6 Things Your Debt Is Costing You

I am not a fan of debt.  Most financial bloggers will agree with me.

Have you ever thought of the things that your debt can be costing you?  Here are six things that I came up with in just two minutes time!

  1. mb-201312billscoins – This is the obvious one.  When you have debt, you have to pay it off.  This is money that comes right out of your income stream, and because it’s for an item you already paid for, you are paying present money for past purchases.  There is absolutely no joy in that.
  2. Opportunity – When you pay money for your debt payments, that takes money away that you could use for other things, including making money!  Your $500 debt payment is gone, but a $500 investment in the stock market is an opportunity for future gains.  But that’s lost when you have the debt payment that comes first.
  3. Freedom – Every debt payment you make requires a certain level of income.  For some people, debt takes any income gap and then some.  These are people in extreme debt.  But, even those not in extreme debt end up with a correlation between debt and income that sees you relying on your income so that you can pay off your debt.  You’re still able to make the payments, which is great, but you’re in essence stuck doing whatever you’re doing to make income for as long as you have debt.  Remember the people in extreme debt I talked about earlier this paragraph?  The ideal thing is to be on the other extreme, where you have no debt.  When you’re there, you have freedom without having to worry about the next debt payment.
  4. Happiness – Debt causes anxiety.  Anxiety causes stress.  Stress reduces happiness.  Therefore debt costs you some level of your happiness.
  5. Sleep – Have you ever woken up and started thinking about your debt?  If you have, then chances are, rolling over and going back to sleep isn’t in the cards.  There are few things worse than being kept at night…because of debt!
  6. Your Net Worth – Financial freedom is obtained by increasing your net worth.  When you make debt payments, you’re taking an asset to pay off a liability.  This means that your debt payment realistically results in zero net worth growth.  In fact, once your next statement comes in the mail, your interest is a new liability, which actually reduces your net worth!

As you can see, debt is kind of the worst.  If you’re in debt, then getting out of debt will help you gain back some of the costs above, and I’m sure there are others.  If you get out of debt, then stay out of debt so you don’t have these costs come up and get you again.

Readers, what other costs are associated with debt?

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6 thoughts on “6 Things Your Debt Is Costing You

  1. Opportunity cost (lost investments) and loss of the ability to pursue your passion, rather than a job that pays more so you can pay back debt, are two things that I’m struggling with right now. I guess the ability to pursue your passion would also result in debt costing you some happiness that way too.

  2. Great post! I really think it comes down to the type of debt and how much of it you have. Debt can be destructive not only to your finances but to your personal relationships. I’ve heard of a lot of cases in which marriages have been damaged through massive debt and the pressures to pay it off.

    • I wrote a similar article on my site and one of the ways debt can also cost you is like you said your personal relationships.

      IMoney is a taboo topic to most so many don’t even find out about their spouse’s debt woes until it’s too late. I’m no relationship counselor but honesty about your personal finances when it pertains to having debt will make things easier for both parties.”

  3. When my in-laws had their biggest trials in their life because during that time they had lots of debts. My hub’s mom was always crying and her complaining that she can’t barely slept during at night because of their debts. Thankfully, they worked hard again and they passed all the trials.

  4. I think debt forces you to live a lie. You are trying to live above your true means which causes you to not be satisfied with who you are in life. You are trying to live someone else’s life, keep up with other’s standards rather than enjoying the journey of life to find your own satisfaction. Who cares what other people think? Apparently you do because of your life of debt. It is so much easier when you don’t worry about what other people think.

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