July 2000

 

Debt Can Be Hazardous to Your Health
Wilma Schuh

For years now we have been reading articles in magazines/newspapers and watching ads on television that keep telling us we need to be aware of what we are putting into our bodies. While researching the subject of Consumer and Family Economics, to my surprise, I found an article entitled "Debt as a health hazard". This really caught my attention. After reading the article I realized this is the information that I want to share with each of you. The most important consideration to take from this article is, "How does being financially overextended affect your health?"

Ohio State University (OSU) has completed a recent study that shows that stress regarding debt (particularly from credit cards) tends to be worse on a person’s physical condition when compared to those with no money worries. What researchers found was that the price of financial anxiety ranges from heart attacks, insomnia, and emotional problems to difficulty doing such simple tasks as climbing the stairs and carrying grocery sacks.

This research also showed the link between credit card debt and it’s effects on individuals. People ailing the most are those that have a large chunk of their finances tied up in credit card bills. A high debt-to-income ratio is significantly associated with high levels of impairment. The researchers of this project were Paul J. Lavrakas, director of OSU’s Center for Survey Research, and former colleague Patricia Drentea, who is now assistant professor of sociology at the University of Alabama-Birmingham.

It is a well-known fact that stress is detrimental. Ohio State University’s research is the first to show a connection between health and the strain of credit card debt. For most individual consumers this is not something new, but what’s striking is the risk you could be taking down the road with how we manage our individual debt level. This is really the dark side of the economic boom in today’s society.

The focus of credit card debt is often an indicator of hardship. Families having a tough time of making ends meet often turn to plastic to pay for basic necessities such as food, medicine, clothes and rent or a mortgage payment. Today credit card debt may be a more sensitive barometer of financial well being than income because it may tap into a more long-term deprivation.

Factors that were considered were the total amount of credit card debt and available credit, the number of cards used, and whether the participants carried a balance. When common health barometers such as age were taken into account, debt stress appeared to play a role in the participant’s physical condition. Those worrying over credit card debt were more likely to smoke and to be overweight.

The 1999 follow-up survey showed heart problems, with heart attacks as the most prominent; followed by sleeplessness, the inability to control emotions and a loss of concentration.

One reason credit card debt is especially conducive to stress is the assumptions that it’s the result of poor money management, and therefore, more embarrassing than being behind on the mortgage or car payment. "The social view on these people is that they are spending more than they earn, and that is shameful," the researchers wrote.

The reality of debt is often quite different from society’s view. The number one reason individuals get into trouble from credit cards is a crisis, such as death of a family member, divorce, or a job loss. Steve Rhodes from Debt Counselors of America states, " It’s usually something unforeseen." He believes that people who are forced to turn to plastic in emergencies do so because they lack financial clarity. "They have no idea where their money is going and if they apply for credit and are approved, they think this must mean they can handle it."

Today counselors are looking at how we individually handle money and consider where we learned our money management skills and our own adaptation of what we have seen and studied. Rhodes believes that there is an ethical dilemma for financial institutions. The ease of credit card availability is bordering on dangerous for a number of people.

With the saturation of the card market, more lenders are going after people with poor credit and low incomes. Hopefully they will think twice and restrain themselves. Technology is giving new meaning to "instant gratification." You know it has gotten bad when people go to the Internet, get credit card approval in seconds, and then shop for tax-free goods without having to get out of their chair.

Rhodes says, "Americans need to stop shifting the blame for credit problems to the banks." As long as you’re laying the blame at the feet of creditors, no one is going to take responsibility and evaluate their individual situations.

The key is educating our young people. " A lot of money behaviors go back to our childhood. We observed our parents and learned from them. Unfortunately, people in general have never had much financial education," stated Rhodes.

Credit problems do not just belong to the have-nots that most people identify with. It is also a problem for those who are suddenly wealthy, such as: the young Silicon Valley millionaires, heirs, gamblers, and lottery winners.

Source: Adapted from article at www.bankrate.com..

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