Economists have the view that debt is just money. It’s a credit on your balance sheet and a debit on somebody else’s. It is nothing more than an accounting artifact — scribblings on a piece of paper. Psychologists, however, know differently. Debt is about way more than just money. It filters into all aspects of your life, affecting how you fundamentally see yourself. In the past, people saw debt as a form of servitude. If you owed money to somebody, you were essentially their slave until you paid it back. In the modern world, physical slavery is illegal. But debts still create feelings of imprisonment, altering the mental landscape in powerful ways.
According to studies, the average person has debts of more than $15,000 on their credit cards. Students graduate from college with more than $40,000. Those that go to the most high-flying schools can often wind up owing more than $200,000. What’s interesting, though, is that different people have different debt tolerances. Some can shoulder six-figure debts with no problems at all, while others can struggle to manage obligations of just $1,000. It all depends on the circumstances and the individual concerned.
In other words, what constitutes insurmountable debt is all in the eye of the beholder. So, what effects can this kind of debt have on the mind? Let’s take a look at some of the evidence.
Many people fear the repercussions that will follow if they get into too much debt. They worry about debt collectors calling them up and bailiffs coming to their homes. They get nervous every time a letter comes through their door. They worry about their utility company shutting off their electricity. For many, losing their home is the biggest tragedy of all.
Debt leads to other fears too. People worry about how their borrowing could disrupt their lives in fundamental ways, forcing them to move to a different area or hampering their relationships. It goes well beyond the amount that they owe in the bank. It includes practically everything in their lives.
Studies indicate that high levels of debt might also be reducing the marriage rate. Research from the University of Wisconsin-Madison found that people are much less likely to marry if their partner is in a lot of debt. Given that most young people have college fees, that’s a considerable factor delaying nuptials in the modern era.
Many people also experience a sensation of anger that they allowed themselves to get into debt in the first place. Whatever the original justification for borrowing somebody else’s money, it no longer seems worth it. The distress of being in debt outweighs whatever benefits it initially brought.
A lot of people can also feel angry because the burden of debt feels so disproportionate to the services received. Colleges, for instance, charge tens of thousands of dollars per year in tuition and yet offer relatively little in return. Graduates compare the fees they paid to the value of their own time and find themselves wondering how it could possibly cost so much. Even working full time in a professional career, they still can’t pay for a year’s worth of tuition per year.
There’s also the fact that student loan repayments deny students other opportunities in their lives. For instance, they can’t buy a decent home because they have to pay massive amounts of cash out to the student loan company. Frustration can start creeping in as the years pass by. Students see a decade roll by, and they still haven’t got a handle on the money they owe. It feels like it will never disappear, despite the fact that they’ve been working hard to clear it for years.
According to the Leinart Law Firm, there are ways to deal with insurmountable debts, so people don’t have to remain angry about their situation forever. Sometimes, lenders make mistakes and put too much pressure on borrowers. Either they offer too much money or try to collect repayments using illegal methods.
Here’s another negative emotion that tends to go along with insurmountable debt: shame. People often try to keep their debt issues private, worrying about how it might reflect on their character or values. They fear what other people will think. They chastise themselves for their lack of personal dignity. How could they have allowed themselves to get into this state?
There are two stories you can tell yourself about debt. The first is that we live in a culture where debt is almost inevitable. If you want a decent career, for instance, you have to go to college and get a degree that typically involves getting into a lot of debt. Likewise, if you want to buy a car or go on holiday, your only option is to take out a loan of some description. That’s the way the modern financial system works.