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There are many reasons why someone is willing to borrow money or go into debt. Starting from losing your job, to failing to manage your monthly salary.
Recently, in Indonesia there have also been many cases of people getting caught in illegal online loans for reasons like that. Tragically, this not only affects the contents of your wallet, but also damages your mental health.
Why can the habit of debt be mentally damaging? Check out the scientific explanation in the review below.
Studies on debt and mental health
A review of 52 studies shows that debt and mental health are closely related. The researchers found that less than 9 percent of people were detected as having no mental health problems and had debt.
Studies also show that more than a quarter of people with mental health problems have some debt. This includes people suffering from depression, drug addiction, neurotic disorders, drinking problems, psychotic disorders, and suicide.
However, more research is needed to understand how the two are connected to each other.
How does debt affect your mental health?
Dr. Thomas Richardson, the lead researcher of the study stated that debt may cause mental health problems due to the stress it causes.
Having debt also significantly increases the likelihood of depressive symptoms. This was concluded from another study which stated that people who live below the poverty line are 1.5 times more likely to experience depression than those who do not live below the poverty line.
This is felt to be the result of a decrease in quality of life and psychological pressure related to the obligation to pay debts. In other words, the greater the debt burden, the greater the psychological pressure a person experiences.
Is the hobby of debt considered an addiction?
Not all debt habits are called addictions. Many people have significant credit card debt, but that doesn’t mean they are debt addicts.
Reporting from Money Crashers, someone who is addicted to debt takes on debt to support their life without any definite plan to get out of these debts.
So if you don’t fall into that category, then the debt you take on is not considered an addiction.
Characteristics of when debt has become a habit
Debt is not something that occurs by accident. Some of the things below are characteristics when debt has become a habit.
1. Spending more money than you make
When you regularly spend money in larger amounts than the income you receive, it is almost certain that you will use debt as a way out.
In fact, it is not uncommon that when one source of credit has been closed or exhausted, this habit will make you look for another loan without paying off the existing debt first.
2. Shopping with money you don’t have
If you often buy goods either by using a credit card, taking out a payday loan, cash withdrawals, and the like. So it could be that debt has become a habit in your life.
Especially if you use methods like that to pay bills and buy daily necessities. It is also prone to making debt a habit.
3. Using loans even when having cash
Another bad habit that leads to debt is choosing credit over cash when you even have it. This could very well make you feel like you have ‘extra money’, even though in fact the excess is just a loan.
Tips for not getting trapped in debt
In general, no one likes being in debt. Follow these strategies to avoid the habit of borrowing money:
1. Don’t buy things you can’t afford
One good rule to live by is if you can’t pay for something in cash. So that means you also can’t buy it with any loan facility.
2. Have a backup emergency fund
An emergency fund can be a way to cover expenses if you suddenly lose your job or other disaster. So you don’t need to go into debt if you suddenly find yourself in that situation.
3. Reduce desires, focus on needs
The more you reduce unimportant desires and only shop for necessities, the further away you will be from the habit of getting into debt.
A disciplined way of managing finances
Creating a budget is just one part of managing money properly. Apart from that, there are several important steps that need to be taken so that you can manage your finances well.
This includes understanding the current financial situation, setting personal priorities and financial goals, adhering to the budget that has been designed, setting aside a portion of income for an emergency fund, and paying off debts that have previously been created.
Make sure to check your and your family’s health regularly through Good Doctor, a 24/7 service. Downloads here to consult with our doctor partners.
