If there is one topic that makes many people uncomfortable, it is the topic of debt. Having large amounts of debt that goes unpaid for extended periods of time can have a series of emotional and practical effects in one’s life. Here are some of the ways that living with debt can cause an adverse effect on your life.
Can Prevent You From Purchasing a Home
After graduation, one of the biggest decisions that new graduates have to make is where they plan on living. For many who aspire to save up to purchase a home and make a down payment on a mortgage, having crippling amounts of student loan debt can derail that goal.
The reason why this is the case is because banks do not want to take on a high-risk candidate to loan money to. If they see that you have a high debt to income ratio, they will instantly turn you down. Those monthly loan payments that you will be making will be seen as competition to mortgages and monthly rent as well. If your debt is higher, your monthly payments will likely be higher as well. All of these factors combine to make you less marketable to future lenders.
It Can Delay Life Goals
Whether it is traveling or starting a family, any major life goal will likely have a hefty price tag attached to it. If you are taking on a lot of debt and are not making enough to pay it off in a reasonable amount of time, major life goals may have to be delayed until later in life. Many are delaying these life goals for the sake of ensuring that they can have their other bills paid.
Depending on how much you owe, some of these goals could be potentially delayed until mid-life. That is why it is imperative to pay as much as you can monthly so that this timeline is drastically reduced. While there are many goals that are noble and honorable, trying to achieve them quicker while having tons of debt can compound issues later in life.
Fortunately, there are experts in the industry of debt consolidation like Brice Capital who may be an option to help in this area.
Can Cause Mental Health Issues
Unfortunately, debt has also been linked to depression, and unsurprisingly so. Sometimes, with the interest that is tacked onto the actual amount you borrowed, the debt can feel as though it will never end. This can predispose to a litany of mental health issues and can cause one to have a depressed mood constantly.
Financial stress and physical stress are related, and the longer the debt stays, the longer the depression will linger. In extreme cases, the amount of money that is owed can prove to be too much to bear.
This can also be compounded by letters in the mail, consistent phone calls by debt collection companies and online messages reminding you of how much you owe.
Wage Garnishment
While it can be deemed cruel, certain creditors may move to sue you and have an order to garnish your wages so that they get their money back quicker. In simple terms, a judge gives whoever employs you an order to make a payment directly out of your paycheck to whomever you owe the money to.
The worst part is that this is a simultaneous order. You can work, but you will never even see the funds because they are instantly taken out of your pay. You do not even have the pleasure of at least seeing the money being directly deposited into your bank account. Usually, this is done in cases where your monthly payments are very low or if you owe a substantial amount and have not demonstrated an adequate attempt of paying it back. Despite this, there are industry experts in debt consolidation like Brice Capital which can assist with debt-related troubles.
Bankruptcy
While this is usually a desperate last resort, thousands of people unfortunately have to file for bankruptcy to gain protection from their debts. Filing for bankruptcy can have a crippling effect on one’s credit score and the ability to gain the necessary financing that may be needed in the future for purchases such as a vehicle or a home.
While bankruptcy can prove to be helpful in certain situations to get relief from debt, it can also be a long, drawn-out process that can have far reaching consequences.
As you can see, debt can affect one in a variety of ways. While these problems won’t be nearly as severe if you are responsible with monthly payments, it is advised to never borrow more than what you can afford. These problems can stay with you for a lifetime.