Being in debt can affect your life in more ways than you might imagine. Creditors can make your life miserable. Poor credit can ruin your chances of getting a loan or getting the job you really want. The added stress of dealing with financial problems can even have a destructive effect on your personal relationships.
How does debt occur? A person can end up in debt before he even realises it. Getting a credit card, taking out a loan or making a major purchase can put you in debt if you don't have sufficient resources to cover the expenses. Loss of employment can easily put one in debt. You may have a good job and a good credit history, then suddenly you find yourself out of work and the debt begins to mount. Before you know it your credit history starts suffering as you struggle to make your payments. When you fall behind, debt quickly takes hold of your life.
Debt can have many negative effects on a person's life. In the financial realm it can prevent you from obtaining any type of credit such as a credit card or loan. If you want to buy a house or car you may find it very difficult to find any sort of financing, and if you do the interest rates will be astronomical. If you have bad credit, lending institutions will view you as a high risk. Debt can also affect your chances of employment. More employers are doing credit checks on prospective employees. Even though you may be the most qualified applicant, you may not be hired because of too much debt. People often don't understand what their credit has to do with being hired for a job. Employers reason that a person in large amounts of debt may steal from the company. They may also have the viewpoint that if a person is not responsible with their financial responsibilities, then they will not be responsible with their job duties either. Excessive debt can prevent you from buying your dream home or even renting somewhere, as landlords are also doing credit checks and may not rent to you if you have a bad credit history. Creditors may garnish your wages in order to get the money owed to them, which means the money comes out of your paycheque before you even get it.
Financial problems can have disastrous effects on relationships. Money problems are one of the main causes of marital disputes. Spouses spend time arguing over money because of lack of proper money management on the part of one or both spouses. In some instances there isn't enough money coming into the household to cover the expenses, in which case both spouses working or one spouse getting a temporary second job could help get the finances back on track. In other situations, the income may be sufficient to cover normal expenses but the spending habits are out of control, in which case the problem may be solved by learning to budget.
Being in debt can put a person under enormous pressure. Bill collectors can make your life miserable, and with your mind focused on the mountain of debt sleepless nights can become a pattern. You may find that you're not as efficient at work and your temperament may change. People who are suffering from stress often become irritable and short tempered. Debt can seem like a never-ending circle. People often borrow to pay off one debt only to owe another, and the cycle continues. The stress of being in debt can lead to frustration and even depression.
Debt can even affect your physical health. The worry and constant stress of debt can take its toll on your body as well as your mind. People often suffer headaches, stomach upset, anxiety and other conditions. Lack of sleep and not eating properly can have adverse effects on one's health. People often avoid dealing with debt because they just don't see any way out of the dilemma, but this just makes the situation worse -- causing more worry, more stress and more adverse effects.
Prevention and solution
It is best to deal with the ill effects of debt by taking one step at a time to eliminate the debt. Getting out of debt isn't going to happen overnight, but the longer you try to avoid the debt the more it will continue to mount. The interest rates are going to continue to build whether you are paying on the debt or not. Make a budget for your monthly finances and stick to it. Take steps to conserve your resources. Contact creditors and make arrangements to get debts paid. It will take time to improve your credit rating and vanquish your debt, but in the long run it's worth it. Eliminating debt can give you peace of mind -- and that's something you can't put a price on.