Is your credit card debt getting in the way of happiness?

People have been debating the source of human happiness since time began. From Jesus Christ himself to Charles Dickens and even The Beatles, social critics and artists have advanced the idea that, whatever the true source of happiness, money and wealth certainly aren’t it. 

These days, there is a renewed push to include happiness as a component of progress, with the New Economic Foundation’s Happy Planet Index serving as one example.

“[T]here is an emerging consensus that economic activity should be seen as a means to an end, rather than an end in itself,” the report states. 

On this basis, Australia was ranked 76th in the world — a fact that might surprise some, given Australia’s status as an affluent, first world country. Why might this be the case, and does the state of one’s savings account have something to do with it?

Debt and dating

While wealth may not bring happiness, a link between individuals’ levels of happiness and their finances has certainly been shown to exist. 

A recent consumer study by RateCity found that money can be a deal breaker when it comes to relationships.

The study revealed that 49 percent of women would end a relationship with a partner if they discovered he had significant levels of debt. Yet, women said they would be reluctant to disclose their own debts to a partner.

Similarly, a 2009 study conducted by the National Marriage Project in the United States found that high levels of credit card debt tended to increase the levels of unhappiness among couples, as well as increase the incidence of fighting.

While in 2011 Canadian researchers behind a report titled ‘The Happiness Equation: The Human Nature of Happy People’ found that being debt-free was one of the key determinants of happiness. 

This same study also found that one’s personal income was less relevant to happiness than was commonly assumed. 

Money and mental health

Finally, a 2013 study from the University of Southampton found those in debt were three times more likely to have mental health problems than those without. Specifically, more than 25 percent of the study’s participants had debt and issues with mental health. 

So while the link between income and happiness may not be set in stone, it is clear that higher levels of debt can take their toll on consumers. 

What can you do?

This suggests that the key to ensuring happiness — through your finances anyway — is to take care of your debt. 

If you need to obtain a credit card, it might help to carry out a credit card comparison first before ringing up a bank. This way, you can weigh up the different rates, terms and fees offered by various providers in order to find the one most conducive to a healthy level of debt. 

You might also think about aiming to pare down your debt before it gets bigger. This will involve targeting the higher interest debts first, preventing them from further accruing, before moving on to larger, lower interest debts. 

While this takes discipline and sacrifice, if these studies are anything to go by, you may end up grinning from ear to ear once you’re finished.

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