Creating debt is incredibly easy. The ability to make purchases without realistically having the money to afford them has made a very slippery slope out of many peoples’ financial situation. Derogatory marks on credit are a serious issue and once you are on that slippery slope there are many obstacles involved that keep you on it, causing you to go further into a place of financial unrest. Knowing how being in debt can affect your life is important in both preventing future slip-ups and motivating you to take action on your current unpaid debt.
When making purchases on credit you are able to spend beyond your means. If you have $2,000 in your checking account and a $10,000 credit limit, that means you have the ability to spend $8,000 more than what you can actually afford. When you don’t have to see the money leave your account, the impulse to make lofty purchases is high. This is often the beginning of a long road of trying to recover from dangerous spending habits. Interest charges, for example, are one of the most difficult hurdles to overcome in paying debt. This is because even as you make payments on a purchase or loan, the interest will cancel out a portion of your monthly payment. For example, if on a particular month your minimum payment is $75 and your interest rate factors out to be $50, you end up having only put $25 towards your actual debt. Therefore, you end up battling the debt for a longer period of time and once the debt is paid off you will have spent much more than you initially anticipated (a.k.a. being in even more debt). Of course, the best way to avoid this is to stop making purchases beyond your means. However, once you are in this situation the best remedy is to pay more than the minimum monthly payment on the debt and pay it off in full as quickly as is financially possible.
Having unpaid debt and derogatory marks on your credit keeps you from being able to follow through on your future plans. If you plan on purchasing a home, you will have to have a higher debt-to-income-ratio that the mortgage lender approves of. If the percentage of your income going to debt exceeds what they have determined to be acceptable you will likely be turned down. Consider that vacation that you wanted to take, Christmas presents for your family, and even your retirement. These are things that you are unable to set aside money for when you are burdened by debt. In this way, debt is stealing from your future.
Being in debt affects you on a deeper level than you may realize. Debt causes stress, anxiety, and depression. Furthermore, stress can cause physical ailments such as migraines, ulcers, and even heart attacks. Your personal relationships can also suffer due to stress. Your marriage may become under a great deal of pressure in trying to overcome debt which can lead to arguments and disconnection. You have the power to avoid and overcome the dangers of having unpaid debt before it takes control of your financial, physical, and personal life.
Account Resolution Team is committed to helping Americans get out of debt. Call 423-586-7613 or visit www.accountresolutionteam.com
