The REAL damage debt creates is more than just your credit

By Jackie Lam

Reviewed by Kimberly Rotter

Aug 18, 2023

Read time: 2 min

SOC_The REAL damage debt can create is BIGGER than just your credit_V3-R1_1280x720_01.jpg

I had coffee with a good friend not too long ago. She’s 32 and has over $80,000 in student loans. She lives in New York City, one of the most expensive cities in the U.S. She confided to me that most days, she survives under a cloud of anxiety and stress. She’s overwhelmed, crushed by the weight of her debt. Sometimes she can’t sleep. (Yes, she’s okay with me sharing her situation with you.) 

If you can relate, it’s because her situation isn’t unusual. Debt and mental health struggles go hand in hand. 

The reality is that being in debt can lead to depression, anxiety, and even suicidal thoughts. 

You have the power to improve your finances and your mental health.

SOC_The REAL damage debt can create is BIGGER than just your credit_V3-R1_1280x720_02.jpg

1. Recognize and address debt anxiety 

When you're dealing with debt anxiety, another common phenomenon that tends to seep in is debt fatigue. Debt fatigue is what it sounds like. You feel tired of the debt that you can’t get rid of. So tired, in fact, that you might even feel like giving up. 

You feel overwhelmed by how much you owe. Your efforts feel like pushing a boulder up a tall mountain. Plus, if you're taking on extra work to pay off your debt, you might feel physically exhausted. 

To manage debt fatigue, consider journaling your thoughts and emotions around your debt.  Write a letter to your debt. Tell it how you feel. Tell it you’re working to leave the relationship. 

If you need to, take a small break from focusing on your debt, especially if you've been strict about not spending. It’s ok to treat yourself to something (modestly priced) that you enjoy now and then as a thank you for all the work you’re doing to improve your finances.

SOC_The REAL damage debt can create is BIGGER than just your credit_V3-R1_1280x720_03.jpg

2. Be real with your spending

If your credit card balance keeps getting higher, it might be time to give your spending a reality check. Go through your credit card and bank account statements to learn exactly where your money is going. Use the Achieve MoLO app, which links to your accounts and tracks your spending, helping you identify areas you want to cut back on so you can have more money left over.

If part of your debt problem is spending too much in comparison to your income, make a pact with yourself to curb the purchases. It doesn't have to be overnight. Set small goals to make incremental improvements over time. An accountability partner can help (someone you can do a financial check-in with on a regular basis).

SOC_The REAL damage debt can create is BIGGER than just your credit_V3-R1_1280x720_04.jpg

3. Know where you stand with your debt 

The "oh, I'll just pretend my debt doesn't exist by shoving it under a rug for now" tactic? That will only lead to stress and anxiety piling up, to eventually hit a breaking point. I get it. Not knowing seems like the easier thing to do. But avoidance is like tiptoeing around a landmine. 

Put on your brave hat. Sit down and figure out: 

  • What types of debt you have (credit cards, student debt, car loans, personal loans, payday loans) 

  • The amount you owe on each debt, and the interest rate

  • The minimum payment for each debt

  • Who you owe (lenders, loan servicers, credit card issuers, debt collectors) 

Awareness of the issue can bring a true release of stress. It’s also the first necessary step before you can take serious action and come up with solutions that are doable and make sense. 

SOC_The REAL damage debt can create is BIGGER than just your credit_V3-R1_1280x720_05.jpg

4. Create a plan

Now that you know where you stand with your debt, build a plan. This plan can include: 

  • Your monthly payments

  • Your projected payoff date. If it’s so far in the future that it’s depressing, set milestone dates like “reduce my student loan balance by $20,000 before the end of next year.”

  • Areas where you will consciously cut back on spending, and ways to bring in more money.

Other steps, like freezing your credit cards in a block of ice or keeping them digitally locked and physically put away can help you avoid the self-sabotage of spending only to regret it later. Use a debit card when you shop online. 

A debt consolidation loan might make your life easier. This is when you use one new loan to pay off multiple smaller debts. It makes sense if you can lower the interest rate on your debt. You might get a more manageable payment, too. All of that can make it easier for you to stay on top of payments and get rid of your debt.

If you’re really struggling, debt resolution might be an option. That’s when you get your creditors to agree to lower the amount you owe. It doesn’t work for student loans, but if you resolve some of your other debts you could free up cash to handle your student loan payment.

5. Seek help 

If you're feeling the heavy burden of debt and it’s bringing you down, consider seeking professional help. Local mental health centers and communities might have sliding scale fee options. Plus, online mental health platforms like Open Path Collective offer therapy at a lower cost. You might also find financial support groups to join in person or online. 

Being on the mental health struggle bus because of debt can happen to any of us. Taking action and small steps to peer into your emotions and mental health around your debt load, and taking steps toward your overall well-being, can help you move forward. 

Jackie Lam - Author

Jackie is an Achieve contributor. She is an accredited financial coach (AFC®) who has written for Business Insider, BuzzFeed, CNET, USA Today's Blueprint, and others. She coaches artists and freelancers.

kim rotter 2022 2

Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.

Article Topics

At Achieve, it’s not what we stand for, it’s who.

Achieve Person