Stopping the debt spiral could do wonders for your mental health


October is Mental Health Awareness Month, and as more South Africans struggle in a fragile economy, many are experiencing the mental health issues associated with being over-indebted.

As early as April last year, a survey by personal finance website revealed that the coronavirus pandemic had “significantly or very significantly” affected the family earnings of three-quarters of ordinary South Africans. The vast majority had less than R5,000 available as an emergency reserve.

A study conducted by the Human Sciences Research Council (2020) reported that 33% of South Africans were depressed, that 45% were fearful, and 29% were experiencing loneliness during the first lockdown period.

Shafeeka Anthony, JustMoney marketing manager, says, “Being over-indebted can cause anxiety, loneliness and depression. This, in turn, makes it harder to deal with the root cause of the problem. It can lead to a vicious cycle.

“Fortunately, the downward trend can be stopped. Help is available – you are not alone in facing the consequences of over-indebtedness.


“Achieving financial stability has huge benefits for your mental health. You may no longer be distracted at work and anxiety may be reduced.”

There are typically five stages of psychological response to financial difficulties. While you may not experience all of them, or follow them in this order, if you are able to recognise and understand the signs, you should be in a better position to take action.

Stage 1: Denial

People who are in denial about the extent of their debt often refuse to recognise they need help. Typically, they make excuses for their inability to pay their bills. They are inclined to disregard creditors’ calls or payment notices.

Ignoring debt won’t make it go away. It can lead to creditors taking legal action, which can further impact both your financial and mental health.

Stage 2: Stress, anger and regret

When people start to realise the problem isn’t going away, financial stress may manifest as insomnia, anxiety and hypertension.

Seeking loans to make ends meet or keep debt collectors at bay only exacerbates the situation.

When their credit profiles start reflecting their perilous financial situation and they’re denied loans, anger and regret set in.

Stage 3: Depression

Confronted at last with the reality of their financial situation, it’s common for people to feel hopeless and desperate.

Anthony says this can be the critical phase for achieving debt acceptance.

“People feel overwhelmed. They’ve exhausted all their options and aren’t sure where to turn. This is when they either do nothing, paralysed by anxiety, or decide to seek help.”

Stage 4: Acceptance

Coming to terms with being over-indebted is a significant step.

“People who recognise they’re over-indebted and unable to solve the problem alone are willing to accept help. This is the breakthrough moment, and the earlier they reach it, the sooner they can begin the journey to financial freedom.”

Stage 5: Resolution

People who’ve taken back control of their finances talk about feeling a sense of relief at having put the anxiety of being over-indebted behind them.

Anthony’s tips for dealing with the psychological impact of being over-indebted are:

  • Don’t let anxiety paralyse you. Seek help as soon as you can.
  • Don’t carry the burden alone. Being over-indebted is nothing to be ashamed of – many South Africans are in this situation.

Don’t underestimate depression. It can be serious, and, critically, may stop you from tackling your over-indebtedness. Speak to friends and family and get professional help if needed.

If you’ve ever had debt that you didn’t manage well, you may wonder how long this will impact your credit score. Lenders use your credit score to decide if you are a low- or high-risk borrower, and this can play a big role in your financial future.

  • Read more about debt impacting your credit score, and sign up to get your free credit score and report.

Anthony says, “Although the pandemic has impacted many people’s finances, it’s not just the poorly performing economy that’s at fault.

“Unexpected expenses that can’t be covered, not having adequate insurance cover, and relying on credit to fund a lifestyle you can’t afford, can all contribute.

“Actor and social commentator Will Rogers warns us that, ‘Too many people spend money they haven't earned, to buy things they don't want, to impress people that they don't like.’

“This Mental Health Awareness Month, take a long, hard look at your finances and decide what you can do to tackle your debt. Financial wellness requires continued maintenance and effort, but it’s worth it.”

The JustMoney website offers articles, money management tools and a full range of financial products and services. Over 200 000 South Africans subscribe to the newsletter to stay informed. Find the website here and subscribe to the newsletter.

HSRC statistics: South African Journal of Psychology – Mental Health and Covid-19 in South Africa, 8 May 2021.