How Debt Costs You More Than Money

December 3, 2013

debtWhen your debt seems manageable, it is easy to simply slowly chip away it while not concerning yourself about it. After all, if you can make your minimum payments, plus a little extra on occasion, what does it matter? As long as you can “afford” your debt, paying it off doesn’t need to be a priority.

Unfortunately, this attitude could be costing you quite a bit, especially in the long run. The longer you are in debt, the more it costs you. You are much better off if you pay off your debt as quickly as you can. Otherwise, you run the risk of big costs in terms of money, opportunity, and even emotional well-being.

Debt Costs You Money

Whenever you pay interest, you are putting money directly in someone else’s bank account. That interest you pay doesn’t provide you with a benefit in terms of items to purchase, or experiences to enjoy. It’s money you pay for the “privilege” of borrowing and carrying a balance. This is money that you could use, putting it to work for you, rather than lining someone else’s pockets.

The longer you are in debt, the more it will cost you. If you pay only the minimum payment on a credit card, it can, even if you never charge another thing on it, take as long as 10 years to pay off, and result in you paying three or four times more than you originally borrowed. That’s a lot of money that is, essentially, being poured right down the drain when, instead, it could be building your financial future.

Just the interest savings alone is a good reason to work a little harder to pay down your debt as fast as you can.

Debt Costs You Opportunities

When you are paying money in interest, you don’t have as many opportunities to make money. This is because your resources are going elsewhere. You can’t take advantage of the opportunity to make a good investment, or go on a trip, or do any number of other things because your resources are obligated to pay the debt that you owe.

If you have high enough debt, and all you do is make minimum payments, you will soon find that your credit score can be impacted. This means that, if you are approved for a car loan or a mortgage, you won’t have the opportunity to get the best interest rates. On top of that, your poor credit report, lowered by your high credit utilization, might mean that you don’t have the same job opportunities, or access to the same lower insurance premiums that others enjoy.

These opportunity costs can add up, resulting in a great deal of money and financial security compromised over time.

Debt Costs You Your Sanity

Sometimes, it’s not just money. Being in debt can take a toll on many people. Indeed, if you have high debt (and no plan to pay it down) it can impact your own emotional state. This can result in you feeling out of control and unable to direct your own life. You might lose your sanity, you could say!

And of course stress about your debt – and unhappiness about your situation – can affect your relationships. Many marriages experience increased problems due to household debt. Fights, disappointments, and even divorce can result from high debt. On top of that, your relationships with other family members, your children, and your friends can be affected by your emotional discomfort related to debt.

You can feel better – and have a sense of control – when you put together a plan to pay down your debt. Find out what your rights are regarding debt, and put together a plan to pay off your obligations as quickly as possible. Your mood will improve, you’ll save more money, and you will position yourself to take advantage of new opportunities.

Has debt had any of these affects on you? Leave a comment and let us know about it!

This article was originally published October 5, 2012.


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Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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6 Responses to How Debt Costs You More Than Money

  • Derek

    As someone who has been there when people lose their sanity, I can agree with the importance of this post.

    Thanks for approaching the issue of debt from this angle.

  • Jerry

    It’s so true. Debt can have a stranglehold on your life if you aren’t careful and it can lead to all sorts of financial disaster. Your insurance against it is to pay cash at all time if possible. That has helped us.

  • Tony

    Great post. Especially love the part about your sanity. So true.

  • Kraig @ Young, Cheap Living

    Good points. I’ve seen this myself. While in debt, I was constantly stressed about my financial situation. It didn’t hit me when just having $5,000 in student loans. I was on track to take 10 years paying them off. But when I bought a $20,000 car on credit, I started feeling the “costs” of debt. After some self analysis and soul searching, I came to be a debt hater and got out as fast as I could. Now, two years out, I feel great and am in such a better situation. I feel better and I’m excited about all the opportunities I now have that I didn’t before.


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