This article will discuss how debt affects people and some of the steps needed to get out of debt.
Debt is a general term for something owed, it is most commonly used to refer to money owed.
Debts can be broken down into categories such as secured debts (like mortgages and hire purchase agreements) and unsecured debts (like credit cards and most bank overdrafts).
Having many different debts, or not being able to afford the repayments when they fall due can be an indication that you are not managing your finances well enough.
So if you find yourself in this position, it’s important to know there are things you can do to improve your situation.
Debt is not all bad; in fact, it can be good if used wisely.
‘Good’ debt may help people purchase homes or cars that they could not afford outright with cash – these are items which many find necessary to live comfortably.
Student loans can provide an opportunity for students who would otherwise not have access to higher education because they lack the funds needed upfront.
This can increase your earning potential, you do not usually have repay these until your earnings meet a specified level.
The difficulty comes when there’s too much debt and not enough money to pay it off.
Debt can quickly become overwhelming and difficult for many people to manage. In order to get out of debt, you need a plan in place that will help you reduce your debt over time.
Debt is something which needs an action plan if the problem is going to be addressed head on; otherwise, the situation may worsen.
Debt often affects mental health, self-esteem and relationships. It can also lead to poor financial decisions that may make it difficult for you to successfully stop the debt cycle.
The best way to get out of debt is by spending less than what you have coming in.
This will allow you to pay more towards your debts and your balance should go down over time without incurring any more interest and charges on loans or increasing balances with revolving accounts like overdrafts and payday loans.
You should also try to resist impulse purchases, especially using ‘buy now pay later’ facilities, that could lead to future financial stressors.
That must have purchase may not seem like such a good idea when you are trying to make ends meet at the end of month. Think about whether the purchase is allowed for within your budget.
Debt can be a big burden for many people, creating a lot of stress, and can make it difficult to focus on other areas of your life.
This is not something that should be ignored, but instead, it needs to be addressed so the problem does not worsen.
Debt can feel like it’s suffocating and impossible to deal with; creating a lot of stress and making it difficult to focus on other areas of life that should also be addressed.
This is why getting out of debt needs attention – you don’t want things to get worse because you’re unwilling or unable to take care of the problem now.
If you want help understanding your options, feel free to reach out to the Care About Money team.