Debt can often be easily justified, since these days, it seems like everybody is dealing with some kind of debt. Student loans, a mortgage, or even a car loan are often unavoidable these days, and with more options than ever before to buy items on credit or borrow money on a whim, getting into debt can be fairly easy. But while there’s nothing wrong with borrowing money if you need to and being responsible about it, there’s a fine line between necessary debt and debt that can seriously harm your health and wellbeing. Debt can hold you back, leave you feeling stressed and anxious, and prevent you from accomplishing your goals in life. Here are just some of the ways that your debt could be harming you and what to do about it.
Your Quality of Life is Impacted
While manageable debt that slots nicely into your monthly expenses is unlikely to affect your quality of life very much, if you have a large amount of debt that is causing you to worry about your money, you might find that you have a difficult time sleeping or focusing. Dealing with the stress of being in too much debt can lead to depression, anxiety and other mental health issues, seriously impacting your ability to live a happy, stress-free life. Worries and intrusive thoughts about your debt may plague you when you are simply trying to do your job or relax at home.
Your Future Borrowing Ability
Along with causing stress and worry, your current debt level could lead to more difficulties in the future. This is because your credit rating is determined by a number of factors including the level of debt that you currently have. Even if you are managing to repay your debts and have not fallen into arrears, a high level of debt that you can only afford to repay the minimum payment for each month could cause your credit score to drop, making it harder for you to borrow more money in the future and take advantage of better interest rates.
Difficulty Finding a Job
If you want a change of career, having a lot of debt might make it difficult for you to be accepted for certain positions. There are some jobs that require a credit check, so if your credit rating is poor due to a high debt level, this will reduce your chance of being accepted to work for a bank, for example. Although most jobs don’t require a credit check, if you want to pursue a career in a field where this is common practice, your debt could be holding your career back.
Miserable at Work
Along with making it difficult for you to find a job in certain industries, a large level of debt could make it more difficult for you to quit your current job and pursue work in an industry that you actually enjoy. If you are paying off debts, you might feel forced to stay in a job that you hate just so that you can afford to make your monthly payments on time without any interruptions. This can seriously impact your mental health as it begins to feel like you are trapped in a situation that you don’t like because of debts.
Difficulty Buying a Home
If you have a large debt to income ratio, you may struggle to qualify to get a mortgage and purchase your own home. You may also end up paying higher interest rates if you get a mortgage with a low credit rating, and may be required to put down a higher deposit on your property purchase, which can be difficult to achieve if you are already struggling to afford all your monthly expenses due to debt repayment.
Struggles with Regular Expenses
It’s important to begin taking action to change your situation as soon as possible if you have reached a point where you are struggling to cover your regular expenses due to the amount of money you are paying out each month to your debts. If your debt is cutting into your ability to pay for your rent or mortgage, utility bills, or you are struggling to afford food for yourself and your family, this can be a seriously stressful situation that will certainly impact your health and wellbeing.
What Are Your Options?
It’s clear to see that being in too much debt can have a serious impact on your life, health and wellbeing. Paying off debts that you are struggling to manage can limit your career, stop you from purchasing a home and make it harder for you to borrow money for things like a new car in the future. In addition, feeling stressed and worried about your debt can impact your mental and physical health and make it harder for you to sleep or focus at work. But the good news is that there are several options available to help you reduce your debt level and make it more manageable.
Consolidation Loan
If your debt is made up of several smaller lines of credit, then taking out a larger loan that will be enough to pay them all off at once can be helpful. This leaves you with just one debt to repay rather than having to manage several different ones each month. Short-term loans are an ideal choice since this allows you to repay your consolidation loan over a short period of time and become debt-free quicker. Some pay day loans might be an ideal solution. Check out Payday UK to find pay day loans UK that are ideal for your situation. Payday UK is a credit broker designed to help you find financial products that suit your needs.
Negotiate with Creditors
Your creditors have a duty to ensure that you are not being affected by your debt and if you are struggling to meet other monthly expenses as a result of how much you owe, your creditors may be willing to negotiate for lower payments, freeze your interest for a while or put other steps in place to help you manage better. It’s always worth giving them a call to see what options they have for you – don’t continue struggling if you cannot manage.
Debt Snowball Method
The debt snowball method is a good way to get out of debt by paying your debts off from the smallest to the largest. Start by clearing your smallest debt as quickly as you can while still making minimum payments to the others. Then, add the amount that you are now saving since you don’t need to make the minimum payment to your smallest loan to the payment that you make to the loan that is next up in size. Continue doing this until all your debts are repaid.
Debt Management Plan
There are companies set up to help people manage their debt with a debt management plan. You can do this via a charity like Stepchange or through a private company that will take a percentage of the amount that you pay each month. This can be an ideal choice if you have a lot of debt or do not have the time to negotiate with your creditors since they will take care of it all for you.
While some debt is unavoidable these days, it’s important to take steps to improve your situation if your debt has started to negatively impact your life.
