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“I lost over $450,000, I cannot pay the bank, I’ll become homeless. Suicide is the only way out.” This desperate plea summarizes one of the top posts a few months ago on a Reddit forum for the cryptocurrency Terra Luna. Like other cryptocurrencies, it recently lost more than 99% of its value.
Over the past five years, I have written several columns and given several media interviews on the risks of speculating in cryptocurrencies. My most recent one generated a conversation with several of my financial planning peers about the recent crypto meltdown. One of them called my attention to the discussions about suicide on cryptocurrency forums, where some members were posting suicide prevention phone numbers.
The possibility of suicide over financial stress is not something I’ve written about for 31 years as a columnist. Yet, it ranks as a significant contributor to suicides, according to Prof. Eric Elbogen from the Duke University School of Medicine in Durham, NC. He was cited in an article by Maria Cohut, Ph.D., that appeared in Medical News Today on September 8, 2020.
A quick Google search produced a plethora of suicides connected to the crash in bitcoin and other cryptocurrencies. Those people took their lives rather than face the intolerable pain and shame of losing everything they had financially, facing the humiliation of being homeless, unable to care for themselves and their families, and unable to make good on their promises to repay creditors.
The crash in cryptocurrencies was not a unique contributor to investor suicides. It just happened to be the financial crisis de jour. Many similar financial crises in history have resulted in people suffering catastrophic financial loss and taking their lives. After the 2008 economic crisis, rates of suicide increased by 5% in the European and American countries studied, particularly in men and in countries with higher levels of job loss.
There does not have to be a widespread economic crisis for a person to have a personal financial crisis. All financial crises are personal, regardless of the current strength or weakness in the economy. Any severe change in one’s finances – like a loss of job, a major loss of value in an investment, or the failure of a business – is a personal financial crisis that could result in the taking of one’s life.
Regardless of the specific cause of someone’s personal financial crisis, the major reason for the severity of the crisis usually remains the same: being heavily in debt or being “all in” on one “can’t miss” investment opportunity or financial speculation. Chances are you’ve never seen a headline about people taking their lives because of a 10% decline in their non-leveraged diversified portfolio. As my father once told me, it’s much harder to lose everything when you don’t owe anyone anything.
Elbogen surveyed 34,653 adults first in 2001-2002 and then in 2004-2005 as part of the National Epidemiologic Survey on Alcohol and Related Conditions. The study found that being in debt, facing a financial crisis, unemployment, past homelessness, and having lower income were each associated with suicide attempts. He found that people who have experienced all these financial stressors could face a 20-fold higher risk of attempting suicide than individuals who have experienced no financial strain.
A 20-fold increase of attempting suicide is something to pay attention to and take very seriously. It emphasizes the spontaneity and impulsiveness of financial suicide – a significant distinction, as one study found that half of all suicides are impulsive. These findings underscore the gravity of making sound financial decisions. At times, money skills are quite literally survival skills.
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM, is founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
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