Does your debt nag at you and make you miserable?
A researcher has now put a number to the emotions. He has quantified just how much debt drags some people down.
Lawrence Berger, a University of Wisconsin-Madison associate professor of social work, has found that when the dollar amount of a person's debt increases by 10 percent, depressive symptoms — like not being able to shake the blues, feeling lonely or having trouble eating or sleeping — increase by 14 percent.
Still, if you are young and have debt that you won't have to pay off for many years, you might be able to shrug it off.
The cruel debt — the debt that brings people down — tends to be short-term debt, like credit cards or payday loans that can snowball. And it especially weighs on people ages 51 to 64, Berger said.
That group is the most likely to feel depressed about its debt, which isn't surprising. They are in the period of life when the time clock is running — when retirement is nearing, when health or age discrimination might make it difficult to get or keep a job, and when the common illusion that somehow money will materialize starts to evaporate.
In a study of retirement confidence by the Employee Benefit Research Institute, researchers found that half of current retirees left their job before they intended to because of health, disability or downsizing.
About 45 percent of workers with major debt said they “were not at all confident” that they would be able to retire, and 5 percent of people in retirement were concerned that they wouldn't be able to pay their debts.
Young adults, on the other hand, have time ahead of them.
Even with large levels of debt, they can imagine tackling it with the next job or the next phase of good luck. Still, the Employee Benefit Research Institute found that many people who might have assumed at a younger age that they would get their debts paid off by retirement ended up in retirement with debt. Since the 1970s, debt levels in retirement have gone up 77 percent.
While people close to retirement might be the most depressed about their debt, Berger said, recent college graduates might be more troubled by long-term debt, like student loans, than the group of people he studied.
For his research, he used data on 4,755 individuals from 1987 to 1989 and 1992 and 1994 in the National Survey of Families and Households.
At the time, student loans weren't as oppressive. And people with long-term debt in the form of mortgages might not have worried in the '80s and '90s because home prices seemed likely to rise over time, Berger said.
Now, realities have changed. And after quantifying the fact that debt does result in depressive symptoms, but not clinical depression, Berger and other researchers are examining more recent trends in debt.
As the nation pulls out of its economic depression, researchers are asking what the long-term effects of financial struggles might be on people.
The research is in the early stages, but if people develop depression with a lot of debt in good times, it wouldn't be surprising to find an effect on people who have lost homes and jobs during the past few years.
One question, said Berger, would be what the effect might be long-term on families.
For example, researcher Fenaba Addo of the University of Wisconsin-Madison has found that women with significant debt tend to remain single.
Researchers at Demos, a think tank, have found that people in their 20s with a lot of debt delay marriage and having children.
Berger notes that while debt gives people options they wouldn't typically have, such as the ability to buy a house or a car, his research suggests that there's a role for government to play in preventing abusive debt such as predatory lending.
He also wonders about the long-term effect on people who have dealt with debt problems in hard times.
Other research shows that recessions alone have permanently changed some people's outlooks.
In a 2009 study by Paola Giuliano and Antonio Spilimbergo, published by the National Bureau of Economic Research, researchers found that lifelong beliefs are altered when people ages 18 to 25 live through recessions.
Those people tend to think that success depends more on luck than their own efforts. And they are most affected if they lost their job in the recession.
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