debt

Got debt?

Debt causing stress?

Do you have an uncomfortable amount of personal debt?

Has your debt-to-earnings ratio increased in recent years?

Are you in debt stress? Does debt prey on your mind all the time?

I read an article in the Sydney Morning Herald this week about the influence of household debt on the effectiveness of the coming tax refund stimulus on the economy. They asked, will people just use the rebate to pay down debt?

debt Australia

Here are some snippets from the report:

  • NAB’s quarterly measure of wellbeing suggests that the single largest negative for life satisfaction is non-mortgage debt at 35%. Mortgage debt sits at 20%1
  • The debt-to-income ratio in Australia hit 110% in 20181
  • Median debt-to-income ratio has jumped 20% since 20141
  • Although lower income households have less mortgage debt, 25% hold debt for university or vocational education1
  • 55% of people 65-74 still hold debt1

This is an Australian report, but even with my E- understanding of economics, when I look internationally, the debt picture is not encouraging. In USA, federal debt against GDP is climbing towards pre-war levels2

Debt Federal USA

The US debt clock and its international counterpart make grim viewing3,4

I can’t even look at that without blood seeping from my ears.

As I mentioned earlier, economics is not my thing at all, but I can be impressed by numbers! My interest on the whole caper is how stress-affected the mythical man (or woman) on the street is by those numbers personal to him or her.

That’s you, my friend. You and me.

And our debt stress.

How does this affect us?

  • PROBLEM: the single largest detractor from life satisfaction is non-mortgage debt, followed by mortgage debt, work, commuting, substance abuse and social media1
  • EFFECT: 40% withdraw socially, 25% are angry/argue, 20% filter phone calls, 20% leave bills unopened, 12% lie to family or turn to alcohol/drugs1

Debt is a mounting yet often hidden problem. It’s still not culturally easy for us to cough up about money stress, bringing shame on all our houses. Or is that view just coming from me and my Victorian upbringing? I’d love to hear that I’m wrong on this. My own father struggled to provide for his family in his youth during the war, taking him to the edge of nervous breakdown.

Shame. Shame and silence are a very effective recipe for chronic stress and mental health problems. I refer once again to the high levels of suicide, particularly among men, in Australia.

Although debt’s a tough thing to talk about, the weight of financial responsibility sits so heavily on our shoulders. Who can stand tall, if they can’t finance their family?

In these times of economic standstill, poor or no wage growth, increasing costs and house prices, and gig economy job insecurity, it’s no wonder if some of us falter.

Who do you turn to?

Financial advisers, previously infamous for lining their own pockets first, are making a brave new comeback to help us sort out the complexities of our finances. Is it too late? For many of us, with diminished medical insurance, decades of inadequate superannuation, modest savings and increased cost of living, housing, education and other expenses, the burden of financial stress seems a long way from resolved.

Still, when we look at the silent build-up of stress, anxiety, insecurity and naked fear in our lives, we might need to seek help with financial stress as part of that.

Not least because when we’re under financial pressure, it’s natural to act out of fear of job insecurity at work.

For myself, I’ve been lucky and worked hard to stay on top. I am educated, have enjoyed good career progression and life has been fairly easy. In the end though, I had a series of financial losses, many of them outside my control. Investment fraud, redundancy, short-term employment, illness and accident. Finally, I arrived at a position that was less stable. Stress affected my health and the dominoes continued to fall.

As I look around, I reckon few of us have an easy financial ride through life.

Do you have financial stress?

Does it affect your performance at work and your family relationships?

Are your ‘coping’ mechanisms just making it worse?

If so, join a very big club.

Money Mindset

When we have a mindset of fear and anxiety about finances, we tend to freeze up and avoid the problem entirely. This inflames our anxiety and by ignoring the financial problem, it generally gets worse. Debt being a prime example. When we’re fixated on financial loss, that’s what we get more of. Just like being a learner driver fixated on a lamp post.

Many people with financial stress feel helpless and add financial mis-management and other negative behaviours such as gambling, under-earning and over-spending to the mix. Overwhelm takes over.

The majority of my clients have hidden or overt financial stress that drives the way they show up in work and in life. The corrosive effects of this stress have to be dealt with early, to make progress in other areas.

I work to help them face hidden fears, of whatever nature, and start to manage their situation effectively, based on just the bare circumstances. The power of fear lies in our response to it. If we face fear and take constructive action, the fear begins to lose control over us. Then we can come out of paralysis, get back to our problem-solving minds and get in to damage control. Managing debt effectively starts with managing it at all.

If you are in crisis please contact Lifeline(AU), National Debt Helpline (AU) or your local mental health crisis support.

P.S. Your normal correspondant will return next week, when he remembers he never talks about money.

Refs:
1 https://www.smh.com.au/politics/federal/doubts-over-refund-stimulus-as-debt-soars-on-back-of-property-splurge-20190712-p526mn.html
2 https://au.finance.yahoo.com/news/debt-us-budget-federal-145558542.html
3 https://www.usdebtclock.org/
4 https://www.usdebtclock.org/world-debt-clock.html

Main photo: Unsplash

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