Published in: Credit Cards | Sept. 1, 2019

3 Types of Debt That Are Sure to Leave You Unhappy

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Being in debt can decrease life satisfaction -- especially if you have these three common types of debt. 

Debt can significantly add to your stress levels, and even cause you to experience shame and low self-esteem, according to new research from The Ascent on “The Psychological Cost of Debt”. 

The research shows that just 70% of people with debt were satisfied with their lives, compared with 83% who had no debt.

Not all types of debt are created equal, though. In fact, certain kinds of debt cause lower life satisfaction -- and greater levels of both shame and self-blame -- than others. 

What types of debt tend to cause the most unhappiness among borrowers? Here are three of them. 

Silhouette of an upset woman on a waterfront bench.

Image source: Getty Images

1. Medical debt

According to The Ascent’s research, those with medical debt had the lowest rate of life satisfaction and the highest rate of non-payment issues.

Only 64% of the borrowers who owe money for medical care indicated that they were satisfied with their lives. This was the lowest life satisfaction level in the survey -- especially compared with mortgage borrowers, 86% of whom reported high life satisfaction rates. 

Debtors who owe on medical bills may have lower life satisfaction ratios in part because of the health issues that led to those bills in the first place -- but the money they owe definitely doesn’t help. 

That’s especially clear when you consider that 76% of people with medical debt report feeling shame about what they owe, compared with just 57% of those with mortgage debt, or 61% of people who are paying off auto loans. Medical debt also showed the highest rates of people failing to make their payments, with 42% paying less than the minimum each month.

Sadly, medical debt is a fact of life for millions of Americans and, in fact, medical bills are a leading cause of bankruptcy. If you’re one of the many who struggle to deal with debt payments for healthcare services, it may help to talk to your providers about a payment plan, or use a personal loan to refinance your medical bills at a lower rate. 

2. Student loan debt

Student loan borrowers also report lower life satisfaction rates than borrowers with mortgages or auto loans alone. Just 71% of people who have student loan debt are satisfied with their lives. 

It should come as no surprise that student loan debt affects life satisfaction, as substantial educational debt has been found to cause delays in getting married, buying a home, or starting a family. Unfortunately, many young people blame themselves for getting into student loan debt, and a full seven in 10 are ashamed of what they owe. 

Although regret about student loan debt is common, it’s not necessarily warranted. The education that student loans finance can help boost earning power and -- if you’ve taken out federal student loans -- the interest rates are relatively low, and the payments are flexible. Interest on student loan debt is also tax-deductible. All of this makes student loan debt affordable and, in the eyes of many experts, a form of good debt. 

Of course, owing a fortune is never fun, even if student loan debt doesn’t have many of the drawbacks of other loan types. And, for those with private student loans, the debt can be a much bigger problem, since private loans don’t offer the perks that federal loans do. Paying back your loans ASAP and potentially refinancing your private student loans at a lower rate could help you feel better about your financial situation -- and keep more money in your pocket. 

3. Credit card debt

Having credit card debt is also linked to increased financial stress and reduced life satisfaction. Just 75% of those who owe money on credit cards reported that they’re satisfied with their lives. 

One reason for lower life satisfaction levels could be that cardholders feel guilty about getting into debt, and responsible for their bad situation. In fact, just about half of the people with credit card debt indicated that they believe they are solely to blame for their debt, compared with just 12% of those with medical debt, or 36% of those who owe on student loans. 

Credit card debt also led to a lot of shame, with 69% of cardholders saying they were ashamed of their situation.  

Although it’s not good to owe on credit cards, self-blame does little to solve the problem. Instead, those who owe should make a debt paydown plan -- which could include using a balance transfer to reduce their interest rate. Sticking to a budget and avoiding future credit card debt could also help to avoid feelings of financial and personal dissatisfaction in the future. 

Don’t let debt adversely affect your life

Whether you owe on credit cards, medical debt, student loans, or other kinds of loans, don’t let feelings of guilt or shame about your debt balance affect your life satisfaction. Instead, make a plan to tackle your debt, and avoid borrowing unnecessarily in the future. 

Debt stopped many of the people surveyed from feeling that they were living life to the fullest -- so make your plan today to become one of these happy debt-free people tomorrow.

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