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“Damn Right, I’ve Got the Blues”

This blues lyric by Buddy Guy probably sums up your reaction to news that debt can make you depressed.

But what’s also true is that one’s reaction to debt hinges on what type of debt the person has – and not all debt is depressing.  Further, people approaching their retirement years and those with less education who are in debt are more likely to get the blues, according to new research.

Lawrence Berger, an associate professor of social work at the University of Wisconsin in Madison, determined that a 10-percent increase in the dollar amount of an individual’s debt increases his or her depressive symptoms by 14 percent.

To be clear, having debt does not lead to full-blown clinical depression.  But it does trigger the garden variety blues that most people experience.  Symptoms vary from losing one’s appetite or being unable to shake the blues to feeling lonely.

This issue is of increasing concern in a nation that has become debt dependent over the past four decades: total consumer debt has tripled since 1968.  People have taken out mortgages for decades to buy houses.  But in this debt culture, many Americans carry their worries around as the credit card bills pile up.

There is good debt and bad debt.  Depressive symptoms are isolated to what Berger labeled short-term debt in his study, such as credit cards, past due bills, and payday loans.  Long-term debt is okay.  The long-term debt did not show dramatic psychological effects, possibly because it goes toward a long-term investment in one’s future, such as a house or a college education.

While this isn’t part of Berger’s research, short-term credit card debt can also be an obstacle to other long-term goals, such as saving for retirement or getting a mortgage.

“Short-term debt is associated with increases in depressive symptoms,” Berger said during a December presentation at Wisconsin’s Center for Financial Security.  People who can afford to pay long-term debt “are less likely to get depressed.”

These are interesting refinements to other studies of the effects of debt on well-being.  One found that young adults who borrow money feel greater self-esteem.  However, too much student loan debt is becoming a major national issue.

To watch Berger’s webinar, click here.

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