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debt: canada's borrowing binge

Dr. Donna Ferguson, a psychologist in the Work Stress and Health program at the Centre for Addiction and Mental Health, says financial stress is a contributing factor in suicide among middle-aged Canadians.Darren Calabrese/The Globe and Mail

This is part of a Globe series that explores our growing dependence on credit — from the average household to massive institutions — and the looming risks for a nation addicted to cheap money. Join the conversation on Twitter with the hashtag #DebtBinge

As Cait Flanders's bills grew, so did her stress.

Flanders, then 25, was so anxious about her money troubles that her credit-card statements made her feel ill. So, she ignored them and continued making minimum payments without looking at the balance. Denial, however, did little to alleviate the chronic unease. Her debt was taking a toll on her health. She put on 20 pounds. She had trouble sleeping.

In 2011, when Flanders finally gathered the nerve to examine her financial statements, she had nearly maxed out her credit-card limit and had accumulated a total debt of more than $28,000 – much of which was consumer debt.

"I remember just sitting on my bed and my hands were shaking, and I just started crying," says Flanders, now 29, of Port Moody, B.C. She felt depressed for some time afterward. "I just remember lying in bed and feeling like such a loser."

Across the country, Canadians are slipping deeper into household debt. In the last quarter of 2014, the ratio of Canadians' credit-market debt to disposable income reached a record 163.3 per cent, which means we owe $1.63 in mortgages, other loans and credit-card debt for every dollar of disposable income. The imbalance is not just hurting our bank accounts; we may be getting sicker as a result.

Debt-related financial stress is not just linked to mental-health problems, such as anxiety, depression and a higher risk of suicide. Recent research suggests it can also negatively affect our physical health, potentially putting us at greater danger of developing high blood pressure and stroke (the third leading cause of death in Canada after cancer and heart disease). As the health consequences of financial stress become more evident, researchers and health professionals are making the case for treating personal debt as a public health problem.

But is debt on a par with, say, obesity, poverty or substance abuse?

"Absolutely," says Dr. Donna Ferguson, a psychologist in the Work Stress and Health program at the Centre for Addiction and Mental Health in Toronto.

"I think that it's a major crisis. It's an issue that needs to be addressed."

Ferguson says financial stress plays a significant role in the incidence of suicide among middle-aged Canadians. She suggests health-care professionals can get more involved in tackling their patients' financial stress and even take steps to help them manage their money. Although she acknowledges financial planning was never part of her professional training, Ferguson often finds herself helping clients develop budget plans, on top of providing traditional interventions, such as cognitive behavioural therapy. Financial counselling, she concedes, is technically "not my role," but she feels compelled when money management is critical to a client's recovery.

"I am treating the depression. I'm treating the anxiety. But for me, I feel like you have to get to the root cause," she says. When it comes to personal debt, she adds, "You can treat around it. But if things are not getting better, then you have to ask yourself, 'Well, what's missing?'"

Her approach to her clients' money problems is informal, but in Britain, researchers such as Chris Fitch are working to address the health implications of debt through more organized efforts.

In a 2009 paper, published in the journal Mental Health in Family Medicine, Fitch and his colleagues noted that a government-led workshop of health, government and financial sector representatives had recommended that all health professionals ask their patients about financial troubles during routine check-ups. If patients reported being in debt, "primary care professionals should routinely assess for depression and other common mental disorders." Moreover, the workshop called for "debt first aid" training for health professionals, which would teach them how to talk to patients about their finances, to support them, and to refer them to debt services.

Meanwhile, the financial sector should be aware of the existence of customers with mental-health problems, the paper reported, since one in four British adults with mental-health problems also had debts.

Since publishing the paper, Fitch and his colleagues with the Royal College of Psychiatrists in London and the charity Money Advice Trust have been offering guidance to health professionals on how to address their patients' debts, and training to creditors on how to treat customers with mental-health problems or are otherwise vulnerable. (Such guidance and training is not widely available in Canada, though Cary List, president and chief executive of the Financial Planning Standards Council, says the financial planning community in Canada is looking to link with health professionals to address financial stress.)

As Fitch explained in an e-mail, the reasons for addressing personal debt as a public-health matter are manifold. Individuals struggling with debt are twice as likely to develop major depression, and the more debt they have, the more likely they are to have mental-health issues. Debt makes it harder for people to recover from mental-health problems, it's linked to other issues, such as poor physical health and substance abuse, and people with mental-health problems are more likely to have a harder time recovering from debt.

Being in debt, however, isn't universally stressful, and thus not always bad for one's health.

"Debt is neither good nor bad," says Scott Hannah, president and chief executive of the New Westminster, B.C.-based Credit Counselling Society. The problem, he says, is we've become a nation that's increasingly comfortable living with debt, which makes it easier for people to fall dangerously in the red. In previous generations, people would pay off their mortgages before they retire and use credit cards for emergencies and avoid carrying a balance. That is no longer the reality.

"Thanks to home-secured lines of credit, we use our homes as an ATM machine," Hannah says.

It's still not well understood what types of debt provoke the most stress. At the University of Massachusetts Boston, assistant professor Elizabeth Sweet of the department of anthropology is trying to tease out the many variables that can make debt a health hazard. For instance, she notes, people may feel less stressed about mortgages and student loans than credit-card debt or payday loans.

While she's still in the early stages of research, she notes accumulating debt is not simply a matter of individual choice or willpower. The loss of a job, major home repairs, and the cost of coping with illness can put people in the red. And some people also feel they're doing the right thing and building their credit by taking out loans, but the information they need to take control of their finances isn't always available in a way that's interpretable, Sweet says.

Employers can play a role in helping employees recover or avoid debt-related stress as they increasingly take an interest in supporting workers' mental and physical health, says Mark Henick, program manager of the Canadian Mental Health Association's Mental Health Works. (Some employee-assistance programs, for instance, include debt counselling.) But doctors may still need convincing to intervene in their patients' finances.

"I think sometimes physicians think, 'I'm not an accountant. Why would I ask about someone's finances?' But it is the primary cause of stress for most people," he says.

For Flanders, taking control of her $28,000 debt also prompted her to take better care of her physical health. She kept a blog to chronicle her repayment process, Blonde on a Budget. And by early 2012, about 10 months after examining her credit statements, she paid off about $13,000 and started exercising and eating more healthfully.

"Just as soon as I saw that I could take control of one thing, I could take control of something else," she says. By June of 2013, she was debt-free and had managed to drop 30 pounds. Today, she's both financially and physically fit.

"I'm [in] a polar opposite position now than I was four years ago. I have no debt, I have savings, I have investments. I work out, I hike. I take care of myself more."

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