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Mental health problems and debt: what you need to know

Posted on 1 December 2021

Written by Chris Galea

Debt problems are undoubtedly linked to mental health problems. In fact, it was recently discovered that 48% of Canadians say they have lost sleep because of financial problems. Symptoms of mental health problems related to debt include lack of sleep, depression, anxiety, paranoia, and feelings of helplessness. In extreme cases, financial issues can also be linked with higher risks of suicide. Some experts have even said financial stress is on the same level as obesity, poverty, and substance abuse. While financial problems can seem overwhelming and can certainly create stress and anxiety, there is always a solution. No matter how bad you believe your debt to be, there is a form of debt relief for you and we are here to help at Spergel. In this article, we discuss the link between mental health problems and debt, and how you can tackle both issues.

How to deal with mental health problems and debt

Financial problems and debt may be more common than you think, with Canada’s net debt reaching $942.5 billion in 2021, up from $253.4 billion in 2020. For this reason, it is little surprise that many Canadians feel their debt is causing them increasing stress. Credit card debt, mortgages, and the desire to maintain a lavish lifestyle can all trigger mental health problems and debt. Mental health and debt can also work the other way around. If, for instance, you are feeling stressed or anxious, you may turn to spending to make yourself feel better. Retail therapy and booking expensive vacations are often forms of instant gratification. This can become a vicious cycle in itself. Psychology Today says that the stress associated with unpaid credit cards and overdue bills can have harmful effects, including depression, anxiety and stress, and addiction or substance abuse. Here are some of the best ways to tackle mental health problems and debt.

Understand your financial situation

To begin gaining control of your financial situation, you first need to understand it. This requires some organization. First of all, you should get a copy of your credit report and recognize what you owe and any income you bring in. Once you have a detailed view of your current finances, creating a budget is the next step. Having a budget that includes all of your income and outgoings will help you to see where you can perhaps pull back to put more money towards your debt repayments. Although it may seem a little overwhelming initially, this is the first step to taking control of your financial situation.

Differentiate yourself from your debt

There are a number of key factors of good mental health and wellbeing. These include a sense of self, purpose, belonging, resilience, contribution, and enjoyment. If you think you are struggling with mental health and debt, it may be worth assessing yourself against each of these factors. The most important thing to note is that your debt is not a reflection of who you are. Many unfortunate circumstances can happen to anyone that lead to debt, like a divorce or medical bills. Making this distinction is the key to good mental health, and will help you to look at your financial situation with a greater sense of clarity.

Find financial purpose

When you are struggling financially, it can be easy to feel helpless, although you should not. Feeling unworthy can lead to a short term view of your finances, and can make you feel out of control. Spending to achieve instant gratification can quickly lead to racking up debt. Turning this around to achieve a healthy relationship with your finances is about thinking longer term. What is truly important to you? Do your goals include eventually buying a property, or going traveling? How you can practise delaying shorter term spending to achieve these ultimate goals? Planning for your goals should give you something to plan and work towards, and help you to feel more positive about the future.

Discover free ways to relax

During a period of financial stress and burden on your mental health, it is crucial to find time out to relax and take your mind off things. Finances can be all consuming, and often cause sleeplessness so it is important to try and switch off. Try to indulge in free methods of relaxation, and explore what works best for you. Relaxation does not need to cost money! Perhaps you enjoy practising yoga, going for a run in the countryside, or spending time playing with your children. Whatever it is that works for you and keeps you calm, make sure you do lots of it. It can help to give you some perspective on your situation.

Adjust your budget

If possible, you should review your expenses. This can help you to feel in control, and some simple changes can make a huge difference to your financial situation. Check out our guide on how to budget. Try downgrading or cancelling your cable TV, try cooking instead of having takeouts, and use coupons where you can to reduce the amount of money you spend on groceries. Perhaps you can get a roommate to rent out a room in your house to bring in some additional income, or take on a side hustle to bring about some extra cash. Cutting back where you can can make all the difference to your situation and mental health.

Speak to a Licensed Insolvency Trustee

Whether you are struggling with mental health problems or debt problems, you should know when to ask for help. It is the first step to resolving both debt and mental health. Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief, including consumer proposals and bankruptcy. They are therefore in an excellent position to help you begin a fresh financial future. At Spergel, our experienced trustees have been helping Canadians for over thirty years. Unlike other bankruptcy firms, you will be assigned your own trustee to walk you through the entire debt relief process. We will assist with everything from debt relief to credit counselling to help you get your life back on track.

If you are struggling with mental health problems and debt, remember you are not alone. At Spergel, we are here to help and we want to lower your financial stress and improve your mental health. Seeking help for debt relief is the first step to building a more positive future. Our Licensed Insolvency Trustees will walk you through your financial situation and recommend debt relief options to help you start a fresh financial future. Book a free consultation with Spergel today.

Chris Galea

Chris Galea is a Chartered Accountant and Insolvency and Restructuring Professional with over 20 years’ experience as an LIT (Licensed Insolvency Trustee). He is also our resident expert on tax debt, COVID debt, and the region of Saskatchewan, Canada. When he’s not at the office educating people about bankruptcies and consumer proposals, Chris is playing pick-up hockey with his friends, spending time with his family, and learning Spanish!

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