Posts

When a person or organization burrow some amount of money with an interest rate and committed to paid back in future is called a debt. It can be unsecured or secured loan. A person can take the loan for any purpose but after completion of that period, he needs to pay it back with the decided interest amount. Sometimes people think little debt will not cost more but it gradually increases along with the increasing amount of interest and becomes a big debt. For an instance, when you make a small purchase by using a credit card then after a short period of time this amount becomes bigger because of the addition of interest rate. Even the licensed money lenders are also giving money as a low interest rate loan within a particular interest amount. The borrower needs to pay the total amount along with the interest amount. In this article, we are going to discuss the top 9 reasons for which the debt is bad for you.

1. Debt encourages you to spend more than your budget

It is a major fact about the debt that it convinces you to spend more amounts on certain even when you cannot afford them at all. When you have debt option you get more excited and attracted towards new things and try to purchase them without thinking about the interest you will pay in future for this. When the time comes for payment you will realise the value of that money you spent on these unnecessary things. In this term debt is definitely bad for you.

2. Debt will definitely hurt your credit score

If you start comparing original loan balance and credit limit with your available debt amount then you will get to know that your credit score is very low. Even if you are not purchasing your loan amount or credit card, still your credit score will definitely affect the cost of the product and service you have taken before. You should Stay Away From These Mistakes that Ruin Credit Score in Singapore

3. Debt is using your future earning

Whenever you use a credit card or take a loan you are actually borrowing that money from your future earnings. Just imagine you
are spending that amount which you are going to earn in future. If you are borrowing the money from a professional money lender then it won’t affect your banking status but it will definitely affect your financial status.

4. Any kind of debt will charge you

You are signing a loan amount or you are using a credit card for your shopping, any kind of debt it will be you will pay a big amount for that. There is nothing free available for you. Normally, you pay a particular pricing amount while creating the debt. In the future, that amount will deduct in the form of interest. The late you are planning to pay, the interest rate will be higher and the load of the debt will be higher accordingly. In such case, the only option is zero percent credit card or interest-free loan but those are also available within a limited amount and can be easily lost in case you default any of your pay.

5. Debt keeps you away from achieving your economical goals

When you are paying your debt amount monthly it will reduce the other expenses that you are planning to spend on other important things. So the more debt you take the more month installment you need to pay in future. So you will not able to fulfill the wish and desire of yours and your family as well.

Even though debts can block or hinder the progress of your economical goals, however, you should not give up. You can simply follow these easy 20 steps to save up and work on your economical goals.

6. Highest interest rate can double the product cost

When you purchased something by using your credit card and you are not able to pay the amount for a longer period then imagine the total payment you paid with interest are really the same values of your purchasing product. It will definitely the bigger value then your product cost.

7. Debt can cause health problems

When you have any kind of debt, it will definitely bring stress to your life. Because every day you only thinking of how to clear the payments very soon. The stress that you get from debt will cause severe health problems which include migraines, ulcers, depression and even some time heart attacks as well. So to take care of health and make yourself relaxed you need to avoid such debt which is really bad for you. That is why it is necessary to keep money aside as emergency funding as you won’t know when you will need it.

8. Debt can affect your marriage

Debt can bring unnecessary pressure which affects your other household expenses which automatically creates lack of finance for your family. It brings unnecessary arguments within your family. In some marriages, the small fights turn into the bigger one which causes to a breakdown of marriages.

9. Debt can keep you away from owning your dreamland or house

While planning for a home loan the bank verifies auto loan, credit card loan and student loan details. If your status is clear and you don’t have such loans then only you will be eligible for the home loan. In case of any kind of debt the bank organization will not allow you to any kind of loan. In such case, if you are planning to own a home through bank load then your dream will never fulfil. So before that, you need to clear all your debt.

Conclusion

Any kind of debt either taken from the bank or any money lender or a professional organization, it is not good for anyone. So
try to lessen your burden on debt and avoid borrowing money for any kind of purpose. Sometime due to some urgent or critical situation, we may need money that time if you cannot manage them borrow from any source but try to pay it back before the committed time frame. The fast you pay your loan the fast you will get relaxed and will able to concentrate on your other requirements. So for that, you need to plan every of your expenditure properly so that you can enjoy everything within your budget and you will not require any kind of debt in future.

The future is extremely unpredictable and it is difficult to ascertain the kind of situations that we would have to face in the coming days and years. That is why, it becomes extremely important and vital to invest and save money in a strategic and proper manner.Some of the reasons why Money saving, financial planning is important are as follows:

1. For Emergency Funds

In order to tackle emergencies in a proper manner, you need to have a substantial amount of money that you have saved over a period of time. These emergencies could include any number of things like building a new roof, unexpected medical expenses, sudden layoff leading to loss of steady income, etc.

2. For the Improvement in life expectancy

As medicines and public health facilities improve, the average life expectancy of an individual is all set to rise. This means that you would require more money in order to maintain the same quality and standard of life over the years.

3. For the Volatility of social security

Even if the government in your country provides social security, it cannot be considered as the main source of income. Social security, at best, can be a small part of your additional income and in no way should you depend on it entirely for your daily expenses. If at any time, social security plans are withdrawn, you will be left with no source of income and that can become a major hurdle in your financial independence.

4. For Kids Education and other expenses

The cost of both private and public education is increasing every single year. Not just that, many daily needs are also becoming more expensive. So in order to live a comfortable life, it is of utmost necessity that you save money at every stage possible.

Investment plans are one of the best ways that can help you save money in an easy and simple manner. Further, it becomes much easier to manage your investments when individuals are in the habit to save on a regular basis. It is, therefore, important to balance both your personal income and expenditure on a monthly basis before you can invest your money in a proper manner. Some steps, that you can follow to save money in a better manner, include:

Create a budget to track your expenses on a monthly basis

Creating a budget will help you identify your spending areas and in turn, regulate cash flow. When you track your expense against your budget in a proper manner, it will help you save money by ensuring that you do not spend on things that you do not need.

Hence, when your saving plans are in place, it will ensure that your investments are protected and safeguarded at all times. At all times, make sure that your extra money is invested in good investment plans so that you are able to reap rich dividends in the future. Good saving plans and investment plans are extremely important in this volatile and ever changing economic environment. In the end, saving and investing money is very important and will help you live a more comfortable life in the long run.