Debt Related PTSD and Financial PTSD Quietly Hurts Many

We commonly think that post-traumatic stress disorder (PTSD) is something that only combat troops face. It’s thought of as an effect only of war. But that’s not the whole story.

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.

It’s quite possible that Dave Ramsey’s entire efforts to talk people out of bankruptcy are based not on logic or reality but on the unresolved PTSD he faced after living through his financial problems.

Dave Ramsey’s unawareness of what was actually happening to him is not a unique occurrence. In fact I might also be just one such person that was struck with debt related PTSD.

Years ago Pam and I recorded a video about our experience with our financial problems and if you watch this section of that video you can hear us described symptoms that we experienced.

While I had previously associated post-debt depression with the financial struggles we had. After doing the research for this article I think that what we actually lived through was most similar to some PTSD experiences.

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. 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.

The Seven Emotional Stages of Debt

A financial collapse can lead to the same emotional reactions as those experienced by those facing other traumatic events. It’s not the exact nature of the event that leads to PTSD, but how the trauma impacts the individual.

The Reality of Debt Related PTSD

This example from psychiatrist Dr. Mark Goulston shows the way many people have felt living through their money troubles. I remember similar feelings myself.

Dr G: How big a trauma has losing all this money been?

Client: Big.

Dr. G: How big?

Client (now beginning to cry with upset and relief): I can’t even think about it.

Dr. G: What does it make you want to do?

Client: I don’t know. I guess, just hide. (He then continues to speak about this for several minutes).

Dr. G: How well do you think you could handle another trauma with your wife, children, parents, health?

Client (looking at me incredulously): Are you nuts? I couldn’t.

Dr. G: What do you think you’d do?

Client: I couldn’t even imagine. (He continues to speak about this for several minutes).

Dr. G: So, you’re as scared as you’ve ever been.

Client: More than I’ve ever been. – Source

Lind Friend, a practicing psychotherapist for many decades has also witnessed the same PTSD symptoms in people experiencing financial loss and worries. She describes the PTSD symptoms as, “anxiety, sleeplessness, heart palpations, overreacting, irritability, excessive worry, a sense of doom, loss of interest in normal events, emotional numbing, and flashbacks to traumatic events.” – Source

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Dr. Maggie Baker, another experienced in anxiety, depression and financial issues, says she sees “patients suffering from post-traumatic stress disorder (PTSD). These patients are grappling with the psychological burden that results from catastrophic losses.”

Dr. Baker states the symptoms of financial PTSD are easy to recognize. Ask yourself the following questions:

  1. Do you think about your money more in the last few weeks?
  2. Are you worried about the current and future performance of your 401(K)?
  3. Do you wake up at night with persistent memories of the 2008 financial collapse?
  4. Have any small events (such as friend asking if you are going on vacation) caused you anxiety or worried money thoughts?
  5. Do you feel a jolt of anxiety when financial statements arrive?
  6. Do you avoid opening or reading your financial statements?
  7. Do you have a growing sense of fear, helplessness and hopelessness?

If 4 or more of your answers are YES, then you are being held captive to the symptoms of PTSD. – Source

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.”

Academic Studies About Financial PTSD

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.

Dr. Goulston, who I previously mentioned, describes in an interview which you can listen to here, some key experiences of those with debt PTSD.

Goulston: I think what goes on for a lot of people, something that I call the “Four D’s of financial PTSD,” and that’s debt, dependency, distrust and then our denials in working. And what that means is when you’re in debt, whenever someone calls you to try to get money from you, it re-traumatizes you, it makes you realize how you don’t have what you thought you had. And then, when you feel that vulnerable, you reach out — who can I depend on? Who can I rely on? I’ll call my stock broker, I’ll call my financial person. I’ll read the news. And then what happens is when you hear the news changing from day-to-day, you feel I can’t trust anyone.

So when you’re in a state of feeling like the world is trying to take more money from you and you don’t even have that much leftover, and who can you depend on, because you don’t know what you can do under your own control, and the people that you have trusted, you can’t trust anymore. It puts you into this real state of irritability, almost brittleness, fragility. And that’s where the fourth D is, what allows us to get through life is denial that functions…

Moon: “I’d rather not think about it.”

Goulston: There you go. I mean, if we were aware of how dangerous it is to drive, how dangerous it is to fly, all the side effects of every medication we take — if we didn’t have healthy denial, we would be frozen. So I think what’s happening is people are living with these four D’s constantly, which leads to “so what do you do about it?” So any thing that’ll help you regain a sense of control will help you feel better. And also, talk with each other and you listen to each other, makes it better.

Moon: What are some of the warning signs, if you will, that you might be experiencing this?

Goulston: OK, warning signs are you feel a change in your personality, you tend to be irritable, you snap at people, you’re withdrawn. But the key signs for PTSD is that you tend to relive the event over again, either in dreams or you even have flashbacks when you read the newspaper. And you want to avoid it, you want to avoid being re-traumatized, because if you’re feeling vulnerable and you get another hit, a lot of people feel shattered, I just won’t come back. And then the third thing is that you have this increased arousal in your hyper-vigilance. So you can’t ever totally lower your guard. And if you think about it, think about that you can never lower your guard, so you never know what it’s like to relax.

PTSD and Debt

PTSD is an anxiety disorder following a traumatic event like injury, death or even something as emotional as the death of your financial like.

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The symptoms of PTSD fall into three main categories:

  1. “Reliving” the event, which disturbs day-to-day activity
    • Flashback episodes, where the event seems to be happening again and again
    • Repeated upsetting memories of the event
    • Repeated nightmares of the event
    • Strong, uncomfortable reactions to situations that remind you of the event
  2. Avoidance
    • Emotional “numbing,” or feeling as though you don’t care about anything
    • Feeling detached
    • Being unable to remember important aspects of the trauma
    • Having a lack of interest in normal activities
    • Showing less of your moods
    • Avoiding places, people, or thoughts that remind you of the event
    • Feeling like you have no future
  3. Hyperarousal
    • Difficulty concentrating
    • Startling easily
    • Having an exaggerated response to things that startle you
    • Feeling more aware (hypervigilance)
    • Feeling irritable or having outbursts of anger
    • Having trouble falling or staying asleep

You might feel guilt about the event (including “survivor guilt”). You might also have some of the following symptoms, which are typical of anxiety, stress, and tension:

  • Agitation or excitability
  • Dizziness
  • Fainting
  • Feeling your heart beat in your chest
  • Headache – Source

According to the National Institute of Mental Health to be diagnosed with PTSD, a person must have all of the following for at least 1 month:

  • At least one re-experiencing symptom
  • At least three avoidance symptoms
  • At least two hyperarousal symptoms
  • Symptoms that make it hard to go about daily life, go to school or work, be with friends, and take care of important tasks. – Source


Treatment of Financial PTSD

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. You may also want to use the links provided here.

With treatment, you can actually learn to get past these issues and resume a more emotionally stable and healthy life again.

In my personal situation the financial trauma I lived through decades ago is still easily recalled and felt as if it was yesterday. But the good news is that it long ago stopped controlling my life because I took action and steps to deal with my trauma.

Ironically, helping others with their debt problems was probably a real blessing for my recovery. It helped me to see I was not alone and that my issues were not catastrophic but actually trivial compared to many people face in debt.

But my experience dealing with debt was not unique. Take Dave Ramsey for example, all you have to do is listen to his traumatic tales of his financial problems and you can begin to see some glimpses of the impact debt had on his life and how he struggled with the emotional implications of his financial stress.

Dave says things like “I’ve never forgotten how painful it was for both of us,” Dave says. “I feel that pain to this very day.” – Source. He also says, “Bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage” and “Bankruptcy. That word sends chills up the spine. If you’re facing the prospect of bankruptcy or you’re in the middle of it right now, you know it’s a living nightmare. It can devastate your job, destroy your marriage and steal your peace of mind” and “Bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. I would never say that bankruptcy is as bad as losing a loved one, but it is life-altering and leaves deep wounds both to the psyche and the credit report.” – Source.

It’s very possible that Dave’s disgust with bankruptcy and credit cards is not a position based on logic as I talked about here, but the remaining bits of his unresolved debt PTSD issues he faced.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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7 thoughts on “Debt Related PTSD and Financial PTSD Quietly Hurts Many”

  1. Hello My Name is Dr. Harvey

    Earlier this year I was notified from a former teacher that University of Phoenix was faced with harming student through decerped advertising. University of Phoenix agreed to $191 million dollar settlement. I was told by Fedloan that I qualify for a discharge based on this settlement. However, I submitted several request base don the settlement but I am being told from Fedloan that I am ineligible based false certification disqualifying status. I am not sure what Fedloan want from me because I have sent documentation to them twice pleading my case. Please advise.

  2. I’m not going to be exaggerating my situation I’m just trying to overcome it while looking for answers.
    I’m BK,I’m a disabled Marine veteran with unemployable status due to my combined physical and mental health and in short I have PTSD. I was a successful journeyman lineman with the world in my control but in 2004 I got a reality check. I was being told PTSD was causing my anxiety and physical altercations were about to make me unemployable then to add to it I was electrocuted on a 12,000 volt power line. After I had nearly lost my life and spent the next 5 years recovering from the burns I was just spinning out of control mentally. I lost everything and by 2013 that was maxed out by divorce. I’m not going to keep on but I have made bad decision after another and I haven’t hit the very bottom yet and as hard as it is to admit I really need some help because I have enough sense to know I’m not as responsible and concerned about anything like before. I have a good idea but that doesn’t make any difference to the ones I have borrowed from and what a great borrower a veteran on a fixed income is. I’m paying interest that I would never have thought existed until the last couple years. So what is there to help me that doesn’t require a computer skill or a cosigner?

  3. I have Complex PTSD, and I have money issues, so I am glad to see this article addressing those issues. It’s hard to find any information about how trauma can affect one’s beliefs and relationship with money. However, I think in some cases, including mine, this approach puts the cart before the horse. I don’t have PTSD because of money problems, I have money problems because I have PTSD. I think it’s important not to overlook that possibility.

  4. Steve,

    This is an incredibly important issue you have raised on many levels. What immediately struck me after reading this is how often people who got caught up in the housing bubble and lost their homes (or are on the verge of doing so) are labeled as greedy, irresponsible, etc. That certainly can’t be helpful to their recovery. Also, I appreciate the way you are describing the confusion between the event (massive debt) and the solution (bankruptcy in some cases). Keep up the good work.


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