Various Ways Debt Affects Your Life

By Chika


Last Updated: August 9, 2021


Living a well-rounded and fulfilling life is what many of us wish for -but hardly attain. It is human instinct to strive for comfort and security. We want to have a good home, go on vacation, send our kids to the best colleges, and retire happily. One major factor that would enable us to achieve these things is money. Without adequate finances, it is challenging living a satisfying life in this modern age. 

However, a recurring stumbling block that prevents us from actualizing our dream of a fulfilled life is debt. The effect of debt transcends beyond our finances, to other areas of our life. For many people, debt is like an illness that never ends but permeates every aspect of our social being. Debt causes suffering and pain to the debtor and those around him.

This inevitably affects not only how we view our existential realities but streamlines our life choices, thereby affecting the quality of life we live. If debt with its mitigating effects are not handled appropriately, it could also affect the life of our dependents and beneficiaries.

A study revealed that student loans are preventing millennials from achieving milestones in life, such as getting married or purchasing a home, thus making them put their dreams on hold. Debt affects us in more ways than one. Let’s have a look at the various ways that debt affects our lives. 


Debt affects your physical health. 

Debt is retrogressive to our well-being because it induces stress which affects our physical health. According to a 2013 study conducted at Northwestern University, researchers discovered that those who felt overwhelmed by debt had instances of high blood pressure. Findings from the survey further revealed that a higher debt-to-asset ratio was associated with higher perceived stress and depression, worse self-reported general health, and higher diastolic blood pressure. These findings are the first to scientifically link debt to one’s health status, thus laying credence to the assumption that there is a correlation between high debt and poor physical health.


Debt affects your mental health.

There are many studies which have linked debt to mental well-being. A survey conducted in 2015, published in Social Science & Medicine found a link between student borrowing and the mental health of young adults.  The report associated student loan with poor psychological functioning. The conclusions of this study were further validated by a separate study published in the  Journal of Consumer Research which showed that perceived financial well-being is a key predictor of overall well-being. This implies that feeling good about one’s finances is an essential factor in mental health.


Debt affects your social relationships. 

Money is a double-edged sword which can work for or against you. When there is a mountain of debt to handle, this can cause severe strain in our social relationships. Money is one of the vehicles we use to fulfil our social obligations to those around us. When you are not forthcoming in your social obligations, this could create a misunderstanding between you and your loved ones. The fact that finance has been the reason for many relationships have hit the rocks is a testament to how debt can influence our social lives. One in four indebted people say debt has hurt their relationships. Debt is the cause of many arguments between partners, creating a toxic environment of mistrust, communication breakdown and blame.


Debt can deprive you of sleep.

A lot of people lose sleep over their debt situation. According to the American Psychological Association’s 2017 Stress in America survey, one-third of Americans admitted losing sleep over debt, while 62% said their financial state was a common source of stress. Poor sleep patterns have pernicious ramifications for our physical and mental health. It is a sure sign of depression and can lead to heart attack, diabetes or obesity.  


Debt affects your life choices. 

Debt has made people put off achieving life milestones like buying a car, getting married or purchasing a house. Debts like student loans have forced people to enter into low-paying careers in public service so that they can have their debt written off. This is particularly alarming, especially when you consider the fact that the reason why people accumulate student debt is to find their college education which is supposed to give them a shot at a better life. Paradoxically, the prospect of debt has also made people forego college education altogether.

 The typical undergraduate accumulates $30,000 in student loan debt. When this amount is factored in, some people prefer to forego college outright. This implies that they can’t attend grad school and as such, reduce their chances of a high-paying job. Even those that attend college also have their chances reduced because students who leave their undergraduate programs with significant amounts of debt often cannot afford to take out another. This shows that debt may be the most significant factor hampering the progress of millennials. 


Debt affects your financial independence. 

This is the most apparent effect of debt in our life. Being riddled with debt means that you have less to save and invest. The high-interest rates accrued from debt, including the implications for your credit score and debt-to-income ratio reduces your chances of being financially independent. For example, if you have a business idea but lack the funds, your credit score is a factor that lenders use to determine your loan eligibility. If this is low as a result of debt, this implies that you would have no funding for your business idea and by implication, fewer chances of being financially independent. 


Debt could disqualify you from a job. 

Your debt profile could be the reason you did not get that job despite doing being qualified. According to a survey carried out by CNN, companies frequently conduct credit checks as part of background checks on prospective employees, especially if you're applying for a position in the financial industry. Findings showed that 34% of companies surveyed performed credit checks on some job applicants, while 14% said they conducted a credit check on everyone who applies. This implies that if you default in your loan payments, it could be a red flag to your prospective employer. 


Debt can make you forgo your dreams and aspirations

The greatest thing you can deprive someone is hope.  Depriving someone of hope is akin to robbing him of his dreams. Debt affects your financial intendance which in turn influences your life choices and what we choose to prioritize. Sometimes, we are pushed to make choices that do not align with our dreams because we need to repay our debt. We may take up jobs that we do not like, or forgo building careers in areas we find fulfilling for more lucrative ventures which solve our financial problems in the immediate term.

For example, you may want to volunteer to a cause, or spend sometime travelling the world. The constant reminder of debt would make you forgo these plans in search of a job. This way, we have allowed the financial burden of debt to put our dreams on hold, thereby robbing us of our aspirations over time. The longer these dreams are put in hold, the less the probability of achieving them.



Debt can have many impacts on a person's life. It can negatively affect your credit rating score and stop you obtaining types of credit such as a credit card or loan; it can prevent you from buying your dream home or even just renting an apartment. Debt can also significantly impact a person's mental health. The scenario depicted above shows that debt could have pernicious effects than span beyond our finances to affect every aspect of our life, including our future. One sure way to hedge against this is having better control of our finances. This can be achieved through appropriate money and debt management skills.


Photo by Ivan Lapyrin on Unsplash


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