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How Can Debt Affect Your Life?

By: Michael Millington

The amount of things you can do in your life can is overwhelming. When you’re uninhibited by money issues, the world can be your playground. All of that changes if you throw debt into the mix. When you owe money to a creditor and it become an issue, debt can become a physical barrier, stopping you from achieving some of the milestones you have set in place. There are many ways that harboring debt can hinder you, but there are also some things you should know about debt impacting your life.


  1. Debt Isn’t Necessarily a Bad Thing


While debt is never particularly welcome in one’s finances, it does serve a purpose. Debt can be used as a tool to enhance your credit worthiness. Handling your debt responsibly will go a long way towards increasing your reputation with lenders. The best way to utilize debt is to make sure you’ve planned for it within your monthly budget. Taking care of your debt will show lenders that you can be trusted to make your payments and get rid of your debts. However, you need to make sure your debt does not get out of hand, because if it does…


  1. Debt Can Stop You From Reaching Financial Goals


Having too much debt (where a monthly payment towards your debt almost or does equal your monthly income) can make you seem an unsavory debtor. When you need to use your credit for certain things, your reputation is all that matters. Make sure that you have enough income to make comfortable payments on your debt. If you make sure you make payments on your debts that are more than the minimum suggested amount, you can make a fair amount of headway towards improving your credit and lowering your debt to income ratio, which would then make you look much more suitable to lend to.


  1.  Debt Can Cost You More Than You Think


The reason that most people will tell you to pay more than the minimum suggested because of the interest that can pile up. Interest can increase the amount of debt you need to pay over the life of the debt. This can sometimes even increase the amount of debt you end up paying by 100%. This can be made even more impactful if you miss any payments and receive any late fees. The sooner you pay off your debts, the less money you end up paying overall (and the more money you can use towards yourself in the long run).