Debt & Mental Health: Understanding the Connection

If you live in Canada, it may not surprise you that financial stress and mental wellness are closely linked. High levels of inflation, resulting in increasing food and gas prices, are wreaking havoc on Canadian’s finances and mental well-being. 

In fact, 48% of Canadians say they’ve lost sleep because of financial worries, and 40% of Canadians reported that their debt negatively affects their mental health. So, if you’re struggling with financial stress, it’s helpful to know that you’re not alone and you have a few options.

How debt can impact your mental health

Debt doesn’t exist in a vacuum, and it can affect your mental health in many different ways. 

When interest on your debt continues to grow and the bills keep coming, it can be hard to see a way out. And, seemingly endless calls from creditors (the companies you owe money to) and collections agencies are anxiety-inducing and can make you feel like you’re trapped in a never-ending cycle. 

“You can hear it in people’s voices – debt can really affect so many aspects of your life and mental state, as well as your self-esteem, health, and relationships,” said Leah Needham, a Debt Counsellor at Farber Debt Solutions. 

A professional of 15 years in debt solutions, Needham works with people from all different backgrounds for a variety of reasons. She helps clients who have filed a Consumer Proposal, and works with them to create a debt repayment plan. She has also said her client’s change from the first meeting to the last is one of the most rewarding parts of the job. 

“Helping people get their debt behind them and move in a positive direction gives them a sense of control back, and you can absolutely see the change in them. You can see their confidence coming back,” said Needham. 

How to deal with debt and stress 

As stressful as debt can be, it’s more common than many realize. According to Yahoo Finance, the inability to pay off debt is now on the upswing in Canada, with millennials leading the pack. Millennials accounted for 49% of total insolvency filings in Ontario, even though they only make up about a quarter of the 18-and-over population. 

If you’re in a situation where your debt is too much to manage, know that it’s okay to ask for help. Speaking with a debt professional for guidance can help you understand the options available to you. One of those options is a Consumer Proposal, which is regulated by the Canadian Government and can only be submitted on your behalf by a Licensed Insolvency Trustee (LIT). A Consumer Proposal can reduce your debt by up to 80% of what you owe and can actually afford – and it starts with a meeting.

“In the beginning, there’s a little bit of apprehension about what’s the right thing to do, but once the client has signed the documents with respect to a Consumer Proposal or bankruptcy, you can sense that the burden has been released, and they can move forward with their lives,” Needham said. “Becoming debt-free can be an extremely empowering experience.”

If you’d like to speak to one of our LITs, click on the free consultation button below, or contact us today. You can also check out our top four tips to improve your financial situation and mental well-being.

The bottom line 

Financial stress can feel suffocating at times, but you have options, and you don’t need to deal with debt all on your own. For over 40 years, Farber Debt Solutions has helped over 100,000 Canadians develop a healthier relationship with money and find peace again.

“We hear it so many times, people say to us, ‘I wish I’d done this sooner, and I wish I knew more about this,’” said Needham. “It’s a really positive experience to help someone to be able to take control of their life again.” 

If you’re feeling stressed or overwhelmed about your personal finances, contact us today. We’re here to listen, and give you the tools to help you start feeling better about your money.