Get Out of Debt Guy

PTSD Caused by Money Troubles

Posted January 28, 2013
Updated February 6, 2013

Post-traumatic stress disorder (PTSD) is something we normally associate with military members. But the reality is that many who have faced traumatic situations can also suffer from the impact PTSD creates.

Through news reports and media coverage we are also aware of the ripples and problems PTSD can create in the lives of many brave military members after they return home. But what if I was to tell you that people who have lived through difficult financial problems can also suffer from PTSD?

Your first reaction to such a statement would probably be "that's not possible" or "that's not true." But in fact it is possible and it is true that many people have struggled with debt related PTSD.

Society minimizes the impact that a problem debt has on lives. Those suffering with problem debt are often disparagingly labeled. But the fact remains, that no matter how someone landed in financial trouble, they still must deal with the trauma and find a way out.

Money problems have two primary components. The first is the actual events that led to the financial trauma but the second is that of the aftermath and impact that financial trauma has on the individual lives.

It would be wrong to label people with debt in negative ways without realize many are suffering with what could be easily classified as post-traumatic stress disorder and need to seek help for that illness.

[Financial] Trauma: "An emotional state of discomfort and stress resulting from memories of an extraordinary, catastrophic experience which shattered the survivor's sense of invulnerability to harm." (Trauma and its Wake, Charles Figley, Ph.D.)

This article introduces a common condition we have heard much about, PTSD, and the reality that many traumatized by money troubles actually suffer from the psychological impact of PTSD related difficulties and without treatment and/or awareness it can dramatically alter the otherwise healthier path in life that could be possible after money troubles.

And that detour in life from debt related PTSD does not began after the event is over, but once the trauma has been felt. The presence of PTSD also hurts the ability for the individual to deal with their debt in a healthy way. Dr. Goulston, a psychiatrist, describes what he calls the "Four Ds of Financial PTSD," debt, dependency, distrust and denial. Those conditions hold people back from making good and level-headed decisions about how to best deal with their debt.

I can't tell you how many times I've had people tell me that they are stuck not knowing what to do to get out of debt or following their financial problems they want to avoid credit because they don't want to face that pain again.

Sarah who lived through debt said, "When I was debt, it didn't just feel like "stress"- it felt like my life was falling apart. It also left me wondering if I will ever shake the feeling that I could lose everything again at the drop of a hat."

They mistakenly continue to link credit with the retraumatizing feeling that occurs when they think about having good credit again. Good credit in their minds equals pain because the good credit led to problem debt and the problem debt led to pain.

The reality is most likely their financial PTSD is keeping them linked in behavior that actually holds them back from escaping the bonds of their lingering emotional debt. By not taking action or only taking avoidance action to deal with their debt they circle in a nearly perpetual cycle of self-fulfilling financial unhappiness.

Some say their money troubles have left them distrusting and depressed. And I've talked about the impact of denial in the process of dealing with debt in my article on the seven stages of debt.

There have been a limited number of studies about the effects of financial problems and the result of PTSD. One such study was published in 2012. In that study by Audrey Freshman (Freshman, A. (2012). Financial disaster as a risk factor for posttraumatic stress disorder: Internet survey of trauma in victims of the madoff ponzi scheme. Health and Social Work, 37(1), 39-48.) she stated:

There are no known studies to date examining the risk of PTSD associated with sudden and dramatic personal financial loss. A Web-based, online, nonprobability convenience survey of 172 Madoff victims (56% female; mean age, 60.9 years) using the Posttraumatic Stress List Checklist, civilian version was conducted 8 to 10 months following the focal event.

Sociodemographic information and data concerning anxiety/depression and health-related concerns were gathered by self-report questionnaire. A five-point Likert-type scale was used to assess victim response to government regulatory systems.

Results demonstrated that a majority of respondents (55.7%) met criteria for a presumptive DSM-IV-TR diagnosis of PTSD, and as a group, respondents acknowledged high levels of anxiety (60.7%), depression (58%), and health-related problems (34%). Victims overwhelmingly affirmed a substantial loss of confidence in financial institutions (90%). This raises a public health concern as to governmental response and counseling needs during times of severe economic trauma.

It's one thing to now recognize the reality that PTSD can be experienced by many as a result of financial trauma or debt trauma, but what now?

Currently there are a number of therapies for those that suffer from PTSD. But the most important step to take is the one that allows you to either reach out to someone suffering and guide them towards help or to seek help if you are the one struggling with these issues.

The most common avenues of treatment are counseling, therapy, medication, or a combination of all. If you are looking for help you should talk to your physician about a referral for help with anxiety counseling or find a local mental health professional that has experience with PTSD or anxiety counseling.

For a more in-depth look at PTSD and money related issues you can read Debt Related PTSD and FInancial PTSD Quietly Hurts Many.

 Steve Rhode

Get Out of Debt Guy


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  • steverhode Jan 30, 2013

    Your description of it as a circular event is spot on. It is a self-feeding spiral unless something is done to address the underlying triggers or know through awareness that outside help is needed.

    Most importantly to know you are not alone nor crazy is often enough initial comfort to realize it is appropriate to seek help.

  • jhinton2503 Jan 30, 2013

    This is very interesting. I've documented my own findings about first-hand experiences that support this topic. The best way to describe the situation is "circular." One event leads to another and so on. And until one knows the whole story, it is difficult to understand how some people just cannot get well. Thanks for sharing.

  • steverhode Jan 29, 2013

    I hear you on the big pharma comment but the awareness of general anxiety and associating a name to it isn't a new issue. PTSD itself has been known by many names over the years, including shell shock, 1,000 mile stare, blank stare, soldier's heart, battle fatigue, etc.

    Take for example those that lived through or impacted by 9-11 who were diagnosed with PTSD.

    The only thing new in this concept of associating financial stress with PTSD is a matching of an event that leads to already accepted symptoms.

    As someone that has helped people on the front lines with debt since 1994, I've seen many destroyed people, not from the debt but by the depression, stress, fear, and symptoms that could be wrapped up under a modern definition of PTSD.

    For years there have been examples and people who were under such emotional duress that they took drastic action instead of reaching out for help.

  • Terkel Jan 29, 2013

    I sense another "disorder" for Big Pharma to cash in on, more Medicaid bills to treat it, another surge of "stress disabilities", and an imminent collapse of the economy.

  • steverhode Jan 29, 2013

    I think if you follow the link to the greater article with more of the research in it you will find the academic backup that supports this. Many get confused that PTSD is a war related disorder, it's not. It is a general anxiety disorder that many face who have not serve in a war zone.

    The triggers for the financial PTSD are not self-inflicted. They are the result of the stress and loss experienced and the symptoms that exhibit. Take for example the Madoff victims who clearly exhibited signs of PTSD. It would be hard to say they did it to themselves.

  • Squirreling Dervish Jan 29, 2013

    A lot of credit problems are self inflicted ( overspending, credit extensions) so you are talking about some people with self-inflicted PTSD....It's ridiculous. I have relatives who served in Afghanistan and Iraq, and they have genuine PTSD. I think "Credit Induced PTSD" is ridiculous, but that is my opinion only..

  • steverhode Jan 29, 2013

    What part do you feel is lame?

  • Squirreling Dervish Jan 29, 2013

    oh BROTHER...Seriously??

    How LAME

About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.