What is the easiest thing to get into and the hardest to get out of?? It is debt and there are many reasons as to why you don?t want to get into it.
According to creditcards.com a family in 2012 that owned one credit card had an average debt of $15,950. Student loan debt has doubled since 2007.
As we all know it is very easy to spend more that we can afford, especially if we are paying for things with a credit card.
It’s hard to live debt free in our society because few can afford to buy a house outright. We also cannot afford to pay for our kid?s college education without borrowing.
The problem for most of us arises when we are using our credit to buy our everyday necessities. More than a third of Americans have ignored their debt for so long that they are being dogged by credit collectors.
Although we all have a sense that debt is bad we really don?t know the extent to which it is bad, nor would we be able to pinpoint the exact reasons it is bad.
Debt may stop you from getting a home. Most people cannot afford to buy a home outright and must apply for a home loan.
When you apply for a home, they check your student loan debt, your credit card debt and auto loan debt. If your debt for these are too high you will probably get turned down.
Being in debt can result in health issues due to the stress that it places on those individuals who are experiencing it.
You are constantly getting calls from early in the morning up to and sometimes including dinner from collection agencies trying to find a way to make you pay.
In 2013 Northwestern University conducted research in which they found that those who owed more than they could afford even if they were to sell everything, (high debt to assets ratio) reported poorer health overall.
The following are some of the health issues caused by debt.
- High blood pressure ? this is a factor that leads to heart disease and stroke.
- Increased Anxiety ? in the same study from above the researcher also found that for those experiencing high debt to assets ratio they reported 11.7% higher rates of anxiety.
- Depression ? Rutgers University did a study in 2014 that found that those who adults age 51 and up were more likely to report being depressed if they also had a high amount of unsecured debt.
- Lowers you Immunity – Although there is no specific data on this it is thought because most people who are in debt don?t usually sleep very well and because of the added stress. It is also known that stress in and of itself can lead to reduced stress.
- Affects Your Medical Care ? Those with higher medical debt and high credit card debt are less likely to go to a doctor because they can?t afford it. This in turn affects their preventive health as well as when they are ill. Because they don?t go to the doctor, there is no preventive care. This is also true for going to dentists.
- Increased Aches and Pains ? In a 2008 study done by the Associated Press/AOL health poll found that 44% of those with greater debt reported migraines compared to 15% who did not have any debt.? Other aches and pains were also reported more often for those who had the greater debt.
When you charge things, you are not just paying the initial price but you are paying interest every month. For example, suppose you bought a living room set for $3,000 and the interest rate was 15% APR.
If you are only required to pay a minimum payment of 2% a month and this is all you pay, your minimum monthly payment will be $60.? Twenty four of this is for the furniture and the other $36 is interest.
If you continue to only pay the minimum amount it will take you about 16 years to pay off this $3,000 loan and the end amount you will be paying is $6,641.
So you are paying an extra $3,641.? Does putting this is black and white give you a better picture of how expensive things are when you charge them?? It sure is sobering to me.
Money is the most fought about thing in a marriage and one of the major causes of marriages breaking up.
With the stress of debt comes bickering about what the money should be spent on, whose fault it is and who is to blame for the situation.
A 2012 study found that newlyweds who argued over finances were more likely to get divorced in the first five years of their marriage than those who argued about other things.
When you don?t lose the money right away and you are getting something in return you sort of get a high and you get tempted to keep spending more and more.
Thirty percent of your credit score is based on the amount of debt you have.? Your credit score is lower the more debt you have in relation to your credit limit.
Most people who are in so much debt end up with a real low credit score. This affects things such as your auto insurance and other similar products.
And, finally, the more you have to pay each month on what you owe the less you have to spend on other things.