Debt doesn’t just affect financial health — it can affect physical and emotional health too.
Having debt can keep you from being able to pay your monthly household bills, but did you know that there are multiple other ways that debt can adversely affect your life? Here are the top five ways that debt can be detrimental to your health, your well-being, and your future:
1.) Debt keeps you from achieving your long-term goals. If you’ve dreamt of home ownership, buying a car, or getting an education, having massive amounts of debt can get in the way of those goals.
Why? You’re unable to save up money, which keeps you from making those long-term investments.
When you have room in your budget to save for a down payment on a vehicle or home, and when you’re able to stock money away in your retirement fund, you can obtain the long-standing goals that you have for you and your family.
When you have debt, your extra cash flow is be rerouted to that debt instead of your dream investments.
2.) Debt creates more debt. Once you accumulate a fair amount of debt, it usually has a domino effect where you end up accumulating more and more debt.
For example, if you have a $3,500 charge on one of your credit cards, you’ll be paying a monthly payment on that debt, which takes away from your monthly household budget.
When your monthly budget no longer covers all of your bills, you’ll end up putting basic necessities on your credit card, like groceries and gas, which will increase your monthly credit card payment.
Often, this spirals out of control, and you end up having high balances on multiple cards, and no way to even make the minimum payments on all of them.
And it’s amazing how quickly it happens!
Debt can negatively affect your health, your long-term goals, and your relationships.
3.) Debt impairs job performance. When you have debts that you can’t pay, your creditors will start to come after you. Receiving phone calls from creditors is never a good feeling, especially when they’re threatening to take your home, car, and/or paycheck.
If you go an extended period of time without (at least) making minimum payments, your creditors will most likely sue you so that they can garnish your wages.
When a creditor obtains permission from the local court to garish your wages, this means that they can legally take up to 25% of each of your paychecks.
When you know that your paychecks are at risk, your level of stress will most likely affect your job performance, as stress causes a lack of focus and drive. This leads us to our next point…
4.) Debt has an impact on mental and physical health. Studies have been conducted that show a correlation between debt and depression (and/or anxiety).
When the brain experiences mental stress, that eventually manifests into physical health issues in the body, such as insomnia, stomach pains, high blood pressure, high glucose levels, and headaches.
If any of those health issues become chronic, you’ll end up at the doctor’s office quite a bit, and the medical bills will not only add more debt, but will also compound your health issues by adding more stress to your life.
5.) Debt harms relationships. One of the top reasons that married couples fight (and get divorced) is differing perspectives on finances. If one views debt as something that’s not a big deal and the other doesn’t view it that way, this can lead to conflict.
When married couples have budgets and each person sticks to that budget, that creates a trusting foundation (as well as no debt!), which helps to minimize conflict and stress.
While going into debt is sometimes unavoidable when it comes to unexpected bills for emergency medical care, a home repair, or a replacement of a car part, it’s important to try to avoid it all costs for non-essential items or services.
However, we understand that life can be unpredictable, and things come up that aren’t covered by the funds in your savings account.
If you’re currently in that situation, you might be wondering, “What’s the best recourse? How can I pay off my debt in a way that makes me feel hopeful and not stressed?”
We recommend the Snowball Method. The Snowball Method is an excellent way to pay off credit card debts and any other debts (medical bills, etc.), mostly because you can see your total debt balance go down quickly.
This reduces stress and gives you hope that you won’t be in debt for decades.
If you’re at a point where you have too much debt for the Snowball Method to work, filing for a personal bankruptcy will most likely be a better alternative.
While bankruptcy tends to carry a stigma, it can actually be one of the wisest financial decisions you’ll ever make.
Bankruptcy can help you pay back some (or all) of your debt while protecting your home, car, and wages from your creditors. In some cases, you can even discharge all of your debts without paying any of it back!
If you want to learn more about bankruptcy in Kentucky, and whether or not it will help your specific situation, I offer free phone consultations.
I understand the stress and anxiety that comes with crushing debt, and I’m here to help. You can text me or call me on my cell phone at (502) 435-2593.
Financial freedom could be closer than you think, and I would love to help you find it.
All the best,
Tracy L. Hirsch
Louisville Bankruptcy Attorney
Need a free consultation? Text or call me at (502) 435-2593!