Don't let debt make you sick
Image Source: Flickr User Alachua County
Do you live in Wilmington, North Carolina and are struggling with debt? Did you know that being in bad financial shape can impact your health and cut years off your life? A recent working paper from the Federal Reserve Bank of Atlanta presented the findings of a study on the effect of financial stress on death rates.
Federal Reserve Study Details
The underlying facts of the study are that 69% of U.S. households have some form of debt, and that’s representative of Wilmington, greater North Carolina and the United States as a whole. There is also the fact the delinquency rates on debt soared during the Great Recession just a few years back with an increase of more than 50% which meant many consumers fell behind on servicing their debt.
The study also pinpointed the issue with debt delinquency is that when you run late on payments, you are then less likely to have access to credit. Access to credit helps Wilmington residents “smooth out consumption.” What that means is, for example, if you have a major car repair, the ability to tap credit allows you to make the payments over several months rather than trying to scrape up the cash in a lump.
Other Studies Have Linked Debt and Poor Health
Other studies have shown links between debt and stress, but this Federal Reserve white paper explains why some of these are flawed. One study looked at poor health and finances, but what may not be considered is which triggered the other. Often those with poor health struggle with greater debt because their illness impacts ability to earn and increases expenses.
There is also the consideration that for Wilmington consumers stuck with unaffordable debt, there may be less healthcare utilization for medical conditions than they would otherwise pursue. If treatment isn’t sought because of financial concerns, health may worsen which, in turn, can worsen the financial status of the already at-risk consumer.
What the Federal Reserve Study Found
The study looked at four factors that measure financial stability: credit risk, severely delinquent accounts, total delinquent debt, and quantity of accounts in severe delinquency. For Wilmington consumers concerned with the toll debt takes on their health, here’s a look at the Federal Reserve study results:
#1 When credit scores rise, the risk of death decreases.
#2 As severely delinquent debt rises, the risk of death increases by as much as 5%.
#3 Those with higher credit scores have a lower risk of death (and vice versa).
#4 Conversely, reducing delinquent debt and improving credit risk improves mortality risk.
#5 Patterns hold despite consumer age, but older people experience greater risk.
The study also concluded that debt from a financial crisis could have a lasting impact on your health to the extent that it can increase your mortality rate. The study closes with this statement: “The effect of individual finances on mortality is non-trivial.”
What Can You Do to Fix Your Finances and Protect Your Health?
For Wilmington consumers just a bit behind on bills, you may be able to belt-tighten to get debt under control and get back on track financially. But if you have seen a decrease in income, increase in expenses, or both, you might need a serious intervention. Most bankruptcy clients at our Wilmington location have suffered some “event” that caused financial stress.
For some, it’s a period of unemployment. For others, it might be divorce or an accident or illness that impacted their ability to work while triggering higher health costs. In the case where you are too far behind to dig yourself out by any reasonable means you can manage on your own, bankruptcy might be the solution for you. End the stress now and shed your debt.
Contact the Law Offices of John T. Orcutt today for a free Wilmington bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington. Call +1-919-646-2654 now to set a free appointment and get started on the road to less debt and, hopefully, improved health.