Although debt isn’t uncommon, it’s a problem that’s often overlooked in today’s society. As the cost of living spirals, we’re used to getting into debt at a relatively young age. Whether it’s taking out student loans to attend college or applying for a mortgage to get on the property ladder, people often accumulate large amounts of debt in their late teens or early twenties.
In fact, the average American has approximately $9,593 debt between the ages of 18-23, but this increases to an average of $78,396 by the time they reach 24-39.
While loans for property purchases or education can be a good investment, there are other types of debt that can be trickier to manage. Credit cards, personal loans and payday loans are classic examples of debts that can get out of control, for example.
Again, these forms of borrowing are often targeted at young people or those who are in financial difficulties. Sadly, high-interest rates and challenging repayment terms means that people will often struggle to deal with these debts in an appropriate way. As a result, their debts continue to increase while their income is eaten up by charges, fees and repayments.
Given the impact that debt can have on your life, it’s not surprising that it can affect your well-being. To get a better insight into the effect debt could be having on you, take a look at these three ways it can affect your well-being:
1. Emotional Health
If you’re stressed about your financial situation, it can have a major impact on your emotional and mental health. Many people who are struggling to deal with debt find that their finances keep them preoccupied at all times. You might find it hard to get to sleep at night or your mind may wonder while you’re trying to concentrate on other things, for example.
Anxiety, depression and low mood can all be triggered or exacerbated by money issues. When you begin to experience emotional symptoms associated with debt, it can actually make it hard to deal with the situation proactively. You might want to bury your head in the sand, for example, or avoid talking to creditors when you feel unable to cope with the situation.
2. Physical Health
As debt can have a significant impact on your emotional well-being, you won’t be surprised to learn that it can affect your physical health too. Often, this is because people with unmanageable debt experience high stress levels. In turn, excess stress can cause a range of physical symptoms, including headaches, fatigue and increased blood pressure.
When physical symptoms occur due to stress, you may not link the cause straight away. In fact, you might think health issues are completely unrelated to your financial situation. While it’s important to consult a physician to rule out other causes, don’t overlook the impact the money worries and debt could be having on your physical health.
3. Financial Health
Inevitably, debt has an impact on both your short and long-term financial health. When you’re at the top of your borrowing limit, for example, you won’t be able to obtain any more debt, even if it’s at a low interest rate. When you apply for credit, such as taking out a new phone contract, you might find that your application is denied simply because of how much debt you already have.
If you start to miss repayments, this is recorded on your credit file and makes it more difficult to obtain credit in the future. Falling behind with credit card payments in your early twenties could make it hard to get a mortgage when you’re approaching thirty, for example.
People are often unaware of the long-term impact that unmanaged debts can have, which is why it’s so important to take a proactive approach to dealing with financial issues. The more you learn about how to manage your finances, the more confident you’ll feel about dealing with any problems that arise.
Why Do People Get into Debt?
People get into debt for a variety of reasons. Unless you have access to a large capital fund, going to college or buying a property is going to mean getting into debt. Similarly, if you’re hit with an unexpected but essential bill, such as medical costs or urgent home repairs, taking out credit might seem like the only way to cover your costs.
However, people also get into unnecessary debt because it seems like a fast-track to happiness. When adverts make it seem like credit is easy to manage and simple to repay, it’s tempting to overspend and treat yourself to something nice. Unfortunately, by the time people realize that they’re going to struggle to manage their debt, they’re often already facing financial problems.
Getting Out of Debt
If you are in debt, there are ways to resolve the situation and improve your finances. In fact, the right strategy can transform your financial health and, in turn, your physical and emotional well-being. To get started, take a look at these top tips for getting out of debt now:
1. Seek Professional Advice
If you’re struggling to deal with debt, don’t hesitate to get professional advice. Whether you consult a financial adviser or a non-profit organization, you’ll be able to speak with an experienced professional who can help you to create a workable strategy to improve your financial future.
2. Automate Debt Management
If you have multiple credit cards or loans, keeping track of them can be difficult and may mean that you miss payment dates more often that you intend to. However, by automating debt management with a tool like Tally, you can pay off debt fast and avoid late payment fees and unnecessary charges. A customized payment plan even allows you to adjust your repayments in a way that benefits you, as well as reducing the amount of time it will take to get out of debt completely. Take a look at how the Tally app works now and get more information on paying off debt.
3. Reduce Your Expenditure
Reducing your outgoings gives you more money to use to pay off your debts each month, which makes it an obvious way of improving your financial situation. However, millions of people spend more than they realize, simply because they don’t keep track of their expenditure. By using a monthly budget, you can identify the expenses that you don’t really need or want and eradicate them altogether.
4. Focus on High-Interest Debts
High interest debts are often the most difficult to deal with, as minimum repayments could mean that your debt continues to grow. By focusing on paying these off first, you can reduce the amount of debt you owe more quickly and pay less interest overall.
5. Create an Emergency Fund
Not having access to an emergency fund is one reason why being in debt can be stressful. If you can gradually build a fund solely to be used for emergency expenses, however, it will give you peace of mind and even improve your emotional well-being.
Taking a Proactive Approach to Debt
There’s no doubt that debt can have a negative impact on your quality of life, but it doesn’t have to. With a great array of tools available and professional advice on offer, you can address any money worries, get out of debt and look forward to a brighter financial future.