NEW YORK — A striking 77 percent of American households grapple with some form of debt, and as the cost of living surges, the burden of managing this debt takes a toll on Americans’ well-being.
A new survey by Forbes Advisor uncovered the impact debt has on Americans’ mental health and how debt affects relationships, spending habits, and outlook on future financial prospects
Economic circumstances emerged as the chief culprit for 55 percent of respondents, drawing them into the debt vortex. Notably, 48 percent ascribed their indebtedness to the allure of advertising and rampant consumerism. Furthermore, 42 percent admitted that difficulties in overseeing and curbing their spending played pivotal roles in their financial predicament.
So, what are the main culprits behind this escalating debt? Three in four attribute their financial troubles to credit cards. Personal loans follow closely, with 68 percent acknowledging them as major debt contributors. Mortgages, too, are a financial albatross for two in three people, while 55 percent indicate medical bills as a principal source of their debt.
These statistics weave a narrative of the intricate challenges many Americans face with debt, and how evading it can be an uphill task.
However, the impact of debt isn’t purely financial; it seeps into mental health as well. The survey notes that 54 percent of individuals frequently feel the weight of debt-related stress, with another 32 percent intermittently feeling the pressure.
This financial strain manifests in various ways. Nearly half (48%) of those surveyed report disrupted sleep patterns, 40 percent experience heightened anxiety, 38 percent noticed a decline in their social life, and 34 percent suffer symptoms of depression.
Debt also casts shadows over personal relationships. Six in 10 people confess that their financial woes have sparked conflicts within their relationships. Of these, a staggering 86 percent feel their relationships are suffering due to debt stress, and 55 percent admit it’s eroded trust with their partners.
Financial anxieties often lead to further financial entanglements. For instance, 72 percent shared that they are prone to dive deeper into debt under stress.
The survey’s insights into debt-stress-induced spending patterns are revealing. Alarmingly, 38 percent missed payments and faced added charges, attributing it to their debt-induced stress. Moreover, 23 percent concede that their stress made fiscal management arduous, often failing to meet their intended debt reduction targets. A significant number (56%) harbor guilt when indulging in purchases, and 53 percent are daunted by the prospect of higher expenditures.
Over one in four people (28%) admit that the burden of debt prompts impulsive spending, further intensifying financial strains.
Yet, escaping the clutches of debt is attainable with the right strategies. The survey suggests focusing on the high-interest debt first, termed the “debt avalanche method,” could offer relief — particularly from credit card-related stress. Harnessing budgeting tools and practicing discerning spending can also help steer clear of unnecessary expenses.
Building a financial safety net, starting small, is another potent strategy. An emergency fund, stashed in a high-yield savings account, can cushion against unplanned expenses.
For those considering external help, collaborating with reputable debt settlement companies is a viable option, but due diligence is paramount. Researching, reviewing, and asking the right questions can guide individuals toward reliable companies.
Lastly, maintaining a positive outlook and seeking support is essential. Breaking financial goals into tangible steps, celebrating milestones, and prioritizing mental well-being are instrumental in the journey to financial freedom. Addressing debt-related stress head-on, staying informed, and adopting stress-relief techniques can offer respite from debt’s overarching shadow.
Survey methodology:
This online survey of 2,000 U.S. adults with debt was commissioned by Forbes and conducted by market research company OnePoll, in accordance with the Market Research Society’s code of conduct. Data was collected from Sept. 15 to Sept. 18, 2023. The margin of error is +/- 2.2 points with 95% confidence. This survey was overseen by the OnePoll research team, which is a member of the Market Research Society and has a corporate membership with the American Association for Public Opinion Research (AAPOR).
