Why Debt is Negative and Holding You Back
Debt is a burden for many people. Those who have just a small amount of debt – an affordable mortgage or car loan – can usually handle it, but even those debts come with risk. Unless you’ve managed to save several months’ worth of funds and more to pay for an unexpected emergency, any amount of debt can get you into trouble in the blink of an eye. Debt is negative and knowing how to get out of debt can change your life.
Having massive debt makes your life difficult. Even if you never experience a financial emergency, you’ll struggle to make ends meet from month to month. One unexpected expense could completely do you in.
Not only is debt a burden financially but it also causes an emotional strain. If your debt to income ratio is higher than 25 percent, it’s holding you back.
How is your debt bringing you down?
1. Quality of Life
You might not realize it, but if you had less debt your quality of life would be better. You could do more of what you want to do and spend less time thinking about debt. From the stress you experience thinking about debt to the sacrifices you make to meet your debt obligations, debt is negative and your quality of life would improve without so much of it.
2. Postponing Retirement
Depending on your age, saving for retirement might not seem like a big deal. But there will come a day that you’ll regret not saving more and instead, having to put it toward debt. The sooner you get out of debt, the sooner you can begin saving for “someday” and taking advantage of compound interest.
3. Damaging Your Credit Score
There’s a “sweet spot” when it comes to debt and your credit score. And it should come as no surprise that it is conservative regarding how much debt you should have. A reasonable amount of revolving credit can help your credit score improve, but stray too far out of balance regarding your debt-to-income ratio and your score takes a hit. Add in late payments and other challenges and you’ll see serious damage.
You can calculate your debt-to-income here.
4. Limiting Your Employment Opportunities
If you have a job you’re happy with, your debt might have little bearing on your work life. But ask anyone who is job hunting in a sector where they must consent to a credit check and you’ll quickly learn how important it is to have your debt under control. Having to stay in a job you can’t stand forces you to see how debt is negative and holding you back.
5. Preventing You from Achieving Your Dreams
Do you dream of one day traveling the world? Do you want to own a home or start a family? Too much debt can interfere with these dreams. When deciding how much debt you want to deal with, make sure you take your big dreams into consideration and do what needs to be done to achieve those dreams before it’s too late. Knowing how to get out of debt can change your life forever.
6. Keeping You in a Job You Hate
Do you envision yourself in a better job with more freedom, more benefits, or more money? Do you wake up in the morning already feeling exhausted because you dread going to work? Many people are forced to remain in jobs that crush their souls because they have to meet their debt obligations. They work to pay their bills and have little freedom or flexibility when it comes to finding something they love.
7. Debt is Negative Because It’s Damaging Your Health
All of the stress caused by debt is bad for your health. The sooner you take action to alleviate your debt problem the better your health will be.
8. Causing More Debt
Finally, your debt is hurting you by creating more debt!
Many people are never able to get ahead on their payments and might juggle balances from one card to another. They might spend years meeting their minimum payment obligations only to realize they’ve done nothing to make a significant debt in their overall debt burden. No matter what they do, they can’t figure out how to get out of debt.