Short-Term Debt Can Depress More Than Your Finances

Overdue bills and credit cards may lead to depressive symptoms, study finds

Thursday, May 14, 2015

THURSDAY, May 14, 2015 (HealthDay News) -- People with short-term debt, such as overdue bills or credit card debt, are more likely to be depressed than those who carry long-term debt through mortgages and other big loans, a new study suggests.

"A 10 percent increase in short-term debt was associated with a 24 percent increase in depression symptoms," said the study's lead author, J. Michael Collins, faculty director of the Center for Financial Security at the University of Wisconsin-Madison.

This suggests, he said, that providing people with protection from debt might lead to mental health benefits.

However, while the study found that short-term debt and depression were associated, it didn't prove one causes the other.

As of February 2015, people in the United States owed $885 billion in credit card debt, according to the U.S. Federal Reserve.

The study authors launched their research to "better understand the non-financial costs associated with consumer debt," Collins said. "There are not many studies that include questions on mental health status, debt levels and changes in debt levels."

This study relied on a national survey of more than 13,000 Americans in 1987-1989 and follow-up interviews of about 10,000 of those people in 1992-1994. The researchers focused on people between the ages of 21 and 65.

The researchers found that 79 percent of households had some debt. And, among households with debt, 62 percent had short-term debt.

People with short-term debt were more likely to have signs of depression, such as feeling sad, lacking motivation, having trouble focusing, sleep problems or unintentional weight changes, according to the study.

"This association was particularly concentrated among 51- to 64-year-old adults, those with a high school education or less, and those who were single or divorced," Collins said.

"Unlike longer-term debt, which is often part of a financial plan and used to obtain something that provides long-run benefits, short-term debt is more costly and may have different psychological consequences, including stress or depression symptoms," he said.

Could a pileup of short-term bills lead to depression that then leads to more trouble paying bills? It's possible, said Nadine Kaslow, past president of the American Psychological Association and a professor at Emory University School of Medicine in Atlanta.

"They may be less able to work hard to pay off debts, or less likely to problem-solve to figure out how to manage different kinds of debt," she said.

As for the big picture, Kaslow said the study shows the importance of considering more than just future bills when you buy things on credit.

"When you incur debt, you need to not only think about the financial implications but also the emotional ones, and maybe even the physical ones," she said, referring to the effects of stress on the body.

As for mental health symptoms, Kaslow said, "when people run up credit card bills, they at least need to be aware this could happen, and it's kind of normal."

Collins said the findings also revealed the potential benefits from consumer protection and debt regulations. "In addition to the direct financial costs of short-term debt that such policies may influence," he said, "they may also indirectly influence other aspects of well-being."

The study was published in the May issue of the Journal of Family and Economic Issues.

SOURCES: J. Michael Collins, Ph.D., faculty director, Center for Financial Security, and associate professor, La Follette School of Public Affairs, University of Wisconsin-Madison; Nadine Kaslow, Ph.D., past president, American Psychological Association, and professor and vice chair, department of psychiatry, Emory University School of Medicine, Atlanta; May 2015, Journal of Family and Economic Issues

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