Debt Fatigue

Debt fatigue occurs when a debtor becomes overwhelmed by the amount of debt incurred and the seeming futility of the debt repayment process, and it may result in a debtor giving up on making loan payments and beginning to overspend again.

Debt fatigue can happen when a large portion of payments go toward interest and the overall amount of debt owed does not appear to dramatically lessen as payments are made. Be it from student loans, mortgage payments or credit card bills, working to pay off debt can feel like an impossible obstacle to overcome. Experiencing debt fatigue may eventually cause a debtor to declare bankruptcy as a last-ditch effort to resolve the situation.

Debt fatigue may cause a debtor to feel depressed, burned out and hopeless about the debt repayment process. Because it can often take years or even decades for debtors to repay their loans, it is easy to hit a wall, especially if a debtor has already made significant cutbacks to their lifestyle and spending habits to stay on track. One of the worst and most immediate effects of debt fatigue is that the debtor may start to overspend and incur more debt again. Increasing the debt load will not help a debtor's financial situation and is likely to drive the debtor to insolvency.

To make debt fatigue less likely to occur, a debtor should make efforts to stop incurring additional debt and make a realistic repayment plan that allows the debt to be fully repaid as soon as possible. By not dragging the debt out for any longer than necessary, the debtor will start seeing more dramatic results of the debt repayments sooner, preventing them from becoming overwhelmed by the overall debt burden.

Overcoming debt fatigue requires planning, persistence and endurance. Those facing large debts should create a strategy for beating it as soon as possible, such as the debt avalanche and debt snowball methods. Because debt often feels like it will last forever, a debtor should focus on the reasons they want to be out of debt and their goals for life after debt. It can also be helpful for a debtor to set small goals and budget to allow themselves a small reward, like dinner out or a movie with friends, whenever they reach a milestone. Because owing large debts is extremely common, if a debtor has friends and family in a similar debt situation, they might consider banding together to help each other remain accountable.