Here’s What Happens To Your Brain When You Start Paying Off Debt

Two fish swim past each other in the ocean one morning. One says to the other, “The water feels great today.”

The other replies, “What the heck is water?”

When debt becomes a part of your world, it’s easy to forget about it and accept the current conditions as permanent. You might not even notice the impact of debt on your daily life. But, how does being in debt affect you? Having debt can have a severe impact not only on our finances but also on our mental health and wellness. 

Beginning to pay down debt is a monumental feat on its own, but it also has some serious impact on your wellbeing. Here’s what you can anticipate as your debts drop each month. 

How Does Being in Debt Affect You?

Like the fish who forgot it was even in water, being in perpetual debt can feel normal. But, this state of mind comes with negative mental health side effects.

Researchers have unearthed a link between mental health problems and debt. Debt can increase a person’s stress and anxiety, discovered a recent study out of the U.K. Detecting which came first, the anxiety or the debt, is almost a chicken and egg problem. Mental illness and credit card debt tend to feed off of each other cyclically, so debt causes more stress, and the stress can lead to more debt. People experiencing debt may even show signs of financial anxiety.

That stress from debt can also bleed into negative physical health. People who have debt are more likely to exhibit persistent headaches, poor sleep and the inability to focus. When debt is a part of a person’s life, it can overwhelm them, leaving little time for anything else, including sleep or serious concentration. In an attempt to deal with the stress, some report increased use of drugs and alcohol and marital and relationship issues.

While being in debt is just one small part of a person’s life, it can have an outsized impact on everything from mental to physical health. As consumer debt reaches an all-time high in the US, it may feel like holding debt is the norm in our lives, but in fact, it can harm us.   

What Happens to Mental Health During Debt Repayment?

If stress, poor sleep, anxiety and relationship issues can be symptoms of debt, then part of the anecdote is debt repayment. Getting high-interest debt like credit cards and personal loans under control means being in better financial standing. Still, it also has many positive secondary benefits that can come almost immediately once you establish a debt payoff strategy.

Here’s how you can expect your mental health to improve as you pay off debt:

Less stress. As outlined above, debt leads to stress, and stress can lead to debt. Once you begin paying off debt, you can expect some of that stress and anxiety to lift. This might be a good time to bring in a financial therapist to help unpack some of the debt anxiety you experience.  

More “space to think.” When you don’t have to think about debt all the time, you may see an improvement in cognitive functioning. Research shows that people can better focus on the task at hand without the mental burden of debt and even learn faster.  

A better-rested brain.

Research shows that people who are in chronic debt have tired-out brains. They’re more likely to perform tasks with the functioning equal to missing out on a night’s sleep. Paying off debt each month could feel like a power nap. 

The snowball effect. 

The snowball method of debt payoff makes it easier for some people to continue paying down debt. The positive feedback of debt repayment creates more motivation, confidence and improved mental health. That positive loop not only encourages you to continue to pay off debt but might also lead to higher self-esteem and lowered anxiety. 

Improved impulse control.

We’re all bound to make impulse purchases sometimes, but once a person begins to pay off debt, they’re less likely to exhibit "present bias." In other words, they’re less likely to bend to instant gratification, whether that means buying fewer lattes on a whim or resisting a flash sale.

Less debt in the future. Once a person begins to pay off debt and experience its positive effects consistently, they are less likely to fall into debt again in the future. Breaking the cycle of chronic debt can be a real challenge, but once a person takes those steps, they're less likely to re-enter that cycle.

For many, simply not being in debt anymore is a motivation to start repayment. But being debt-free or beginning to pay off debt can come with other positive effects on a person’s life. 

The First Steps Toward Debt-Free Living

Credit card debt can bog a person down emotionally, financially and even physically. Because of all the weight debt carries, it can be challenging to take that first step towards conquering it.

But no one said you had to do it on your own. Tally has the tools to help you pay down credit card debt faster. Automate payments, manage your cards all in one place or even apply for a low-interest line of credit to kickstart your journey to financial independence. 

See how Tally can help decrease the financial stress in your life.