Debt Has Negative Effects Throughout Your Life
Debt has an insidious way of taking over your life. If you're not watching your finances, it's easy to let the balances on your credit cards creep up month after month. You're short this month, so you'll just charge a few purchases and pay the credit card off when you catch up. Except you never seem to catch up, and before you know it you owe thousands or even tens of thousands of dollars. Debt like that can completely take over your entire life.
As the debt accumulates, more and more of each payment you make goes to interest charges instead of paying down the actual debt. As a result, it becomes steadily harder to make any headway on the balances on your credit cards and other loans. Any unexpected expense can wipe out months or even years of payments, setting you back even worse.
As money becomes tight, your problems with it begin to take over your headspace. Money is constantly on your mind, but your thinking becomes increasingly short-term. Make the money stretch to the next paycheck. Figure out how to juggle all your bills so you at least make the minimum on everything. Time when you mail checks so they arrive before the due date on the bill, but after your paycheck is deposited in the bank.
Issues of money can strain your relationships with family and others. Discussions about purchases become heated arguments, and one person's purchases can result in recriminations from the other. Even marriages that had been strong can be pushed to the breaking point by overwhelming debt.
Extensive credit card and other revolving debt can also affect other aspects of your life. Most obviously, it can hamper your ability to buy a car or home. As your debt increases in relation to your income, lenders become more reluctant to write you a car loan or a mortgage. You may have to accept high interest rates or other unfavorable terms, such as adjustable rates that seem to only go one direction -- up.
Even if you are renting, you can be hurt by a heavy debt load. Increasingly, landlords are requiring credit checks before renting, to protect themselves from tenants who default on their rent. If you have too much debt, you may find yourself unable to rent an apartment in a good part of town and having to live in a residential hotel (expensive) or a slumlord's digs (not safe). At the worse, you could become homeless and sleeping in your car, buying showers at the local truck stops to stay presentable for work.
Speaking of work, extensive debt can have a negative impact on your ability to get a good job or to advance to a more responsible position with your current employer. Particularly if a line of work involves handling money or sensitive customer information, employers are very leery of workers with a high debt load. Someone who is struggling to make ends meet is at far greater risk for the temptation to embezzle money from an employer or to sell sensitive information to a criminal organization.
Staying out of debt trouble is far easier than getting out of it once you've gotten deep into the hole. Be aware of your spending. If you're prone to impulse purchases or otherwise find that money keeps slipping through your fingers, be very careful about how you handle credit. You may want to avoid credit cards altogether. If this is not an option for you (for instance, if you travel a lot or make a lot of online purchases and need the security offered by credit cards), you will want to work out ways to restrict your access to your credit cards so you don't make purchases in the heat of the moment only to regret them later.
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