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How Depression Threatens Financial Well-Being

This article was written by in Health, Psychology. 7 comments.


An estimated 9.1% of the population in the United States have symptoms of depression, according to the Centers for Disease Control (CDC) Morbidity and Mortality Weekly Report.

Depressive illnesses are more than just being sad occasionally. Among people with depression, there is a measurable chemical imbalance in their brands, and this prevents signals from being transmitted from neuron to neuron correctly. So depression changes how people think. And any obstacle to rational decision-making has significant long-term effects on an individual’s quality of life. As a family’s financial situation is one of the primary concerns of this blog and a primary factor in the quality of one’s life, it stands that depression can cause difficulties with money worth a discussion here.

Although depression is often chronic, it can be triggered by external events, or at least correlated to life factors. One of these factors is state of employment; the longer someone is out of work and looking for a job, there is a higher probability of that person showing symptoms of depression. To be certain, the CDC study shows 21.5% of unemployed persons in the United States have depression, compared to 6.6% of the employed population. Of those unable to work 39.3% have depression.

A cycle exists that makes depression particularly dangerous, even when putting aside the increased risk for self-harm, suicide, or violent behavior. Frequent or consistent financial problems, stemming from the loss of a job, a divorce, a bankruptcy, health problems, or a variety of other reasons, can lead to depression’s chemical imbalances. Those imbalance can prevent what others might consider “clear thinking,” the type of cognitive abilities that might, in other situations, be able to help people improve their finances. And that frustrating mental condition can lead to more financial trouble, keeping the depression persistent.

In some cases, people have the ability to adjust their thinking on their own, and change their circumstances — or at least, change the way they perceive their circumstances. There was an example of this recently in a story on CNN Money:

When Ray Camp lost his job at a Dell supplier at the height of the recession, it took a toll on his soul and his family. After nearly four years of looking, all he found was 16 hours of work every other week at a company fours away from his home in Nashville, Tenn.

He was crushingly depressed and felt worthless. His sour mood made him difficult to be around, putting a strain on his family. His story is a familiar one among the 3.1 million Americans who have been unemployed for more than six months…

In February, Camp finally decided he was no longer a failed job applicant but a new retiree. After four years, he had embraced retirement and started collecting social security since he had also turned 62. “Once I finally got into the mindset that I’d never have to face rejection again, I started to feel 100%,” said Camp, who now spends the hours he lost on job searches playing with his grandchildren and mowing his lawn.

For some people with depression, the mindset change is only possible with therapy or medication. In fact, the CDC distinguishes between “major depression” and “other depression,” and it is this “major depression” that is less likely to be overcome through nothing more than a decision to look on the bright side of life.

The Suicide Awareness Voices of Education group explains the differences between a healthy brain and a brain with depression:

A person living with depression does not always have the same thoughts as a healthy person. This chemical imbalance can lead to the person not understanding the options available to help them relieve their suffering. Many people who suffer from depression report feeling as though they’ve lost the ability to imagine a happy future, or remember a happy past. Often they don’t realize they’re suffering from a treatable illness, and seeking help may not even enter their mind. Emotions and even physical pain can become unbearable.

It should thus be no surprise that depression can become an obstacle not only to financial independence but to basic financial stability.

Depression affects your performance at your job. Motivation is a casualty of depression, so this affects how you work, if you do happen to have a job. Motivation is crucial for performing as you’re expected to perform at your job. As depression goes untreated, it may be difficult to hold onto that job.

Depression affects your spending. With depression, people may seek behaviors that heighten their sense of pleasure to counteract the general depressive moods. One method of self-therapy involves spending money. Buying things and experience can create a high feeling that masks emotional pain, at least temporarily. “Retail therapy” is a common type of self-medication, so to speak. And the temporary feeling of satisfaction gained from buying a present is more powerful than the reasoning and logic behind the idea of spending only what you can afford.

Depression can increase debt. From spending more than you earn in order to feel good to the lack of an expectation of feeling good when paying off debt, depression can lead to a larger portion of one’s life spent in debt or accruing new debt. Debt severely limits your options in life, and when in combination with unemployment, it can leave you with nothing over the long-term.

Treating depression can be expensive. Stories like the one in CNN Money about someone overcoming depression on his own are not the norm. Dealing with major depression requires professional help. And doctors are not cheap. Health insurance comes in handy when paying for psychologist visits or medication, but many with depression are not working. Until the Affordable Care Act, citizens in the United States have typically relied on employer assistance to subsidize the expense of health care, but the Act may be ushering in a new era in which individuals manage their own health care insurance, with the potential for subsidies from other taxpayers. Regardless, treatment is expensive, and those needing the treatment may not be in the best position to afford the help they need. Thus, they don’t get the help, and depression and its financial effects continue.

I think the best thing that those of us without depression can do is to learn to be somewhat empathetic towards those who do. We, who are often too smart for our own good, expect people to be able to make rational decisions about their lives, and I’ve seen many people get frustrated when people in their lives do not act in responsible ways with their finances. We want to believe in personal responsibility and accountability, where good results come about from hard work and good decision-making, and where people have the capability of improving their lives. We want people to be able to take action. We want people to control the way they react to certain situations.

We want people to “choose happy.”

But depression is one of many things that prevent people from seeing these “truths” that we want so much to share with the world.

It took me a long time, but I now live under the philosophy that happiness isn’t something that needs to be sought, it’s just a choice. I can always choose how I react to any situation in which I find myself. But every once in a while, I still have to remind myself that this is not a choice everyone is free to make at every moment. The ability to make a choice rests on the brain’s ability to make neurological connections, and that ability can be impaired.

Read the latest CDC report on depression.

Updated August 6, 2014 and originally published August 5, 2014. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 7 comments… read them below or add one }

avatar ANON

Thank you, thank you, thank you. Many of us are also undertreated, which means we can get through the immediate future but can’t plan for the long-term. My husband became permanently disabled at age 37. We have disability insurance, but my depression understandably grew some, and being undertreated, all I could do was focus on getting the house and yard cared for and maybe do some freelance writing, and after 9 years, moved. The retail therapy was a factor; fortunately, I am a big bargain hunter so it didn’t do as much harm as it could have.

I discovered Dave Ramsey and we are now in a real pickle. Due to horrendous medical bills, we are going bankrupt. Our retirement savings are poor, and our future uncertain.

I HAVE to get to a point where I can get a job, or at least, get self-employed again. I don’t know how I am going to do that.

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avatar Abby Freedman Perry

I feel for you. I’ve been disabled from age 19, which means constantly failing at trying to support myself. At 28, I finally got on disability. Through absolute happenstance, I managed to find a job I can do at home, but I still have to deal with depression since that’s another health problem. Meanwhile, my husband is now on disability for his own health problems.

Luckily, when things were at their worst we didn’t have to contend with a mortgage. I’m certainly sorry to hear about your current situation. The fact that people can have these crippling medical bills… well, that’s a rant for another day.

I’m sure you’ve gotten all sorts of advice about depression, so I’ll probably be repeating some of it. But have you looked into sliding scale therapy? There are usually programs where newly graduated MSWs need the training hours, so you get a good rate. The counselors are overseen by someone with experience. I found a therapist I really liked that way, and she gave me a discount when she went into private practice. Also, is there any way you’d qualify for vocational rehab?

Also, it’s painful but I recommend the book “Shoot the Damn Dog” to any depressive I meet. It’s an eloquent look at the dark days of depression by someone who was resistant to antidepressants. It really resonated with me and helped me work a couple things out more.

I think you have it particularly bad because you’re obviously in a situation where you *have* to act. But the stress of having to act just fuels the depression and stress, which makes it so much harder.

I’m writing a darned book at this point, so let me just say that if you ever feel like stopping by my blog — yep, shameless self-promotion — I talk a lot about getting through life imperfectly. A lot of my readers have health problems, some compounded by depression, and sometimes it’s good just to be able to vent.

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avatar Abby Freedman Perry

Thank you for sharing these points of view. I was diagnosed with depression 24 years ago (ack, I’m old). Later I was more correctly diagnosed bipolar 2. That changed which meds I should take, which helps a lot.

But there are days that I just won’t be able to make myself do something as simply as making a phone call. I just have to accept it and try not to let guilt overwhelm me, which could keep me from doing other chores.

So you see, it’s not just going on shopping sprees. It’s an issue of capability — and the cost of incapability. Maybe you have a bad depression day (or days) and just can’t make yourself pay that bill on time. Late fee. Maybe you aren’t capable of keeping a close eye on your bank account. Overdraft fee. Maybe you aren’t up to cooking — or even going out to get groceries. So you order in, even though it’s pricey.

Depression has so many costs in so many ways — large and small — that most people don’t appreciate. In fact, as you pointed out, many people can’t understand or appreciate that depression is an illness. One of the few, in fact, that makes you feel like a bad person for having it.

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avatar Luke Landes ♦127,490 (Platinum)

I’m certainly in the early stages of learning about any mental illnesses, so it’s fantastic to get feedback from anyone who has gone through them and has experiences to share or lessons that others can learn — particularly about empathy and understanding.

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avatar Abby Freedman Perry

As I said in my reply to Anon, I really can’t recommend Shoot the Damn Dog enough. Granted, it’s just one person’s story, and it’s pretty much a worst case scenario. But it’s written by one of the founding members of Elle, and it’s really well written.

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avatar Donna Freedman ♦85 (Newbie)

In addition there’s the inability to plan or even to see a future for yourself. It’s all you can do to get through the current day (imperfectly), so you don’t think about saving an EF, building a child’s education fund or your own retirement, looking for the best deals on the things you need the most, taking advantage of a low interest rate to apply for a mortgage vs. renting, etc. (Talk about opportunity cost!)
Or maybe you need a better job than the one you have now but feel so worthless you can’t imagine anyone wanting to hire you. You worry that you’re not doing right by your partner and/or your kids. You’re afraid that your illness is ruining your family’s life. Etc. etc. As the character in “Diary of a Mad Housewife” put it, “The list could go on, but I can’t.”
Thanks, Luke, for being willing to learn.

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avatar Yo Yo Mama

Thank you for the excellent article. In terms of finances, a huge piece of this is the bi-polar II designation. Rapid cycling manic behavior can trigger buying in excess. Knowledge is power – the more we learn about this the greater our understanding of people who are dealing with an awful lot. Thanks again.

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