Seriously indebted people can't think clearly enough to make good decisions—including decisions about how to get themselves out of debt.

That's part of the results of a study from the Social Service Research Centre at the National University of Singapore. A Newswise report on the study highlights the findings that relieving debt relieves mental stress, enabling people not just to feel better but literally to think better and improve their cognitive functions.

Researchers found that "Cognitive functioning significantly improved post-debt relief … The average error rate fell from 17 percent to 4 percent postrelief … Median reaction time improved from 1.86 to 1.27 s postrelief … [and t]he combined score rose from 6.29 to 7.54 postrelief."

And Forbes points out that the effect of the stress from debt also weighs on physical health in what it calls "3 vicious cycles" that constitute feedback loops.

Chronic stress, it says, is linked to physical health issues, affecting sleep as well the digestive, immune and reproductive systems via the stress hormones adrenaline and cortisol, "which, if sustained, may cause [those systems] to stop working normally."

In fact, it adds, "Employees with high financial stress are twice as likely to report poor health overall and are more than four times as likely to complain of headaches, depression, or other ailments." And if that's not enough, financial stress is also associated with high-risk behaviors.

But physical health is only the first of the three vicious cycles.

Next is delayed health care, since naturally enough people who lack the funds to pay for it will tend to put off necessary medical treatment. That boosts the cost when treatment is eventually sought for a now-escalated problem, which in turn boosts stress even further.

High-deductible health plans may add to this cycle, since the more people have to pay and the less they're able to do so, the more likely they are to simply stall—and get sicker.

And the third cycle is mental health, with people in debt not only three times more likely to have a mental health issue but also more likely to commit suicide: Financial stress is the second most common cause of suicide.

Even if they don't take the ultimate way out, those under financial stress suffering from mental health issues also suffer from impaired financial decisionmaking and employment. Et voilà—a recipe for further financial disaster.

In the report about the Singapore study, Dr. Ong Qiyan from the NUS Faculty of Arts and Social Sciences is quoted saying, "One challenge with poverty alleviation policies is the bedrock belief that the poor are indebted because of personal failings…. However, our study shows that because debt impairs psychological functioning and decision-making, it would be extremely challenging for even the motivated and talented to escape poverty."

The solution? According to the NUS paper, helping people out of debt, thus lessening their financial stress and the toll on body, mind and spirit.

Instant Insights /

Stress from debt affects not just health but cognitive functions and decisionmaking

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