Debt is a word that strikes fear in the hearts of many. It ruins fortunes, causes untold stress and topples governments.
Just ask a millennial about their financial struggles—student loan debt will certainly top their list.
But why? Why is debt so bad, anyway? After all, isn’t credit just money you can use now and then pay back later? What’s the big deal?
Well, actually debt is a very big deal. In fact, it can make or break your personal finances.
This article isn’t for hardened debt fighters. You already know the damage debt can do.
But if you’re just starting your financial journey, take note before it’s too late. At best, debt is a tool. It certainly isn’t your friend. Here’s why…
It begins by lowering your cash flow. All those monthly payments bite into your paycheck, effectively lowering your income.
And that has consequences.
It can make it a struggle to afford a home. You simply lack the cash flow to afford mortgage payments.
It makes it a struggle to build wealth. Every spare penny goes towards making ends meet.
It makes it a struggle to maintain your lifestyle. You may find yourself choosing between the pleasures—and even the basics—of life and appeasing your creditors.
And that brings the risk of bankruptcy. It’s a last-ditch effort to erase an unpayable debt. It comes with a heavy price—creditors can take your home and possessions to make up for what you owe. And even if bankruptcy erases the debt, it will have a lasting impact on your credit score and financial future.
It can change your life forever, throwing your life into chaos.
Think about it—when was the last time someone smiled and fondly recalled that time they went bankrupt? Never. It’s a traumatic experience. This is something you want to avoid at all costs.
This isn’t to scare you into a debt-free life or guilt you for using a credit card. Rather, it’s to educate you on the stakes. Debt isn’t something to be taken on lightly. It can have lasting consequences on your life, family, finances, and even mental health. Act accordingly.