When you’re swiping your credit card and spending money from your credit line, going into debt feels good. You get to buy things you couldn’t ordinarily afford and don’t have to worry about paying it back all at once. Unfortunately, debt requires you to sacrifice more than you may realize. Your hard-earned money is just part of what you have to give up for the things you bought years ago. Read on if you’re ready to face the reality of what debt is really costing you.
Early Retirement
Being in debt may mean that you have to delay retirement several years, either because you haven’t saved up enough money or because your retirement income isn’t enough to cover your monthly debt payments and other expenses. Putting off retirement is one thing, but what if you have to come out of retirement after realizing your debt payments are too high to sustain on your retirement income? Think about it – after decades, you finally quit working and you’re forced to return to maintain your lifestyle. It won’t be pleasant.
Higher Standard of Living
Everyone has a different idea of what it takes to live comfortably. But some people live beyond their means, financing a better life with debt, but you can only fund a lifestyle with debt for a limited amount of time. When the day of reckoning comes, you won’t be able to borrow any more money and you’ll have to pay back what you’ve borrowed.
Debt can keep you from buying a bigger home in a better neighborhood or a better car for your family. You may not be able to replace your clothes or shoes. You may be forced to live an uncomfortable life for several years until you increase your income beyond what you’re spending on debt or you finally pay off your debt.
Higher Education
Banks that lend private student loans, which are often needed to supplement other financial aid, check your ability to repay a loan before they’ll lend to you. With too much debt, you may be turned down. You may not be able to pay all your education expenses with Federal loans and without the ability to borrow enough money for school, you might have to postpone or even cancel your dream of a college degree.
Vacations
Vacations mean different things to different people – an adventure, a break, a time to bond with family, a chance to relive memories. Your debt payments can keep you from going on vacation. Even if you can come up with the money, is it really wise to spend thousands of dollars on a vacation when you have so much debt to pay off?
Money Lost on Interest
If you’re in debt, you can come up with a long list of things you could buy with the money you spend on interest every month. For example, what if you invested the interest instead of sending it to a credit card company? You could have several thousand extra dollars available at retirement. For instance, if you invest $20 each month in an account earning just 5%, you would have more than $8,000 in 20 years. If you’re paying more interest than that, the missed opportunity for earning interest increases exponentially.
Freedom in Your Career
As long as you’re in debt, many of life’s decisions – and quite often job decisions – are based around that debt and making sure the banks don’t ruin your life because you missed a few payments. If you have dreams of opening your own business, you’d have to think very seriously about how you’re going to pay back your debt while you’re getting the business off the ground. You may be forced to stay at a job you hate because you’re making enough money there to pay off your debt.
Health Problems & Medical Bills
Debt, more specifically the stress associated with having debt, can have a significant impact on your health. A 2008 poll from Associated Press and AOL revealed that people with debt have higher instances of stress, migraines, severe anxiety, severe depression, muscle tension, and even heart attacks. The stress from debt can lead to even more debt if debt stress leaves you with uncovered medical expenses.
The consequences of being in debt reach further than most people can imagine. It has the potential to hurt your credit, make your employer wary of promoting you; it can even ruin relationships with your loved ones. If you’re not in debt right now, make sure you stay that way. If you are in debt and it’s affecting your life, take steps to pay off your debt for good. It may not be easy or fast, but life without debt is worth the work.
