Achieving a debt free life is easier said than done. You have to be very vigilant about how you will spend your money. Not only that, you need to be prepared for any uncertainty in the future because despite living within your means, your inability to finance an emergency could lead you to put yourself in debt.
We all want to be free from the bondage of debt and in our modern society, that is not easy to implement. But given the debt effects that can damage our life and future, you need to pay attention to how you can be rid of it. Although society is promoting credit to achieve a consumerist lifestyle, you have to keep in mind how powerful and influential debt can be in your life.
The damaging effects of your credit problems
When the recession hit, we all realized the extent of the damage that debt effects can bring us. Not only does it affect the present, your credit can also seriously alter your future. Here are five important effects of debt that you have to keep in mind to motivate you to stay out of it.
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Brings emotional trauma. If you are in debt, you can testify to the emotional trauma that it has in your life. It all begins with denial when you first find out about your debt. That will be followed by stress – which is one of the emotions that can lead to several physical ailments. As you battle the stress of trying to find a solution, the magnitude of your credit troubles will also bring in fear and panic. This is caused by your thoughts of what creditors and collectors are capable of doing to collect from you. When things feel bleak, you start to feel anger at the external factors that you claim to have caused your debt. It can be your spouse or your children or the economy – this resentment will really bring you down. Finally, you are in danger of succumbing to depression especially when you go through one disappointing debt solution after the other.
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Ruins relationships. Battling all these emotional struggles will directly or indirectly affect your behavior and thus the relationships that you have with the people around you. As you get bitter and resentful of your current situation, that negativity translates to how you relate to those close to you. Financial problems can lead to divorce and that is one other thing you can expect from your debt if you are not careful.
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Hinders financial growth. Since your money is going to debt payments, you are unable to grow your finances through investments. Instead of benefitting from your hard earned money, you are making your creditors rich by paying interest on past purchases that is probably just sitting in the corner by now.
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Forces a lower quality lifestyle. Just like you are kept from investing your money, you are also kept from a high quality of lifestyle that should have been easy with your income. But since household and entertainment expenses have to share the income with debt payments, a lot of your “wants” will have to take the backseat. Sometimes, you also have to make do with a lower quality for your basic need.
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Compromises your future. Your debt will also seriously compromise your future. Instead of saving up for your retirement, for instance, you have to pay off your debt. You will hear a lot of stories about baby boomers who are forced to continue working past their retirement age because of debt. If you let your credit go out of control, that can also be your future.
How to keep your debt from ruining your life
Fortunately for you, there are ways for you to recover so you minimize the debt effects on your future. While there is nothing that you can do for the present, you can keep it from destroying the lifestyle of your future self.
Pay down your debt. Obviously, you have to pay your debts. There is no quick fix for this and you have to find the right debt relief program that will help you eliminate your credit problems. The Federal Trade Commission or the FTC provides consumers with tips on how they can approach debt relief smartly and with caution. You should check out the website to see what you can get from it. Of course, sites like the National Debt Relief will offer you great insight on various debt solutions that you can choose from.
Budget and live within your means. As you solve your current debts with the program that you will get, you have to put your finances on a budget. There are many benefits to this apart from living within your means. You get to ensure that your debt payments are funded by putting it high on your expense list. You can also keep tabs on where your money goes to. In fact, monitoring your money transactions through a budget will help you direct where it is spent every month.
Save like your life depended on it. You want to save a portion of your income because having an emergency fund can really save you from a financial catastrophe. If your job is suddenly compromised, you have this fund to support your needs and payments as you strive to get another source of income. If an immediate need comes up (e.g. a sickness or something breaks down in the house), you have this fund to finance it.
In the end, you have to realize that knowledge will help keep you from any financial difficulty. You can search through the US Department of Justice website for the approved list of debt education providers in each state. Keep yourself informed of how you can manage your money better. This will help you find the right information that will help you make the right decision about your money.
