Sep 192016
 

The Effects of Debt on Your Health

According to a Globe and Mail article I recently read, people have gotten sick and depressed thinking about their debts. “Researchers and health professionals are making the case for treating personal debt as a public health problem.” Oh no. 🙁 Dr. Donna Ferguson, a psychologist in Toronto says, “I think that it’s a major crisis. It’s an issue that needs to be addressed.”

The average consumer debt in Canada is only about $21,000. Personally I don’t think that’s a whole lot. Yet psychologists are calling this a “major crisis.” 😠 People are blaming debt for making them feel physically ill. But I have much more debt than they ever will. So if having a healthy relationship with debt is their primary goal, then they should do something to keep their stress under control. 🙂

Luckily I have a solution to help those consumers. If we want them to get better we have to address the root of the issue. The problem is with individual psychology, not with debt. Instead of creating more health problems for borrowers and increase the burden on our public healthcare system, like what Dr. Ferguson suggests, let’s try to educate people about the truth so we can prevent people from feeling ill in the first place.

So here’s my simple yet effective tip to help anyone who may have debt anxiety:

If you don’t think you can handle the debt, then don’t borrow the money. 😀

Sometimes the negative consequences of debt are blown out of proportion. The ASA, a financial support organization, has even made a horror video to show the trepidation and paranoia that comes with having student loan debt, which further supports the common narrative.

16-09-allow-debt-ruin-lives-meme

Some people have this irrational fear that if we have debt then somehow it will come to get us like the boogeyman. 😆 But the reality is nothing bad will happen as long as we make the payments on our debt.

Missing a Debt Payment is No Big Deal

The consequences for delinquent debt are very lenient towards borrowers. The bank can’t just take our house away as soon as we stop making mortgage payments. In my neck of the woods for example, the bank has to first draft up a foreclosure petition if a mortgage payment is 3 months late. Then the court hearing will be a month later. And then the property goes into a redemption period for up to 6 more months. So we have plenty of time throughout this entire process to get our payments back on track. We can even sell our house if it’s worth more than the mortgage balance.

For other types of debt, if money becomes tight we can enter into consumer proposal or apply for other debt relief options. We’re usually given at least 3 months to catch up on our payments before it goes to a collections agency. Despite the scary rumors, consumer debt cannot physically harm us. We won’t be assaulted or locked up if we’re late on our credit card payments. Nobody will drag us to jail because we failed to make a car payment, lol. The worst they can do to us is take the car away and tarnish our credit score. But I think that’s only fair. Our vehicle is being repossessed only because we broke the debtor/creditor agreement first.

So there’s no reason to get all worried and stressed out over a reasonable amount of debt. 🙂 We just have to be smart and not borrow too much.

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Random Useless Fact:

If the original Power Rangers series were made today in 2016, it would probably offend too many people and be banned from airing in most countries.

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The yellow ranger was Asian. The red ranger was Native American. The pink ranger was portrayed as a ditsy white girl. The black ranger was black. And in later episodes they introduced the white power ranger who was the strongest.

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RICARDO
RICARDO
09/19/2016 7:07 am

Obviously Dr. Ferguson is worried about her retirement and is looking for a problem to solve or at least psychoanalyse. The solution is as simple as you stated. If debt bothers you save up your loonies until you can pay for it. But then that would not insure you a client on the bed telling you how their parents telling them they can be anything they want to be when they were young impressionable children affected their reasoning today.
Does debt bother me? I would say I think about it and consider what actions I will take to either mitigate the level of debt or pile on more if I think it is worth it. If it “bothers” me too much I will eliminate it because quite simply I have enough investments to do that.

So who is the guy in the blue suit? Is he the VP? I am impressed with your observational skills as to the characters races. I would never had guessed the black goy was black or the Asian girl was Asian LOL Wonder if it would fly these days.

RICARDO

Financial Canadian
09/19/2016 7:11 am

Debt is a good thing, when used properly. It allows us to leverage up and increase our investment returns. It also is a huge reason why homeownership levels are so high – after all, not many people can afford to pay cash for their homes. Not sure why it’s got such a bad reputation with everyone.

Anon
Anon
09/20/2016 6:20 am

No, they were NOT students, they merely put ‘student’ as their occupation on the paperwork. A third of the mortgage recipients listed ‘homemaker’. You forgot to include this from the article: “…Canadian banks allow foreign clients with no credit history, including students, to qualify for uninsured mortgages without verifying the sources of their income. The practice exempts non-Canadians who have money in the bank from the scrutiny domestic borrowers face when buying a home or an investment property.” Safe to say that it was Mr. and Mrs. Mainland China sending Jr. to Canada with suitcases full of cash to “go to school” and, oh yeah, buy a luxury house or two. What it’s not is any Canadian twentysomething kid coming up with a $100,000 downpayment to become the next great flipper. Moving on… “So here’s my simple yet effective tip to help anyone who may have debt anxiety: If you don’t think you can handle the debt, then don’t borrow the money.” Yet ANOTHER asinine statement. Some people, especially in the ranks of poverty and/or lower incomes simply do not have a choice but to rely on credit in order to keep their basic needs. With another recent news report… Read more »

Phil
Phil
09/23/2016 7:44 am
Reply to  Anon

Anon… You crack me up. Life is about choices, and debt is but one of the million choices we have, just like education, having that drink, driving drunk, cheating on a loved one, sharing your time with the elderly or perhaps sharing your comments… Debt is debt and it is ultimately a choice… whether you made previous choices that got you into the spot you are in, or whether you are about to make a choice that gets you to the spot you dream of, we ultimately have control of our own lives through choice… Choose wisely though, because certain choices can affect your life long-term for better or worse 😉 Liquid, keep on, keep in on… Your journey has made me ponder my own and reflect on how your choices have gotten you to where you are today, and how I might leverage your experiences to enhance my own. – Cheers

Anon
Anon
09/29/2016 7:47 pm
Reply to  Phil

Written from a place of middle-class white male privilege, Phil. Executed to perfection. 👍

BeSmartRich
09/20/2016 6:15 am

I agree. As long as we are not overly extended, we will be all good. Good debt can be a great tool to boost wealth for sure!

Phil
Phil
09/23/2016 7:47 am
Reply to  BeSmartRich

Good debt, bad debt… debt is debt, don’t fool yourself. Debt is a tool, nothing else… it eventually needs to be repaid and usually with interest – Cheers

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[…] So it concerns me to learn that “struggling with debt often leads to depression, anxiety and stress.” 🙁 There are many things in life to worry about like the US presidential election next month. But I don’t believe debt should be a cause for anxiety. Getting depressed over private debt is like obsessively stressing over the cost of a brand new car from my analogy above. It completely ruins the experience of whatever beneficial purpose the debt was used to pay for. It’s all about the mindset. According to webmd.com, “there are studies that show it’s not how much money you owe that predicts depression and health problems. It’s how much you worry about it.” I’ve mentioned how to easily deal with the stress of debt in a previous post. […]