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The credit card blues: The correlation between debt and depression

Feeling blue? Maybe you should check your net worth. But hold on…it’s not because money makes us happier. Most studies show that once we have enough money to achieve a reasonable standard of living, more doesn’t make us much happier – and a lot more doesn’t make us any happier at all. In fact, if you’re looking for the key to greater good cheer, you won’t find it in what you own but in what you owe. Research by Lawrence Berger, an associate professor of social work at the University of Wisconsin in Madison, has found that debt and depression are twin evils - when debt goes up, so do depressive symptoms.

Now let’s just clarify a key point: This research isn’t talking about the clinical kind of depression that can drag people to dangerous lows; that requires professional intervention. Instead, Berger’s research ties debt to the day-to-day lows that plague otherwise healthy people.

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Here we’ll take a look at why debt and depression tend to go together, and what you can do to deal with both.

The debt that drags us down

What’s interesting about this study is the finding that when it comes to its psychological effects, not all debt is the same. Think of the times you’ve taken on debt in your life. Chances are, the feeling you got when you turned the key in your first home (paid for with the help of a mortgage) was one of pride and elation. But what about the day you got a big credit card bill you couldn’t pay off (and couldn’t remember racking up). Pride? Not so much.

In fact, Berger’s study found that the type of debt you take on does make a difference. While long-term debt doesn’t seem to have much of an effect on happiness, short-term debt – especially credit card debt – can really drag us down.

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Sad shoppers spend (sniffle) more

Worse still, when it comes to spending, doing it with a credit card delivers a depression double-whammy: Credit card debt makes us feel sad, and the sadder we are, the more we spend – especially on a credit card. A 2008 study published in the journal, Psychological Science, found that sadness significantly increases the amount of money we’ll pay for something. Another study found that while using cash discourages spending, using a credit card encourages it. This means that if you’re looking for a little retail therapy, using a credit card to buy your way to happiness is more likely to send you into an ever-deepening spiral of debt – and the depressive symptoms that come along with it.

We all take on debt at some point in our lives, and in many cases a little leverage can be just the ticket to launching us toward our biggest, most important financial goals. But if your debt is getting you down, chances are you’ve crossed a line.

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Money = what?

In strictly literal terms, money is just math. If we made all of our spending decisions as logically as we tackle a simple problem of numbers, personal finance would be easy. The problem is that people aren’t always rational, and most tend to see money as more a matter of the heart than one of cold, hard facts. That’s because most of the things we pursue in life have a price tag attached - an education, a car, a job, a hobby, even a spouse. In that sense, money becomes a lens through which we view the world.

And when we turn that lens on ourselves, things can get a little warped. If you have money in the bank, you’re ready for the red carpet. If you’ve got a ton of debt, that picture probably looks more like the grim reflection you encounter in the mirror after a rough night.

Most of us have gotten so used to using money to measure just about everything, it’s only natural that we also lay it down as a yard stick to measure our own self worth. But just like your salary or your bathroom scale don’t do a fair job of measuring what you’re worth, neither does your net worth, regardless of whether it’s positive or negative.

[More: Debt: The good, the bad and the ugly (& how to tell the difference)]

In fact, the biggest problem with measuring yourself in this way is that when you let matters of money get this personal, it can be really hard to make any financial progress. You might think you’re trying to balance your books, when what you’re really looking to do is boost your self esteem. And that isn’t a project that any amount of money – or debt – can subsidize.

How to get out of debt depression

If you have clinical depression, you’ll need a professional to help you tackle it. To tackle the kind of down-in-the-dumps feeling that comes with debt, all you need is a plan – and the ability to look at the world through a different lens. Having debt doesn’t mean you’re falling behind in life any more than having money in the bank means you’ve arrived. But moving from one to the other is a journey worth taking. Not because you’ll have more money - we already know that doesn’t buy happiness - but because you’ll have less debt.

Well, well. So maybe your credit card really does hold the key to being happier after all. is a free personal finance and education site for women.

Nothing contained herein is intended to provide personalized financial, legal or tax advice. Before implementing any financial strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances.

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