress Levels
It is no surprise that having debt causes high anxiety levels. Debt is considered one of the most stressful life events.
According to the Society of Occupational Medicine’s Life Events Inventory in 2009, which ranked emotional stress across 100 kinds of life events, getting buried in insurmountable debt can make people’s stress levels skyrocket. Men ranked severe debt at 82/100, while women scored 86/100.
That is not good news since 80% of Americans are in debt. That is eight out of every ten people.
According to a 2021 CNBC report, the average American owes a whopping $90,460 in debt.
In addition, the Student Loan Planner survey discovered that 90% of people who took out student loans reported intense anxiety due to the debt. Many reported anxiety levels so high that they had trouble sleeping.
This highlights a complex problem that intersects with economic issues, student loans, soaring inflation, the rising cost of living, and personal spending habits. Collectively, Americans owe a staggering $14 trillion in debt.
Stress, caused by owing money that you cannot repay, can undermine your health. Stress that lasts for a long time is linked to several health problems, such as diabetes, heart disease, stomach problems, autoimmune diseases, and allergies.
Paying off debt can lift a massive weight off your shoulders. It can also relieve a common cause of stress and anxiety.
2. Psychological Relief
Getting out of debt can have more than a positive effect on your body. It can give you emotional and psychological relief as well. Unfortunately, many people are carrying more than just a mountain of debt.
- In addition to debt, there are the normal traumas of everyday life like divorce or medical emergencies.
- Debt wrapped in negative experiences can make cortisol levels spike in your body.
- This stress hormone can make you feel more anxious, fearful, and uncertain about the future.
Once you purge that old debt, with all its negative associations, from your life, you will likely feel a surge of emotional relief. While money does not necessarily make you happier, cutting out debt and having enough money for a reasonable standard of living can give you a fresh outlook on life.
You might feel like you are not moving forward when you are deep in debt. If your finances are a mess, it might seem impossible to go abroad, get married, buy a house, start your own business, get a higher degree, or have a baby.
Broken finances can complicate relationships and make achieving your other life goals challenging.
Financially stable people might not want to marry someone who has ruined credit, no savings, or tens of thousands of dollars in debt. Launching a business usually takes capital. It costs an average of $250,000 to raise a child from an infant to age 18. The emotional impact is enormous.
Bottom line – having debt can block you from achieving your goals. The faster you find a repayment strategy that works for you, the closer you’ll get to making your dreams a reality.
4. Increased Confidence
We might live in the 21st century, but debt still carries a stigma that can lower your self-esteem.
Financial distress can eat away at your identity. Intense shame over poor finances can make people spend more in an unhealthy attempt to mask the problem.
Maybe you are swiping your card to get a McMansion, nice cars, designer clothes, the best schools, the newest Apple products, or big vacations, but you are living on the edge of credit.
Paying off debt is empowering. It can give you renewed confidence because you practiced discipline, made a budget, kept track of your expenses, worked hard to pay off debt, and came into financial solvency.
5. Better Relationships
It is no secret that many couples fight about money. For example, a 2018 Fidelity Couples Money Study found that 46% of couples in debt felt that finances caused the biggest problem in their relationship. In contrast, only 16% of couples who did not have debt concerns reported that money created challenges in their relationship.
The good news is that paying off debt can ease relationship stressors. If your marriage survives the laborious process of paying off debt, you have likely learned how to communicate well, respect each other, and build a stronger partnership.
One way to get started is to create a safe space to discuss finances with your spouse openly. Talk about debt, lay any resentment, or fears out on the table, draw up a budget together, plan your regular spending, and figure out your future financial goals.
6. A New Connection Between Spending and Happiness
Once you have paid off debt, you might find that your beliefs about money and happiness change.
Paying off debt and saving money can give you that adrenaline hit you once got from buying a designer handbag or a fast car. In addition, many people find that experiences with friends and family can offer more happiness than swiping a card to make themselves feel better for a few minutes.
Financial freedom can bring a new kind of satisfaction and change your perspective on short-term gratification versus long-term joy.
7. Broader Horizons
While debt can hold you back in life, becoming debt-free can expand your horizons by giving you the freedom to pursue business opportunities, save up for retirement, buy a house, or do whatever fuels your passion.
When you are no longer diverting a large chunk of your paycheck to pay off debt, your optimism will grow as you’re able to accept new opportunities.
8. Learning How to Make Smart Money Decisions
Most people take on debt like student loans or mortgages to accomplish their primary goals in life. Once you pay off debt, you can exercise caution about any new debt you incur. If you take out a business or home loan, ensure that your debt-to-income ratio is balanced and that you research the most favorable loan rates.
You do not need wealth to make wise money decisions. Instead, you need to commit to debt-free living, seek expert advice, and make the hard choices between lifestyle and financial reality.
9. Better Mental Health
For thousands of years, most societies swept mental health issues under the carpet. Today, health experts agree that financial hardship and stress caused by debt can affect mental health.
If you are deep in debt and experiencing mental health problems, you should talk to mental health or financial professionals about the best steps to dig yourself free.
According to a Purdue University study in 2016, lowering debt levels can relieve mental distress and boost happiness levels nearly as much as earning a higher income.
10. The Strength to Escape and Stay Out of Debt
Once you have crawled out of the pit of debt, it’s easy to forget how hard you fought to escape.
Temptation can sit like a little demon on your shoulder. Now that you are debt-free, it is a good idea to stick to a budget that works for you and does not leave you feeling like you cannot spend any money. This can lead to a cycle of feelings of deprivation and overspending.
Whether you are just starting the race or almost at the finish line, achieving freedom from debt can give you the practical tools and emotional perks you need to control your financial future.
Image credit: [GGuy44]