Is debt dangerous to you? Yes, debt could literally mean the death of you and your success. Here are the 9 most essential facts to prevent debt and steadily get yourself out of the high-risk bracket so you can reach your goals.
Reason #1: Unhealthy Debt Denies Affordability
Unhealthy debt can prevent you from affording the things you desire. Your spending habits could spiral out of control and cause further problems in other areas of life. You have a much better chance at success if you stick with a budget that is realistic for your income level and limit overspending so you can afford that holiday.
The need for not only basic necessities but also material and luxury items to keep up with the expectations of modern society has driven many into the darkness of dept, leading to a lifetime of bills and not blessings.
Reason #2: High-Interest Debt Could Mean Death
High-interest loans and higher purchases could cause you to spend more than the item actually costs in interest payments alone over time. Debt is expensive and difficult to pay back. You need a plan for how you’re going to get out of debt you may have incurred as paying off high-interest debt can take years or even decades, depending on the amount owed and your payment frequency.
Reason #3: Debt Limits Financial Goals
High amounts of debt will stand in the way of you buying that dream home or car as Lenders don’t often give loans and mortgages to those who have debt and prefer a clean financial commitment. Paying off more bills than are necessary amounts to not much extra spend left for you to achieve your goals.
Reason #4: Unpaid Balances Bring Raised Rates
The amount of debt you have, or not, plays a difference in the rate percentage given to you. The rate of increase is determined by the creditor1 and this is not always predictable. Less debt means lower rates but beware of high debt as it makes this difficult. Rates accumulate over time and can become very hard to resolve.
Sit and work out a plan with those who share your life to stay debt-free so you can enjoy the fruits of your earnings.
Reason #5: Don’t Let Bankruptcy Be Your Bailout
If you cannot pay off your debts in time, declaring bankruptcy may be the last resort. but you don’t want this to happen. You have to take measures to get out of debt before it becomes too difficult as debt is not something that just disappears on its own. High interest rates as well as other factors like unemployment can bury you in debt.
Reason #6: Bad Debt Ends At Negative Credit Reports
Debt that isn’t paid off on time will be included in your credit report and affect your scores. A bad credit report2 can keep you from being approved for anything else, like a loan or mortgage, as well as increase the rates at which interest accrues. Having a bad credit record can keep your life in limbo until you find the means to clear your credit record by paying off bills and this could take years.
Reason #7: Don’t Become a Slave to Debt
It may not be noticeable at first but as the months turn into years, it becomes like a ball and chain hanging over your head and can spiral out of control. You may eventually have no other option than to pay off or declare bankruptcy, especially when you could reach the stage of being barred from purchase by the credit bureau or your credit cards may be maxed out.
Reason #8: Debt Affects Health & Wellbeing
According to the American Psychological Association3, debt causes a lot of stress and anxiety which can seriously affect your health. A resort to using credit cards, overdrafts and high-interest loans to survive can lead to more debt and adds to the anxiety.
Some studies have shown that those with high levels of credit card debt are at an increased risk for depression and other serious illnesses like diabetes or heart disease.
Reason #9: Debt Can Risk Your Relationships
The stress and anxiety associated with debt may cause a huge effect on relationships between spouses, partners or even friends who could have found themselves at the bottom of a pile of bills without having relief options like a family or community to support them in crises.
Even this avenue causes stress in relationships and personal self-confidence. Debt can also lead to economic abuse in families as well as child labor and all-around sacrifices made towards having a fulfilling life.
Common Questions
What Are the Risks Associated With Carrying High Levels of Debt?
Why Should I Pay off My Debts Before Taking on Any New Ones?
What Are the Long Term Effects of Debt?
Can I Get Rid Of My Debt by Filing for Bankruptcy?
Don’t Let Debt Cripple You
Debt can be a crippling burden that you don’t need. If you are in debt, it is important to know the right way to get out of debt as well as how not to go into more debt. It may seem like common sense but there are some steps people with debts often miss and end up paying for later on down the line – when they have less money or no money at all.
The steps outlined here, which include keeping a tight grip on your spending, maintaining good payment plans if you have purchased items with high interest, should ensure less stress and anxiety for you, your relationships and for you to enjoy your earnings.
References
www.thebalance.com/reasons-debt-is-bad-960048
www.investopedia.com/articles/younginvestors/08/purchase-financing.asp
www.investopedia.com/articles/pf/12/good-debt-bad-debt.asp
www.compoundingpennies.com/why-debt-is-bad/
www.abcnews.go.com/Health/Wellness/ways-debt-bad-health/story?id=25066977Extra
