Worrying about debt may keep you up at night, but it can also affect your health, leading to stress-related illnesses.
By Jean Lawrence
Reviewed By Brunilda Nazario, MD
You've seen those commercials: "You're not just in debt, debt is all around you." Or how about the one with the Huns rampaging in to pillage with their murderous interest rates? Or the counselor who says: "Our clients are going off a cliff and at the bottom lies a bankruptcy"?
It's enough to keep you up nights.
In an Associated Press/IPSOS poll of 1,000 adults taken in early December, half of all Americans say they worry frequently about their debt, many of them saying they worry "most of the time." While economists say some people need to use credit in slow times, psychologists cite more reasons -- to punish spouses or stuff down their pain in brief bursts of consumption-related satisfaction.
The average household has 10 credit cards, and the average interest rate is 19%. To pay each card off at the minimum monthly payment alone would take decades.
To make matters worse, the cards have almost saturated the market and are now looking for more ways to make money, such as upping interest rates even when you have not paid late or making canceled accounts payable in full.
And on top of that, the all-important FICO score based on your handling of credit now governs not only the amount you pay for a mortgage, but whether you get a job or insurance, in some cases.
Oh, My Indebted Self
In other words, credit has become a huge headache. And this is only one stress-related illness debt can cause. Stress increases levels of the hormone cortisol, which can lead to or worsen heart disease, high blood pressure, diabetes, and even some forms of cancer.
Tossing and turning at night with visions of screaming collectors dancing in your head can even make it hard for you to lose weight. In a study in the Dec. 7, 2004, issue of Annals of Internal Medicine, researchers from the University of Chicago found that insufficient sleep cut levels of appetite-regulating hormone leptin. Leptin levels tell the brain when the body does or doesn't need more food. Low levels are associated with obesity. The upshot of sleep deprivation was weight gain.
And the pint of ice cream it takes to do the bills probably doesn't help, either.
"People definitely relate their health problems to their debt," Loral Langemeier, author of Guerilla Wealth and founder of Live Out Loud, a coaching firm in San Francisco, tells WebMD. "I hear about migraines, weight gain, digestive disorders."
"I hear a lot of mental symptoms," says Rudy Cavazos Jr., director of education and community relations of Money Management International in Houston, the largest nonprofit credit counseling firm in the United States and owner of Consumer Credit Counseling outlets in several states, recalling his days as a counselor.
"I used to get referrals from Employee Assistance Programs," he says. "The client would be sent from the workplace for being under stress, moody, angry, and unproductive."
So What Can a Person Do About Debt?
Cavazos and other professional credit counselors start with an opening session with the client. Some elements of that meeting:
- First, you must be determined to resolve outstanding debt.
- Bring in all your bills.
- But debt is only part of it. The other side is to understand your
spending, Cavazos says. "Many people don't even understand their paycheck
stub. They may be paying too much withholding, for example."
- Look at expenses. "Most people have no idea of what they are spending
each month and how," he says. "I will say, 'When you got gas last time, how
much was it?' and they will say, 'I don't know, $20 or $30.' It's too easy
to just put that card in there and drive off." What do you spend on dry
cleaning? If you have cable, are you also renting tapes and DVDs?
- Then, and only then, look at the bills, and this includes medical bills, old hospital bills, student loans, everything. "People are afraid to know," Cavazos says. "You must conquer that.
"At that point," Cavazos continues, "I might say, 'Well, you are short $750 a month.'" The question then becomes, how do you increase income, decrease spending, or both?
"The clarity of doing this," says Langemeier, "creates calm. And from going from chaos to calm creates confidence."
"You need not only a debt plan, but a wealth plan," Langemeier contends. While consumer credit counselors will work with certain creditors, such as the major credit cards, to cut your interest and consolidate your payments into a single payment, you may simply need more money as well.
"Being $40,000 in debt," Langemeier says, "is like being 40 pounds overweight. It is a result of overconsumptive behavior. You have to face that."
Once your spending plan is in place (both counselors hate the word "budget"), Langemeier looks for ways to make more money. One way she likes is to get on an online auction site and sell things of value. "One doctor, who had a great income, got in trouble and sold his gun collection," she says. "Another woman cooks for parties. A teacher picks up tutoring clients."
She is a big believer in saving, even a little at first. With interest rates so low, finding a good place to park money is hard these days. Both counselors liked some Internet banks to gain higher rates.
They also recommend getting the free annual credit report from each credit bureau, an opportunity that recently became law and is being implemented across the country in stages.
No Cheating Allowed
Any debt reduction or income increase plan takes both discipline and sacrifice, as Cavazos points out.
Langemeier emphasizes changing spending behavior. "Spendaholics keep repeating the cycle."
Cavazos might let you cheat a little but in a positive way. "The conventional wisdom is to pay the highest interest card first," he says, "but if it makes you feel better to eliminate at least one card, pay the smallest balance first."
Then you can say, "I used to have eight credit cards, now I only have seven."
Just like the 40-pound weight gain, you didn't get in debt in a month or even a year. But you might get out much faster than a couple of decades. Cavazos says his counselors don't let you come out of the process with bad credit, either.
"I had clients hug me and say, 'I feel like a 1,000-pound weight came off me,'" Cavazos says.
Star Lawrence is a medical journalist based in the Phoenix area.
Published Jan. 3, 2005.
SOURCES: Loral Langemeier, author, Guerilla Wealth; founder, Live Out Loud, San Francisco. Rudy Cavazos Jr., director of education and community relations, Money Management International, Houston.
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