Eliminating Debt Leads to Happiness

Billy McGrath
January 11 2019
Eliminating Debt Leads to Happinesscover

According to the American Psychology Association, money is the leading source of stress for American adults. Debt, especially, increases stress and negatively affects overall well-being. Two new studies, one by Purdue University and one by the University of South Carolina , found that student debt is strongly linked to levels of stress and depressive symptoms.

Stress and depression from student debt

The study by Purdue found that debt has a significant, negative impact on stress for college graduates. The report showed that the presence of student loan debt is nearly as strong of a predictor of financial worry and life satisfaction as income levels.

Researchers at the University of South Carolina found that depressive symptoms are more prominent in graduates with student loan debt. Beyond the troubling implications for employee health, this leads to worse performance and productivity at work by debt-burdened employees.

Repaying student loans

Student loans payments exceeded the threshold of affordability in each of the 50 states. This means that student loan payments are greater than 10 percent of disposable income.

If graduates are to get out of debt, they need to be proactive and effectively use financial resources. Paying off student debt ahead of schedule can have a large impact on both personal finances and mental health.

Debt assistance vs. pay raise

The results from both studies suggest that employer assistance with student loans makes employees nearly as happy as a pay raise. The loan payment help lowers monthly financial obligations for employees, increasing cash flow. 

For employees trying to save money, paying off loans is a smart investment with guaranteed returns. Paying down student debt early has a guaranteed saving on years’ worth of interest costs, while investing in the stock market has variable returns.

Paying off debt also alleviates money stress, which leads to improved mental health. This can also lead to improved health and immune systems, and lower risks for headaches or high blood pressure.

Achieving freedom from debt makes life better for both employers and employees. Employees can enjoy lower levels of stress and improved mental and physical health. Employers can enjoy the increased productivity of their debt-free employees.

Billy McGrath
January 11 2019