Debt is a concept that just about everyone struggles with throughout the course of their life. When you are old enough to qualify for high-interest rate debt, the allure of a new shiny object is often much stronger than the idea of paying it off with interest. We have all fallen for that trap to one degree or another.
But while taking on a little debt might not seem like a big deal in the moment, it almost always works out to be a bad investment in the long run. So in order to help you prevent yourself from falling into the debt trap the next time you are presented with the opportunity, we have put together a list of seven good reasons that you should actually turn and run in the opposite direction.
Paying Interest Is Awful
The most obvious reason to avoid any type of debt at all costs is that you are going to be charged a fee for the chance to borrow the money up front and pay it back later. Depending on what type of debt we are talking about, this could be anywhere from a few percentage points to double digit interest rates, and all of that interest is going to be added right onto the total price you are paying for the thing you are buying.
When you add the total cost of the interest you are going to pay on to the purchase price of whatever you are buying, you might suddenly feel the strong urge to reconsider.
Life Doesn’t Go According to Our Plans
As we learned from the great philosopher, Forrest Gump, stuff happens. And there is nothing you can do to prevent those things from having an impact on your life.
But while you might not have any control over the things that happen to you, you certainly can control how well you are prepared to handle them from a financial perspective. Having outstanding debts will always make life’s problems more complicated.
Your Life Will Mature
Another big reason that you should stay as far away from debt as possible is that your life is going to change, grow, and evolve in ways that you simply cannot imagine today.
As you advance in your career, consider starting a family, and possibly even move across the country, the last thing you want holding you back is the outstanding debt from a foolish purchase made many years ago.
You Can’t Spend (or Save)
Not only will those outstanding debts hinder you as your life matures, they will also hold you back from spending and saving right now as well. It’s much harder to pull the trigger on concert tickets or up your contribution to a retirement account when you are struggling with month debt service payments.
It’s Hurting Your Credit Score
Speaking of those debt service payments, they are also going to be holding down your credit score. Even if that doesn’t seem like a big deal today, it definitely will when you are ready to purchase a new vehicle or are shopping for the best home mortgage.
Interest Rates Could Rise
In most cases, the interest rates on consumer debt are going to vary with the market. Since those rates are more likely to be going up than down over the next few years, you can expect that your debt service payments will be trending in the same direction. And in many cases, you have no idea just how high up they might be able to go.
Debt isn’t always a bad thing, but in today’s society it has the potential to do catastrophic damage to your life all on account of some consumer goods that we don’t really want or need in the first place. Don’t let debt grab a stranglehold on your lifestyle. Pay off your current debts and avoid new ones at all costs.