It’s easy to underestimate debt when you are somehow able to pay some of it, as when you still have a source of income or making minimum payments each month. We tend to overlook its consequences and continue adding some more to what is already a mounting debt. If you are currently in debt, it’s time that you examine closely what you are sacrificing and the price that you are going to pay if you don’t stop the growth of debt. Here’s some info for you to understand the consequences of debt.
Chronic financial stress
To anyone who has been in debt before, you know that debt that debt just does not die right away. It lives for months or years and decades. It haunts people in their sleep, making them wake up at 2 o’clock in the morning and feel helpless about their situation. Such cycle creates stress, that when left unattended can even affect a person’s self-esteem, happiness, and quality of life in general. Don’t let that happen to you. Attack the problem from its root cause, i.e. the debt itself, and do it at the soonest possible time.
As the old adage goes, time is gold. Time is money and if your time is spent working for money that is only used to pay debt, then you are losing money. Only your creditors are making a buck.
When your money goes to paying debts, you are not able to save and invest. More importantly, you are not able to leverage the power of compounded interest, which needs time in order to grow your investments.
The longer you have to pay your debts, the shorter time you have left to save for your retirement. And when you only have a few years left to retire, it means you need to save and invest more out of your income, in order to keep up with the lost time you had for investing. Had you saved and invested earlier, the power of compounded interested would have taken care of growing your money.
Individuals who are nearing retirement would even have to keep working beyond the usual years as employees so that they can add more money to their savings, after having to pay their debts for so long.
When you are in bad debt, chances are you are paying interest charges that never seem to end. If you put together these interests that you are paying your creditors, you’d realize what ridiculous amounts of money you are wasting on interest. That money could well serve as a starting point, a nucleus for an emergency savings, investment, or a retirement account. The point is that interest charges are a ridiculous way to waste one’s money, that’s why anyone who is in bad debt needs to escape from it at the soonest possible at time, in any possible and logical way.
Lost hope for financial freedom
All of us dream to financially free. We dream of a time when we don’t need to go to work in order to earn a living. We want to just spend our days exploring our talents, the world, and possibilities. With debt, we can’t do any of that. Debt is such a thick barrier to our dream of financial freedom. If you are to remain hopeful of being financially free someday, you need to get rid of that barrier and start it today.