Being in control of your finances, regardless of your income level, may help ward off negative mental health symptoms such as depression and anxiety. That is one conclusion suggested by a new study led by a professor at Johns Hopkins University.

The study, published in the American Journal of Epidemiology, found a correlation between higher credit scores at the ZIP code level and lower rates of depression and anxiety symptoms among residents in those areas. In other words, people living in areas with stronger average credit scores were less likely to report those symptoms.

There is no magic formula to fix your credit or your mental health. However, what they have in common is that understanding the problem and working on ways to address it can go a long way toward making you feel more in charge of the situation.

How the survey was conducted

The study was based on mental health survey data from more than half a million adults in Pennsylvania. Key to the study were two questions from the Carnegie Mellon University COVID-19 Trends and Impact Survey, conducted in partnership with Facebook:

• In the past five days, how often have you felt depressed?
• In the past five days, how often have you felt nervous, anxious, or on edge?

Researchers matched responses to these questions with the average credit scores of the respondents’ ZIP codes. This showed that people in higher-credit-score ZIP codes generally reported fewer symptoms of depression or anxiety than those in areas with lower scores.

An average of 10.9% of adults in high-credit-score areas reported symptoms of depression, compared with 13.7% in lower-score areas. Similarly, an average of 14.9% of adults in high-score areas reported anxiety, compared with 17.4% in lower-score areas.

Of course, there are many factors besides credit conditions that can contribute to mental health struggles. Notably, people living in high-credit-score areas still reported symptoms of anxiety and depression. However, the numbers suggest that when financial pressures are reduced, it may help improve overall well-being.

Living within your means appears to be key to happiness

While it is true that higher-credit-score ZIP codes tend to be wealthier, the study adjusted for ZIP-code-level income, unemployment, education, and other factors. The pattern linking credit score and mental health remained even after those adjustments.

This is important because it is possible to maintain a good credit score despite having a modest income.

A Credit Sesame survey found that people with higher incomes tended to have higher credit scores than those with lower incomes. Undoubtedly, making more money makes making ends meet and paying on time more manageable.

Significantly, even among people making less than $50,000 a year, there were more people with good to excellent credit than with poor or fair credit. The takeaway is that you do not have to let your income define how you manage your finances – or your happiness.

The chicken-egg relationship

Looking at the results of the new study does bring up questions about the nature of the relationship between credit and mental health. It boils down to a chicken-or-egg question: which comes first, credit challenges or symptoms of anxiety and depression?

Credit difficulties may lead to feelings of stress or helplessness. At the same time, mental health struggles can make it harder to stay on top of financial responsibilities. It may be that credit issues and mental health concerns reinforce one another, making it especially important to address both when possible.

Taking control of your credit history can be empowering

If you frequently experience anxiety or depression, it is important to consider seeking help from a qualified mental health professional. Support can benefit many areas of life, including your financial situation.

At the same time, if you have credit challenges, taking steps to address them may help you feel more empowered and less overwhelmed.

It may take time to see results. But even just having a plan and working on it can give you a greater sense of control over your financial life, which might contribute to a better sense of well-being.

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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.

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Credit card balances inch upward despite dip in total consumer debt

Consumer debt declined at a seasonally adjusted annual rate of 0.2% in February 2025. While modest, this marked only the fourth month of decline since 2020. The pullback in borrowing may signal rising consumer unease about the economy. However, revolving debt, primarily consisting of credit card balances, ticked up at a seasonally adjusted annual rate of 0.1%. In contrast, non-revolving debt, such as installment loans, fell at a rate of 0.3%. Revolving debt has outpaced non-revolving debt in recent years, partly due to the higher interest rates typically associated with it. See details at FederalReserve.gov.

Signs of distress emerge in credit card repayment trends

The Federal Reserve Bank of Philadelphia reported that recent credit card data reveals growing signs of “consumer distress.” The percentage of credit card accounts 90 days or more past due has reached its highest level in the 12 years the Fed has tracked this metric. Even many consumers who stay current on payments find it challenging to keep pace. The share of customers making only the minimum monthly payments is also at a record high, making it harder to reduce outstanding balances. With high interest rates and ongoing charges, debt balances may continue rising for those making minimum payments. See article at PYMNTs.com.

Debit and check fraud drive most financial losses

A Federal Reserve survey of risk officers found that debit cards accounted for the largest share of fraud-related losses reported by U.S. financial institutions last year, making up 39%. Check fraud followed closely at 30%, underscoring the vulnerability of checking accounts. In contrast, credit card fraud accounted for just 5% of losses. While debit cards lead in total fraud losses, check fraud is the fastest-growing category, with attempted check fraud rising by 10% last year. See article at ABA.com.

Tariff fears ripple across stocks and bonds alike

Typically, U.S. Treasury bonds serve as a safe haven when stocks falter. But the global anxiety over tariffs has driven bond prices down as well. One financial firm described the trend as a “sell America trade,” reflecting concerns about U.S. isolation from the global financial system. Bonds are particularly sensitive to inflation, and fears that tariffs could drive inflation higher are fueling the ongoing bond market sell-off. See article at Reuters.com.

Temporary tariff pause brings relief and more questions

In a new tariff development, President Trump announced a 90-day delay in implementing reciprocal tariffs for all countries except China. The stock market initially surged in response but gave up gains the following day. The future remains uncertain once the pause ends, leaving investors wary and businesses struggling to navigate supply chain decisions amid ongoing tariff unpredictability. See article at Yahoo.com.

Consumer inflation eases slightly in March 2025

The Consumer Price Index (CPI) declined by 0.1% in March, though it remained 2.4% higher compared to a year earlier. Core CPI, which excludes food and energy prices, rose by 0.1% for the month and 2.8% over the past 12 months. March prices did not yet reflect the effects of new tariffs and may have been influenced by growing concerns over a slowdown in economic activity. See CPI report at BLS.gov.

Producer prices decline, easing inflation concerns

The Producer Price Index (PPI), which had been rising recently, fell by 0.4% in March 2025. This lowered the year-over-year increase to 2.7%—still above the 2.1% low from August and September last year, but an improvement from February’s 3.2%. The PPI will be an important index to monitor if new tariffs are implemented. See PPI report at BLS.gov.

Mortgage rates hold steady amid broader market swings

While other interest rates, such as bond yields, have been volatile in recent weeks, mortgage rates have remained notably stable. The average 30-year mortgage rate dipped by two basis points last week to 6.62%, marking six straight weeks within a narrow 5-basis-point range. The 15-year rate also held steady at 5.82% for the second week in a row. Although mortgage rates remain elevated compared to late September 2024 lows, the recent consistency offers some predictability for prospective homebuyers. See rate data at FreddieMac.com.

All weekly news headlines from Credit Sesame

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Economic ups and downs have been making headlines lately, with new tariffs, market swings, and rising costs putting extra pressure on household budgets. When inflation climbs or interest rates shift, your credit can be affected, sometimes in ways you don’t expect. Staying ahead of these changes starts with understanding how they might reach your wallet.

Managing credit during economic uncertainty is about more than just paying bills on time. It means watching how you borrow, spend, and protect your financial future, even when the headlines overwhelm. You can employ practical strategies to help keep your credit steady, no matter what the economy throws your way.

1. Know where your credit stands

The first step in protecting your credit is understanding your current position. Check your credit score regularly and review your credit reports for errors or unexpected changes. During periods of economic uncertainty, catching signs of fraud or reporting mistakes is useful.

Credit monitoring tools can help you stay on top of changes that might impact your score.

2. Track your spending patterns

When prices rise or income becomes less predictable, your budget might shift without you realizing it. Monitoring your spending helps you spot trouble areas before they lead to high balances or missed payments.

Use a budgeting app or spreadsheet to keep tabs on where your money is going and identify spending that can be trimmed or paused during tight times.

3. Keep credit utilization low

Credit utilization — the percentage of available credit you use — is a major factor in your credit score. Even if you make all your payments on time, high balances can still lower your score.

Aim to use less than 30% of your available credit across all cards. If possible, pay down balances strategically to reduce your utilization and free up credit in case of emergencies.

4. Avoid taking on new debt unless necessary

Lenders may tighten requirements or increase rates during uncertain times, making credit more expensive. Applying for new credit also triggers a hard inquiry, which can cause a temporary dip in your score.

If you don’t need new credit right now, it may be better to hold off. Instead, focus on managing existing accounts responsibly.

5. Set up automatic payments to avoid mistakes

One of the easiest ways to protect your credit score is to pay every bill on time, every time. Even one missed payment can hurt your score and stay on your report for years.

Consider setting up automatic payments or calendar reminders for all your accounts. This small step can prevent unnecessary damage, especially when your financial stress level is high.

6. Stay in touch with lenders

If you’re struggling to keep up with payments, don’t wait until you’re behind. Reach out to your lenders or creditors as soon as possible. Many offer hardship programs, forbearance options, or temporary adjustments that can keep your account in good standing.

Being proactive may help preserve your credit and reduce the long-term financial impact of a missed payment.

7. Watch for changes in interest rates

Economic instability often leads to fluctuating interest rates, especially on variable-rate credit cards and loans. If your interest rate increases, your monthly payments might rise too, even if your balance stays the same.

Check your statements for interest rate changes, and consider transferring balances to lower-rate options if available. You can compare options to see if you can reduce your interest costs.

8. Keep older credit accounts open

The length of your credit history matters. Even if you’re not using an old credit card, closing it could shorten your credit history and increase your utilization ratio, both of which may hurt your score.

Unless a card has high fees, keeping it open (and active with small, regular purchases) can support your score during unstable times.

9. Protect your identity and accounts

Fraud and identity theft often spike during periods of economic stress. Criminals may take advantage of distracted consumers or overwhelmed systems.

Monitor your credit accounts for unfamiliar charges and consider setting up alerts for suspicious activity. Tools can help detect fraud so you can respond quickly, before it impacts your credit score.

10. Make a backup plan for credit access

If the economy continues to worsen, access to credit could shrink. Banks may lower credit limits, tighten approval standards, or close inactive accounts.

To stay prepared, consider building an emergency fund — even a small one — and evaluating your credit options. Know which cards or lines of credit are most stable, and avoid sudden changes that could spook lenders or impact your score.

How to manage credit during economic uncertainty

Staying calm and focused during economic uncertainty can feel challenging, but your credit doesn’t have to suffer. You can protect your score through even the roughest economic waters by monitoring your accounts, staying ahead of payments, and avoiding high-risk financial moves.

Credit monitoring tools, personalized tips, and insights can help you make confident decisions when the economic outlook is unclear. Take small steps now to secure your credit health and keep your financial options open for the future.

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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.

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Swiping a card to cover everyday expenses can feel harmless—even helpful. But when credit card convenience quietly becomes a financial habit, it can lead to mounting balances, rising interest costs, and long-term consequences.

This gradual shift, known as credit creep, often goes unnoticed until the damage is done. A few purchases here and there, a few minimum payments later—and suddenly, you’re in a cycle that feels impossible to break.

That’s why it’s important to have a complete view of your credit score and what influences it—how your credit usage, payment history, and debt levels all work together to shape your overall financial health.

The slow slide into credit dependency

Credit cards were designed for short-term borrowing and convenience—not long-term survival. Yet more Americans are relying on them to pay for essentials like groceries, gas, and bills.

A 2024 report from the Federal Reserve Bank of New York showed credit card balances reaching a record $1.13 trillion. At the same time, delinquency rates are rising—especially among younger adults and lower-income households.

Inflation and stagnant wages contribute to credit creep, but so does a subtle behavioral shift. What starts as temporary help can slowly evolve into a financial dependency.

Minimum payments, maximum problems

Making only the minimum payment keeps your account current but does little to reduce your balance, masking the severity of your debt.

Minimum payments primarily cover interest charges, allowing the principal balance to persist for years. For example, with an average credit card interest rate of approximately 22.60% , a $5,000 balance could take over 17 years to repay if only minimum payments are made, resulting in substantial interest paid over time.

This prolonged repayment period can lead to debt fatigue, where the lack of noticeable progress undermines financial confidence and decision-making.

How credit card convenience affects your credit

One of the biggest issues with credit card convenience is rising credit utilization—the ratio of your card balances to credit limits. Higher utilization often means a lower credit score.

Even if you’re making on-time payments, maxed-out cards can damage your credit profile. Missed payments make things worse and can stay on your credit report for up to seven years.

To monitor changes in your score and catch issues early, consider using Credit Sesame’s free credit monitoring tools.

The illusion of control

Credit creep happens quietly. Swiping feels easier than handing over cash, and the real cost—interest—doesn’t show up until later. That makes it easy to underestimate how much you’re borrowing.

You may feel in control, but your balance says otherwise. As interest builds and payments remain flat, your financial flexibility starts to vanish.

Signs credit card convenience is becoming a problem

If you’re not sure whether credit creep is affecting you, here are a few red flags:

• Using credit cards to cover everyday essentials.
• Feeling nervous about checking your balance.
• Paying only the minimum each month.
• Shuffling debt between cards or relying on cash advances.
• Losing track of how much you owe across multiple accounts.

You can get a full view of your credit activity by checking your report at AnnualCreditReport.com.

Strategies to reverse credit creep

If you’re starting to feel trapped, you’re not alone—and there are ways to regain control:

• Press pause on new charges. Use cash or debit while you reassess your budget.
• Build a bare-bones budget. Prioritize essentials and redirect extra funds to pay down debt.
• Earn extra income. A temporary side hustle can help you make larger payments.
• Refinance high-interest debt. Balance transfer cards or personal loans may lower your rate.
• Negotiate with your card issuer. Ask for a lower rate or hardship assistance if needed.

Why credit card debt hits harder over time

The longer debt lingers, the more it costs. High-interest cards can quietly add hundreds—or even thousands—of dollars in finance charges over time.

This growing burden affects more than your wallet. It can make it harder to qualify for lower-cost credit, increase insurance premiums, or affect housing opportunities.

Don’t let convenience become a crisis

Credit cards can be useful tools—but when convenience turns into dependency, the consequences grow quickly. Credit creep is a real risk, especially in today’s economy, and it often leads to financial strain before people even realize it.

Recognizing the signs early and taking proactive steps can help you avoid a demoralizing debt disaster—and reclaim your financial freedom.

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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.

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Panic Day, Thursday, March 9, 2023, is upon us. Far from an official or nationally recognized holiday, this date on the calendar is one of the copyrighted Wellcat Holidays invented by Thomas and Ruth Roy. It’s meant to be a day when we acknowledge the stresses of everyday life, including financial pressures and economic anxiety, in the hope that we can better cope with these challenges.

“Panic day is a date designated on the calendar to remind people to take a moment to acknowledge and manage any feelings of panic, anxiety, or stress they may be experiencing,” says Daniel Colston, CEO of Upward Financial Planning. “It’s an opportunity to bring awareness to the importance of mental health and encourage people to take proactive steps to address any issues they may be facing.”

While you don’t have to carry around a paper bag to hyperventilate in on March 9, and you won’t find a Panic Day Hallmark card to give to a friend, the second Thursday in March this year can be an opportune time to acknowledge an attempt to resolve any feelings of financial overwhelm. Acknowledging that you may be experiencing financial tension is an important first step; the pros concur.

“Talking about or dealing with financial challenges can be sensitive. In fact, most Americans would rather divulge details about their sex lives than their financial lives,” Colston adds. “With something so sensitive and central to our lifestyles, it’s understandable how such a topic would be shrouded in anxiety for many.”

Behavioral neuroscientist Katherine Grill, PhD, the CEO/co-founder of Neolth, explains that any type of chronic stress can be detrimental to mental health.

“Financial stress is especially dangerous because it’s a threat to our basic needs – we go into panic mode when we don’t have money for housing, food, and other necessities,” says Grill. “When stress is prolonged for six weeks or longer, the higher level of circulating stress hormones like cortisol affects our brain. It’s a maladaptive form of neuroplasticity. That means financial stress literally causes the brain to change and how it is built and how it functions, leading to heightened anxiety, panic attacks, depression, trouble sleeping, and more.”

Financial fears can also cause relationships to suffer, impede our performance at work, and result in social withdrawal, weight loss or gain, and unhealthy coping practices like using illicit drugs or alcohol.

The American Psychological Association reports that money is the leading source of stress for Americans. Additionally, 84% of Americans feel that financial stress affects their mental health, based on a recent study by Northwestern Mutual. Among those in debt, 46% also have a mental health problem, and people are over four times more likely not to pay back their debt if their mental health is poor, according to the Money & Mental Health Policy Institute. Furthermore, two in three students have anxiety about their finances, and 86% of students say debt worsens their mental health, per Trellis Research.

“Keep in mind that good mental health is essential for good financial decision-making. When we are under stress, our ability to make sound financial decisions is compromised. We may be more likely to make impulsive decisions or take unnecessary risks. For these and other reasons, it’s important for people suffering from financial stress to seek help from mental health professionals, financial advisors, or other support systems like family and friends,” recommends Justin Gasparovic, a behavioral psychologist and personal development expert.

Ignoring the problem only puts you at risk for continued financial difficulties and worsens your mental health. Many insist that turning to experts for assistance is your best move.

“A therapist can help, especially if you are experiencing panic attacks, hopelessness, thoughts of self-harm, or an inability to go about your daily routine,” Grill continues. “A peer community, like a secure online forum or talk support group, is beneficial because you can get acknowledgment that you are not alone. And a financial expert can work with you to get a plan in place to manage your finances.”

Grill says using some combination of problem-focused and emotion-focused coping is an effective way to manage financial stress. The former works to address your financial situation, such as by sitting down with an expert to revise your budget and expenses. The latter aims to manage negative emotions related to finances – for example, using self-guided relaxation techniques or getting emotional support from a friend.

Arming yourself with financial education is another tactic that can decrease money-related stress and anxiety.

“Some great places to start are personal-finance channels on YouTube, industry-leading books, and blogs. Just be sure the purpose of the content is to educate you on wise financial decisions and not to sell you on a specific financial product or solution,” advises Colston. “The most helpful content will teach you how to create a budget, prioritize debt repayment, build an emergency fund, seek professional help if necessary, and practice self-care like exercise, healthy eating, and getting enough sleep.”

If you are suffering from financial stress and need help, let Panic Day inspire you to explore these resources:

• If you have suicidal thoughts or feelings, call 988 on your phone or visit https://988lifeline.org.
• Consult with the Foundation for Financial Planning.
• Learn if you qualify for financial benefits from the US government.

If you feel overwhelmed by debt, consult the Financial Counseling Association of America and the National Foundation for Credit Counseling.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

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Financial stress can be damaging to our mental and physical health. Persistent money worries can lead to chronic stress, which can cause depression. This can have a devastating, snowballing effect on our minds and bodies.

Ideally, you want to address issues before things get too bad. But it’s never too late to get help both through practical measures you can do yourself and through financial and mental health counseling.

Financial Stress is a HugeProblem in America

An October 2021 study published by the American Psychological Association (APA) found that “72% of Americans reported feeling stressed about money at least some time in the prior month.” When that survey was conducted, money worries largely stemmed from the COVID-19 pandemic and its disruption of the economy. In May 2022, inflation is is running at a 40-year high, something that can stretch family budgets to breaking point.

The study also indicated that consumers with variable-rate debt faced higher interest rates as the Federal Reserve looked set to hike rates aggressively. Meanwhile, economists polled by Reuters reckoned there was a 40% chance of a recession in either 2022 or ‘23. In this financial environment, there is plenty to be stressed about.

How Financial Stress Can Affect You Physically

It’s entirely sensible to be worried about these things. Financial stress, just like work stress, can be a motivator – driving you to address the issues you face. However, “chronic” (long-term) stress can seriously impact your health.

Linda Gallo is a professor of psychology at San Diego State University. And she told the APA:

“ … humans are actually equipped to deal with stress and stress can be beneficial, at least initially, because it allows us to avoid danger and face challenges. But, stress becomes unhealthy when it is unrelenting and people do not experience opportunities to recover. So, in these cases stress can lead to physical problems, things like headaches and stomach aches and also mental health issues, such as anxiety, trouble sleeping.”

Dr Gallo went on to describe how, when left to get worse, stress “can contribute to chronic physical conditions, such as heart disease, diabetes and other illnesses.”

Depression Can Cause Financial Problems to Snowball

Chronic stress often leads to depression. British mental health charity Mind describes how depression can spiral and make money problems worse:

1. Feeling low and depressed can rob you of your drive and motivation to improve your situation. You may feel that things are so hopeless it’s not worth even trying to sort them out
2. You may get some brief relief from your depression through spending, making your money problems worse
3. Your demotivation can lead to lethargy, meaning you’re feeling too low to work or study normally. You might lose your job or be thrown off your course
4. You might avoid thinking about money at all, ignoring letters, bills, statements and calls. That’s almost guaranteed to make your situation worse

How to Relieve Financial Stress

There are some practical, do-it-yourself steps you can try that might help you take back control of your money. This in itself often reduces anxiety. You can employ a tried and tested business strategy that managers use when facing a problem. They ask themselves:

1. Where are we now?
2. Where do we want to be?
3. How can we get to where we want to be?

Answering these questions for your own financial situation, may help relieve financial stress.

Where are we now?

Get a clear picture of your current finances. That means opening all those unopened bills, checking statements and creating a spreadsheet or written schedule of all you owe and what you spend on regularly. Even though this is daunting, you may feel better knowing exactly where you stand. You have started the process of taking back control of your money.

Where do we want to be?

In the short to medium term, thats is. We aren’t talking retirement planning. W would love to be rich and debt-free but think smaller. Think not letting the situation get worse and how it be be improved. The aim is to be sufficiently in control of our money that you no longer feel sustained financial stress.

How do we get to where we want to be?

You’ve already done the hard part by knowing where your finances stand. You have set realistic goals. What next?

1. Create a household budget listing all items that have to be paid. That lets you see where your money is going and where you might be able to make savings. It tells you how much, if anything, is available to pay down debts. Read 7 Steps I Used to Create a Realistic Budget, After a Few Failed Attempts. It is possible you can make enough savings in your budget by living frugally to pay down your debts.
2. Consolidate your debts into one loan with a lower monthly payment. This may depend on your credit score.
3. Call your creditors, explain your situation and ask how they can help. Many may be willing to cut your interest rate and give you more time to pay, so reducing monthly outgoings.
4. Turn to a reputable credit counselor. The Department of Justice maintains “a list of approved credit counseling agencies by state and Judicial district.” And read Free Financial Counseling Services.
5. Consider bankruptcy If your credit counselor suggests it, don’t recoil – talk it through. Bankruptcy may be a better solution than living with debts that are out of control and chronic financial stress that could undermine your physical and mental health.

Believe That it is Possible to Relieve Financial Stress

No matter how hopeless your situation, there are medical and financial professionals ready to help you recover and move forward with your life.

It’s common to feel guilt or shame over your situation. Don’t let those emotions put you off seeking help. Anyone can find themselves in your situation. The professionals to whom you turn won’t judge you. They are there to help.

If you feel your mental health is being undermined, read Healthline’s article, How Can I Get Help for Depression? And check out the federal government’s webpage, How To Get Mental Health Help.

No matter how bad your finances have gotten, there’s always a way to take back control.

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post How to Relieve Financial Stress During Difficult Times appeared first on Credit Sesame.

May is Mental Health Awareness month, and this year it’s more important than ever to be mindful of things that cause a strain on mental health.

The past couple years saw the arrival of a deadly pandemic, a fraught Presidential election and a series of false hopes and setbacks as the COVID virus went through cycles of apparent decline followed by new and persistent variants.

As the health crisis moves into its third year, Americans find themselves battling another assault on their psyches in the form of financial stress.

It is helpful, perhaps, to understand the effect financial stress can have on your health, and actively pursue strategies for easing that stress.

2022 Is a Tough Year for Financial Stress

Just a few months into the year, 2022 is already shaping up as a tough year for financial stress.

High inflation, the likes of which most of today’s Americans have never seen, is making it difficult to make ends meet. Those higher prices seem especially cruel coming at a time when many forms of emergency government support are expiring.

To ease the financial sting of the pandemic, the federal government doled out emergency assistance to Americans: more generous unemployment benefits, stimulus checks and expanded tax credits for earned income and parents.

In addition, the government suspended payments on federally-backed student loans and declared a moratorium on evictions.

These programs helped the economy at large and individual families weather the immediate financial pressures of the pandemic. But now, all the direct financial benefits have expired, the Supreme Court has struck down the moratorium on evictions and student loan payments are set to resume in September.

This could all be seen as a return to normal, except that just as those forms of assistance are going away, inflation is making increases in the cost of living anything but normal.

Signs of Rising Financial Pressures

For millions of Americans, making ends meet is a weekly challenge. There’s little cushion between being able to pay the bills and getting caught short.

When inflation rises quickly, it can quickly shrink that cushion. For some that means borrowing just to pay the bills. For those already in debt, it can mean defaulting on those debt obligations.

One measure of the cushion people have between making ends meet and going into debt is the Personal Savings Rate. This is the amount households save as a percentage of their income. As inflation has soared that cushion of Personal Savings Rates has gotten thinner and thinner over the past nine months. See charts below.

The savings rates shown above represent the nationwide average for individuals. For many who are on the wrong side of that average, the cushion is long gone.

Already this year, default rates on auto loans, mortgages and bankcards are up.

Also, while default rates measure payments that are already months overdue, many more Americans are increasingly concerned about missing a payment in the near future. According to the Federal Reserve Bank of New York’s Survey of Consumer Expectations, 11.1% of Americans with debt now see a probability of being late with a payment over the next three months.

There may be worse to come. Not only are the above trends heading in the wrong direction, but they don’t reflect the ticking time bomb of student loan debt.

Federal student loan repayments were suspended because of the COVID-19 pandemic. That has temporarily hidden the problem of just how many borrowers were struggling with student loan debt before the pandemic.

Those loan repayments are scheduled to resume after August 31 of this year. The Consumer Financial Protection Bureau (CFPB) studied the credit records of student loan borrowers to see how many were at risk of having problems making those payments when they start coming due again.

The CFPB identified five risk factors that indicated a student loan borrower might have difficulty resuming their payments. They estimate that 15 million borrowers have at least one risk factor, and 5 million borrowers have at least two.

Impact on Physical and Mental Health

The personal finance situation in 2022 tells us that growing numbers of people are already unable to make ends meet, and indications are that many more have reasons to worry that they will have trouble keeping up with their financial obligations in the near future.

This is not just a dollars-and-cents problem. Several academic studies have identified a link between debt and health problems. Here are some examples:

• A Northwestern University study of young adults (24 to 32 years old) found that those with high debt levels showed an increase in blood pressure, an 11.7% higher perceived stress levels than people with low debt levels and 13.2% more incidence of depressive symptoms.
• It’s not just younger people who feel debt pressure. A study of Americans over 50 years old published in the Journals of Gerontology found a correlation between unsecured debt and depressive symptoms.
• A paper in the European Journal of Health reported that people with debt were three times as likely as those without to exhibit common mental disorders.

Of course, if you’ve ever been deep in debt or struggled to pay your bills, you probably don’t need an academic study to tell you there are physical and mental health consequences to financial stress.

Use Mental Health Awareness Month as motivation to take actions that will start to relieve that stress.

Take Control of Your Financial Situation

One characteristic of financial stress is a feeling of helplessness. It’s that sense that your debts and your bills have gotten away from you, and there’s no catching up.

The way to fight that feeling of helplessness is to get organized. Make a plan to deal with your financial problems. Start making your finances better instead of allowing them to keep getting worse. Here are some steps you can take to start taking control of your financial situation:

• Set up a budget to make essential payments your top priority and eliminate unnecessary expenses.
• Rank your debts from highest to lowest interest rates, and look for opportunities to pay down the most expensive debts fastest.
• Look into whether you could refinance or consolidate high interest debt into lower interest debt, or restructure the debt to reduce your monthly payments.
• If you see no way of keeping up with payments, contact your creditors to see if different payment plans can be worked out.
• If you have federally-backed student loans, look into programs that will base what you have to pay each month on how much money you make.
• Consider whether debt counseling might be a necessary step.

There is no instant cure to debt problems. But with time, patience and willpower you can improve your financial situation and eventually rise above it.

From a mental health standpoint, just starting that process can feel empowering. Knowing there’s a way out, and that you have some control over the solution, can give you a healthier outlook towards life.

Of course, financial suggestions are no substitute for psychological help if that’s what you need. However, whether you concentrate solely on fixing your finances or do so in conjunction with mental health therapy, attacking the sources of your financial anxiety is a step in the right direction.

And remember, you are not alone.

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

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