It is not hard to see why so many people are suffocating in debt. While you may think that a little debt here and there will not hurt you, the truth is that it can become a significant hindrance to your ability to live the life that you desire. Here are three things that you need to know about the reality of living with debt.
It Can Grow Fast
Debt can quickly spiral out of control when not managed carefully. Although you might believe that you have a handle on the payments, it does not take long for the balances to balloon and grow exponentially. This leads to even more debt, sending your finances down a dangerous path. When you are only able to pay off the minimum amount due, it does not take long for the payments to become more than you can afford if you keep adding to the debt. If your credit score has taken a hit, that is a sign that you have taken on more debt than you can handle.
Debt Collectors Can Be Tenacious
While there are many myths about debt collectors, they are actually legally pretty limited in what they can do. It is important that you know your legal rights when it comes to debt collection. Debt collectors are not allowed to misrepresent the amount of money that you owe, nor are they allowed to harass you in any way. While a debt collector is legally allowed to take money from your paycheck, they must have a court order called a garnishment in order to do so.
Excessive Debt Can Negatively Many Aspects of Life
Too much debt can prevent you from accomplishing all of your life’s financial goals. You may not be able to qualify for a vehicle or home loan if your debt to income ratio is too high. High amounts of debt will also negatively affect your credit score. Not only will this severely impact your borrowing power, but it may also mean that you will pay higher automobile insurance premiums because you will be seen as a higher risk. In addition to all of these tangible effects, too much debt can also lead to stress and issues in your relationships.
The reality of too much debt is never a pretty picture. Taking tangible and intentional steps to reduce your debt will enable you to live your life free of this massive burden.
Need help managing and paying off your debts? Kelley Financial Planning can review your income and expenses to provide you with recommendations on how to pay off your debts and build an emergency fund!
