Being in debt and using credit is unavoidable in this day and age, especially as our credit history depends on us using credit in the first place, which sucks. But it’s easy to feel out of control when it comes to managing our debt, and when that happens, it can drastically affect our quality of life. This article will explore this side of debt and suggest a few ways to manage such situations.
What Is Debt?
For an article on debt, it seems like it’d be a good idea to first make sure we’re all on the same page when it comes to what debt is. Simply put, debt is usually money that needs to be repaid to a person, government, or organisation that loaned it to us in the first place (The Money Charity, 2025). This generally comes with an additional cost for the privilege of being in debt to them.
Credit is another term you might be familiar with when it comes to debt, as most of you likely have a credit card or two. But credit can be defined in two different ways. Waugh (2025) kindly outlined those two definitions for us. One definition is how it’s used to refer to our ability to borrow money and repay that balance, i.e. some form of credit agreement. The other definition is how credit refers to how it’s a term to note our individual borrowing history. The latter is why we have credit scores.
Annoyingly, banks, other lenders, and many services, like our power company, use credit scores to decide how likely we are to pay back the money we owe or the likelihood we can afford to maintain the service they provide. Our credit score is a snapshot of our financial history (Hamilton, 2025). Thus, it’ll have a record of if we’ve missed paying our bills, gone over our credit limit, broke the terms of a credit agreement, and stuff like that (Royal Bank of Scotland, n.d.).
Each fact about us gives us points, and that accumulation of points is what makes our credit scores (Citizens Advice, n.d.). This not only includes our credit history but also things like being on the electoral roll (Royal Bank of Scotland, n.d.), at least in the UK.
Fortunately, even if all our credit and debt history is captured in our credit score, the one debt that won’t be is the informal debts we may owe our friends, but paid back later than planned. So if your mate lent you a tenner on a night out, and you said you’d pay them back tomorrow, but it took you over a month, that debt won’t affect your credit score (The Money Charity, 2025).
Lastly, arrears. According to Dictionary.com, arrears mean we’re in the state of being behind or late on our fulfilment of payment, thus making it overdue. For example, rent arrears when we’re two months behind in paying our rent.
How Debt Affects Our Quality Of Life
The main problem is that most people with debt problems are those who are low-income earners, lack a financial buffer, and may only be able to get a load via organisations with inhumane interest rates (Dackehag, Ellegård, Gerdtham, and Nilsson, 2019).
According to Fitch, Chaplin, Trend, and Collard (2007), one in four people with mental health issues in the UK are in debt or arrears, which is three times the rate of those without mental health issues. Now the question is, which comes first for most people? The debt, which leads to mental health decline, or the mental health issues which lead to debt growth?
Support for this comes from Hojman, Miranda, and Ruiz-Tagle (2016) and their large sample of 10,900 Chilean households. They were able to use a longitudinal dataset with detailed health and balance sheet information for a three-year period. With that information, they could study the relationship between debt trajectories and mental health.
They found that depressive symptoms were highest for those who transitioned from moderate to high levels of debt and for those trapped in persistent debt. They also found that debt-related depressive symptoms vanished as debt levels fell, which makes sense.
Further support for this comes from Dackehag, Ellegård, Gerdtham, and Nilsson (2019), who state that when people were in arrears, it had negative consequences on that person’s mental wellbeing. Noting that it caused those people a high prevalence of anxiety and depression.
A study by Kim and Chatterjee (2021), which examined young adults and the factors associated with their mental health, found that the amount of loan and credit card debt had a negative effect on their mental health.
The same is an issue for medical students and the debt associated with their education, which, according to Pisaniello et al. (2019), caused the students stress and led to unhealthy coping strategies such as alcohol use.
What we might not always notice is the harm our debts can cause to our relationships, and I’m not talking about as a direct consequence of borrowing money off a loved one and not being able to pay it back. When we’re having prolonged issues with debts, we often stop doing things with our social support network. Because we have to keep saying “no” to requests to hang out, we can become isolated (Fitch, Chaplin, Trend, and Collard, 2007).
Simply put, debt messes with our heads. And when it messes with our heads, there’s always the risk of it causing a full-blown crisis (Fitch, Chaplin, Trend, and Collard, 2007).
A study by Bond and D’Arcy (2021) found that 45% of people with what is known as ‘high-cost credit’ had experienced suicidality. By ‘high-cost credit’, they mean payday loans, store cards, and overdrafts. I’ve been trapped in an unauthorised overdraft debt trap because of the charges myself.
Managing Debt: What Can Be Done
Awareness
The first step is to become aware of the problem and then acknowledge the problem (The Bank Workers Charity, 2025). It’s easy to try to bury our heads in the sand so we can pretend like the problems don’t exist, but that doesn’t get rid of the problem. Ignoring those letters from lenders also won’t help, and the longer we ignore our debt problem, the harder it can be to find a way to manage it. The last thing we want is bailiffs knocking on our door and taking everything or being kicked out on the street.
Therefore, try to stay on top of your finances as much as possible, and if you notice problems with debt developing, take steps to get ahead of it. There are many charities and other organisations that exist solely for this purpose, so make use of them. Remember, debt relief, like what these services can help you get, will have a positive effect on our mental health (Hojman, Miranda, and Ruiz-Tagle, 2016).
Food banks
In the UK, we can access local food banks to help make sure we can feed ourselves and reduce the financial burden that comes with buying food (The Bank Workers Charity, 2025). I’m sure other countries have something similar. It’s in no way an ideal situation that rich nations like the UK have to have food banks, but that’s the world we live in. Make use of everything you can when you can.
Avoid isolation
Although we may think we have to stop doing things with our social support network as a cost-saving measure, that isn’t the case. What you do when you hang out might have to change, but that’s not the same thing.
Don’t let embarrassment and shame stop you from letting your social support network know what you’re struggling with. Any of your loved ones worth keeping in your life will be more than happy to hang out with you in ways that accommodate your situation. If they don’t, then maybe they shouldn’t be part of your social support network.
In fact, it’s been shown that those struggling with the stress of debt benefit from engaging in social activities (Kim and Chatterjee, 2021).
Contacting the right people
There are many organisations that are designed solely to help us get our debts under control, which is why it’s important to be aware of these even if we don’t have problem debts ourselves. The ability to signpost people to the correct debt support is very useful (Fitch, Chaplin, Trend, and Collard, 2007). I have a list of debt information ready to give to my clients when such situations arise, and it does arise quite frequently.
Spending habits
As I’ve written about in another article, retail therapy can become problematic if we let it. Therefore, it can be useful to review our spending habits (Lewis and Keefe, 2025) as part of a journaling exercise. Look at the reasons why we spend, what might trigger a spending habit like retail therapy, what emotions we experience with our spending, and whether we are living within our means or if we’re trying to keep up with the Joneses.
Therapy
If we need some extra support and help with coping with our debt, or the decline in our mental health as a result of that debt, then speak to a therapist.
The little things
There are several things that can be done to help bring debt down, which I’ve talked about before in my cost-of-living crisis (greed) article. I gave advice, like not leaving things on standby, batch cooking, applying for grants, etc. They all add up.
Credit unions
The UK is lucky to have alternatives to the usual places to get loans, which are often more reasonable than most options available and are kinder to those of us who may not have a great credit score. It can be worth checking out what local credit unions exist near you and if they’ll be able to help. You can find information on credit unions on the Citizens Advice website, which you can find by clicking here.
Financial management skills
One good way to manage debt and to prevent out-of-control debt is to improve our financial management capabilities. There are many places that offer free education on this, from the basics of balancing your accounts, keeping a budget, and maths skills. Any perceived improvements in our financial skills have also been shown to benefit our mental health (Kim and Chatterjee, 2021).
Summary
Debt is something people experience in one form or another, whether it is student debt, using a credit card, buying a home, or buying a car. While that debt is to be expected nowadays, that’s only ok if it’s debt we’re able to manage. Then, there’s also the problem of experiencing debt through no fault of our own. Whatever the reason, debt can become problematic for us if it’s swinging above our heads like the sword of Damocles.
What’s important is that we don’t engage in avoidance behaviours when this happens, or things are likely to get far worse. There are many options available to help us get into a better place with our debt. Take advantage of them.
If you’d like to learn more about my personal experience with debt and how it damaged my mental health (My Experience Of Living In An Overdraft Debt Trap), then check out my companion piece by clicking here.
As always, leave your feedback in the comments section below. Also, please share your experiences with managing debt in the comments section below. Don’t forget, if you want to stay up-to-date with my blog, you can sign up for my newsletter below. Alternatively, click the red bell icon in the bottom right corner to get push notifications for new articles.
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References
Bond, N., & D’Arcy, C. (2021). The state we’re in: Money and mental health in a time of crisis. Money and Mental Health Policy Institute. https://www.moneyandmentalhealth.org/wp-content/uploads/2021/11/The-State-Were-In-Report-Nov21.pdf.
Citizens Advice. (n.d.). How lenders decide whether to give you credit. Citizens Advice. Retrieved from https://www.citizensadvice.org.uk/debt-and-money/borrowing-money/how-lenders-decide-whether-to-give-you-credit.
Dackehag, M., Ellegård, L. M., Gerdtham, U. G., & Nilsson, T. (2019). Debt and mental health: new insights about the relationship and the importance of the measure of mental health. European Journal of Public Health, 29(3), 488-493. Retrieved from https://doi.org/10.1093/eurpub/ckz002.
Fitch, C., Chaplin, R., Trend, C., & Collard, S. (2007). Debt and mental health: the role of psychiatrists. Advances in Psychiatric Treatment, 13(3), 194-202. Retrieved from https://www.cambridge.org/core/services/aop-cambridge-core/content/view/FFEEE1E7043153444C1B5FFE6F73EFB6/S1355514600003837a.pdf/debt_and_mental_health_the_role_of_psychiatrists.pdf.
Hamilton, R. (2025, March). What is a good credit score?. MoneySavingExpert. Retrieved from https://www.moneysavingexpert.com/credit-cards/what-is-a-good-credit-score.
Hojman, D. A., Miranda, Á., & Ruiz-Tagle, J. (2016). Debt trajectories and mental health. Social Science & Medicine, 167, 54-62. Retrieved from https://doi.org/10.1016/j.socscimed.2016.08.027.
Kim, J., & Chatterjee, S. (2021). Financial debt and mental health of young adults. Journal of Financial Counseling and Planning. Retrieved from https://files.eric.ed.gov/fulltext/EJ1323085.pdf.
Lewis, M. & Keefe, J. (2025, February). Mental Health & Debt. MoneySavingExpert. Retrieved from https://www.moneysavingexpert.com/credit-cards/mental-health-guide and https://www.moneysavingexpert.com/content/dam/mse/downloads/mentalhealthguide-May-2024.pdf.
Pisaniello, M. S., Asahina, A. T., Bacchi, S., Wagner, M., Perry, S. W., Wong, M. L., & Licinio, J. (2019). Effect of medical student debt on mental health, academic performance and specialty choice: A systematic review. BMJ Open, 9(7), e029980. Retrieved from https://bmjopen.bmj.com/content/bmjopen/9/7/e029980.full.pdf and https://bmjopen.bmj.com/content/9/7/e029980.full.
Royal Bank of Scotland. (n.d.). Credit scoring guide: What is a good credit score?. Royal Bank of Scotland. Retrieved from https://www.rbs.co.uk/borrowing-needs/credit-scoring-guide.html.
The Money Charity. (2025, January). What Is Debt?. The Money Charity. Retrieved from https://themoneycharity.org.uk/advice-information/what-is-debt.
The Bank Workers Charity. (2025, February). Guide to managing debt. Bank Workers Charity. Retrieved from https://www.bwcharity.org.uk/guide/taking-control-of-debt.
Waugh, E. (2025, February). What is credit?. Experian. Retrieved from https://www.experian.com/blogs/ask-experian/credit-education/faqs/what-is-credit.
Very informative post. I’ve always been very risk averse and do not like being in debt. It is funny how your body feels it.
Thanks for commenting
Great post. Debt is terrifying and all too easy to slide into, especially with predatory practices and just the state of existing today. Thanks for sharing these resources!
Yeah. Sometimes it can just be one little thing, and then it snowballs. Thanks for commenting
Debt ruins life. Syukur alhamdulillah, so far I’m able to manage my spending well. I’m still free from debt. Thank you for this reminder.
Thanks for commenting
Debt can be such a slippery slope. I think it’s really easy to fall into. I had a credit card when I was in my early twenties and it was honestly one of the worst things I could have done. Although like you say, to get good credit, you have to get a credit card or some form of payment plan. It’s so annoying. We should be more open about debt, because I bet more people than you think are suffering in silence.
Claire
http://www.clairemac.co.uk
Statistics would back you up in that, with the majority of people carrying some level of debt, and often the combined personal debt of some Western countries are staggering high
Dealing with financial debt is never easy! I have been trying to be more diligent in how I spend our money.
I need to rain mine in again myself. Thanks for commenting
Really great post and so helpful these days especially since there is a lot of uncertainty in the markets being financially educated especially when it comes to debt is so important. Thanks for discussing this!