It’s no joke when you are in debt.
Recent figures indicate that more of us are in debt than ever before. And it’s not just mortgages or getting into debt to fund education, but personal loans and credit cards too. There’s also a rise in people who need to borrow money in alternative ways such as doorstep cash loans. Currently, consumer debt is edging back towards the same levels that we saw before the 2008 crisis and that’s a worrying sign as far as many financial experts are concerned. But, why do we really need to take debt seriously?
Interest rates could go up
In fact, interest rates have already started to go up after a period of complete stagnation. If you have debt then this means that you’ll pay more for what you owe with every interest rate rise. So, if you’re currently not really making much effort to clear debts this is a good time to start creating a plan while interest rates are still low enough to make it viable.
Too much debt will impact on your credit score
Although lenders have a wide range of factors that they take into account when it comes to determining whether someone is a good candidate for credit, there’s no doubt that existing debt has an influence. So, if you have already got a lot of credit card debt then you might find it hard to get a mortgage at a good rate as a result. This means that even relatively small debts can have a big impact on longer term financial goals and objectives, which is why it’s always important to take debt seriously.
Debt can be costly
Responsible lending is not practiced everywhere and if you’re borrowing without taking the debt seriously you could be paying a lot more than you need to be. Many lenders charge huge fees for debt – or missing payments on debt – and interest rates can be sky high. If you’re keen to borrow then find a responsible lender who can extend you the credit you need on terms that won’t make it difficult to meet repayments.
There are consequences if you can’t repay
There is no easy solution to debt problems and if they get out of control then there can be some serious consequences. If your debt is secured on an asset like a home or a car then you might lose that asset to the lender. Even if your loans are unsecured your financial future could still be scarred. Your creditors may be forced to pursue you through the courts, which could lead to items you own being repossessed to cover what you owe and leave you with legal judgments that affect your financial future.
Debt problems are a danger to health
Money and, in particular, debt problems represent one of the biggest causes of stress and related health issues. It can feel like there is no way out when you have debt that you have not taken seriously and can’t repay and this can lead to all sorts of bad decisions. Before you get into debt think the potential consequences through. Make sure it’s affordable and that you really need it before you sign on the dotted line.