The Psychology of Debt: Post Pandemic Impact

Written by Fiona Elwood

As we begin 2022, it is widely reported that rising living costs are having a financial, emotional and physical impact upon an ever-increasing percentage of the population. With National Insurance set to increase in March and the UK as a whole beginning to feel post pandemic inflationary pressures, one of the UK’s leading Debt Charities, StepChange, have confirmed that one in three people in the UK are struggling to keep up with bills (interestingly this is double the pre-pandemic number). Advice NI, another debt advice charity, has also recently issued a call to ‘encourage everyone to take a look at their finances now to help deal with what’s coming over the next year’. 

In my role as a debt advisory professional, we often meet with people struggling with their finances and in nearly every case the emotional (and physical) side effects of their financial difficulties are clear for us to see.

Whilst most households in Northern Ireland will have mortgages, car loans, personal loans, credit cards along with other essential monthly financial obligations such as childcare costs, It’s important to consider that debt impacts different people in different ways.  One person may suffer severe anxiety owing £1,000 on a credit card whilst another person may consider a credit card bill of ten times that, normal. Debt and financial pressures are not a new issue, but the effects of the pandemic have shone a light on the fact that any amount of debt can have a serious mental health impact. 

The commonly accepted emotional effects of debt include: Depression and Anxiety, Resentment, Denial, Stress, Anger, Frustration, Regret, Shame, Embarrassment and Fear. A recent study by Queen’s University Belfast on the Impact of debt and financial stress on health in Northern Irish households outlined that “neither the size of the debt, the type of debt nor the number of different lenders used affect health whereas the subjective experience of feeling financially stressed has a robust relationship with most aspects of health. In particular, financial stress negatively affects self-care problems, problems with performing usual activities, experiencing pain and feeling anxious or depressed”.

The key advice around resolving financial difficulties is to seek professional help.  When the financial problem is addressed and the appropriate solution is determined and implemented people will often describe more positive feelings such as relief, freedom and accomplishment. The age old saying of a problem shared is a problem halved has never been more true.

We often witness that when an individual begins a process such as bankruptcy or Individual Voluntary Arrangement to resolve the issue, there is a clear sense of relief experienced by the person and it is notably visible. Many of our clients describe the feeling of having a weight lifted from around their shoulders and many describe the day they accept the issue and seek help as being the first day of the rest of their lives. The role of a debt adviser is not the most glamorous of occupations but the ability to make a positive impact on someone’s mental health does make it all worthwhile.

Anyone affected by debt should seek professional advice and also avail of debt counselling to help deal with the mental health impact. StepChange, Advice NI or Christians Against Poverty are just a few of the amazing debt charities providing fantastic support in this area and their work (in an area that often remains unspoken about) should not go unnoticed.