Everyone knows that carrying an unmanageable amount of debt is not a good situation to be in, but many don’t know the many ways owing money can do damage to personal, financial, and emotional livelihood. Here are the major disadvantages of being in debt:
1) You can’t get more credit. If you have too much debt, few banks will give you money for a home or car loan. Many of those who are overloaded with credit also have poor credit scores, hurting their chances for credit even further. Carrying a high credit card balance, for example, can prevent you from making smart and important credit choices. If you or a child wants to go to university, for example, it could be hard for you to acquire the funding necessary to pay tuition and other expenses, simply because you made poor credit choices in the past.
2) Being in debt is incredibly stressful for both individuals and couples. Individuals carrying a heavy debt load often obsess about their situation, making them ultimately depressed and irritable. Marriages and relationships can suffer; money is a big factor in many divorces today. Owing tons of money can have a huge negative effect on psychological and emotional quality of life.
3) Owing lots of money can hurt your lifestyle. If all your money is going towards interest payments, you won’t have any money to enjoy the finer things in life. Some people even struggle to afford the basic necessities, like food and shelter, much less ‘luxuries’ like cars, internet, cable TV, cell phones, and eating at restaurants.
4) Debt can damage your financial future. If you have to spend all your money on minimum payments and accrued interest, you won’t have any money left over to save and invest for your future. Instead of enjoying the benefits of compound interest years down the line, you’ll be left penniless – or worse, you’ll still be paying off those old debts.
5) Legal issues. If you are late on your payments, you may have creditors hounding you, day and night. If you have to take the extreme step of bankruptcy to escape your debts, your life will never be the same again. As a result of your legal obligations for the money you owe, you may lose your home in a foreclosure, for example.
Thus, it’s clear that debt can damage and even destroy lives. If you owe a lot of money, make it a priority to eliminate it as fast as you can.
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