Being in debt is the worst.

That’s not just opinion. The Society of Occupational Medicine’s Life Events Inventory, which ranks the level of stress caused by 100 life events, found that “getting into debt beyond means of repayment” received a score of 82/100 for men and 86/100 for women — meaning significant debt is more stressful than divorce (81/100 for men and women), infidelity (77/100 for men and 81/100 for women), or the death of a close friend (78/100 for men and 80/100 for women).

The level of stress caused by debt is something Melanie Lockert, author of Dear Debt and host of the Mental Health and Wealth Show, has experienced first-hand.

“Debt can lead to depression and anxiety,” Lockert says. “Depression may start after the debt didn’t lead to a certain outcome. In my case, I took on a lot of student loan debt and for a long time, couldn’t find a full-time job to pay it back. And anxiety can rise out of not knowing how you’ll pay off your debt.”

The good news is that deciding to take control of your debt offers a number of benefits to your mental and emotional health. Here’s how to give your brain a bit of a glow up by paying off debt.

This Is Your Brain … on Debt

A study out of the National University of Singapore’s Social Service Research Centre tested the cognitive function of people in a money crunch before and after they unexpectedly had portions of their long-standing debts paid down by a charity. According to those tests, the participants’ were able to think more clearly after their debts were paid.

That’s because of something experts call “the bandwidth tax,” or your ability to focus your time and attention on something.

Your Brain on debt by Emily Guy Birken

Your Brain on debt by Emily Guy Birken

“When we’re in debt, we’re going to feel squeezed. We have to toggle between our current financial needs and wants and our future needs,” says financial therapist Amanda Clayman. That kind of mental toggling is stressful and tiring to our brains, and it leads to mistakes, even in areas that have nothing to do with money.

In the National University of Singapore study, the average error percentage on a test of cognitive function was 17% before the unexpected debt payoff, and only 4% after having the debt paid. Without the worry about debt hanging over their heads, participants were able to avoid mistakes and correct themselves on the tests.

The researchers also found that the participants exhibited 10% less present bias (a need for instant reward) after their debt was paid. In other words, carrying debt causes a mental struggle between future needs and immediate gratification. But once the debt is gone, that bias is reduced because your brain’s toggle switch works better.

But debt doesn’t just affect how your brain works. It can also affect the way you see yourself — and how much power you feel you have over your life.

Out of Locus?

Are you in control of your destiny, or is your life a series of events that simply happen to you?

If you think you’re steering the ship, you have what psychologists call an internal locus of control. But if you feel like that steering wheel is out of your reach, your locus of control is external.

For example, let’s say you do poorly on a test. If you have an internal locus of control, you’ll probably think you didn’t study enough and resolve to do better next time. With an external locus of control, however, you’re more likely to think the test was too hard.

What if you ace the next test? In that case, if you have an internal locus of control, you’ll probably attribute the good grade to your excellent study skills. But if your locus is external, you might think the A is evidence of a lucky break.

According to psychologists, having an external locus of control is correlated with carrying debt. That is likely because feeling out of control means believing that nothing you do matters. If Sallie Mae, Goliath Bank and “The Man” will always win in the end, there’s no point in trying.

But according to Clayman, these beliefs don’t reflect reality. “It’s a story we tell ourselves,” she says. “We want to feel like we’re in control of our debt, but having no obviously apparent way of changing the situation feels painful. So we soothe ourselves with the narrative that we can’t win and give ourselves permission to not take control.”

However, working to pay off your debt can reduce distress and help you shift your locus of control.

You’ve Got the Power

Your brain on debt is fuzzy, impulsive, and likely to convince you that you’re powerless.

Lockert advises stressed-out borrowers to start reclaiming their power in small ways. “The first step is to make little promises to yourself to build confidence,” she says. “This can mean just looking at your total debt. Or not using your credit card. Or it could even be a promise like ‘I won’t beat myself up when thinking about my debt.’”

Keeping these promises can help you tell yourself the (true!) story that you do have control, that you are mighty, and that The Man can go pound sand. That gives you the internal motivation to start building a strategic debt payoff plan.

Putting a plan in place will help reduce the strain on your brain and help reinforce your feelings of power and control.

Here’s what you’ll need to get out of debt and change your mental state:

  1. A system to keep you from running up more debt. You won’t be able to pay down your debt, improve your thought processes and reclaim your power if you keep increasing the amount you owe. Start with a plan to pause your debt load by only carrying cash or removing your payment information from your favorite online retailers.
  2. A list of everything you owe. Though making a list of all your debts may sound like the opposite of reassuring and reaffirming, you have to know how much you owe, to whom, and what rates you are paying before you get down to business. This will help you decide how to tackle your payoff strategy.
  3. A ranking of your debts in order. Whether you focus on paying off the debt with the lowest balance first for a strategic win or the debt with the highest interest rate first to reduce the amount you pay overall, putting your debts in a planned payoff order creates your map.
  4. A higher-than-the-minimum payment. Pay extra on the debt you have on the top of your list each month. Even if all you can afford is an additional $20, the extra payments will go toward the principal and push your balance in a downward direction faster.
  5. A method of tracking your progress. Paying off debt can be a long and slow slog, so track your progress and celebrate small successes along the way. Not only will posting a debt payoff thermometer on your wall or drawing a rainbow-hued debt tracker in your bullet journal help remind you of how far you’ve come, but your brain will also enjoy the dopamine hits of filling in each additional step on the way to debt payoff.

Clayman warns that the process can stir up some negative feelings that we’re not used to sitting with. But you don’t have to let those emotions get in the way of your debt freedom.

“Learn to tolerate the painful feelings that come up as you work to pay off debt,” Clayman says. “Cultivate the hope that you can slay your debt.”

In other words, if you believe you can do it — you can!

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