We all know the problem with debt. It all starts simply when you buy something with that little piece of plastic. Its all so fun and innocent. Its a mindset that you need somethimg now. you don't have time to save for it. Get it now and worry about the bill later. Maybe you don't have the money, but you'll just make the payments
The short term effects of debt are you have to make your payments with your finite amount of income. This bill arrives in the mail with a small monthly payment, you pay the bill and go on with your life. It still feels good, your paying it back. You see the credit card is your friend, it helps you live a better life. You continue this cycle of credit and it works for a while. Till it doesn't. You eventually don't have enough money to pay your debt. You get behind and here comes stress, fear and worry. Credit has made your life better.
That's only the beginning. Think of all the things you do and can't because of all this wonderful debt. I can relate in my life the many things I miss out on because of debt. For starters my mortgage is 40 percent of my income. Dave Ramsey's rule of thumb is that it shouldn't be more than 25 percent of your income. I can see why my house is keeping me poor. My mortgage is keeping me from saving and paying other bills in my life. The lack of of cash has made me go into further debt when an emergency comes up. A lot of things around the house get neglected like repairs and maintenance. As the debt payment rises, taking more cash from our budget, we don't do a lot of other activities, namely vacations. If we do vacation its put on debt making the situation worse.
More effects are you have to work more. I had to start working on the weekends just to make ends meet. I can't go back to a 5 day week I need the money, guess why, my debt payments. Its incredible I have to give up my Saturday to pay my debt. I'm not working for me but I am working for the bank till I pay them off.
Your quality of life reduced. Your in a bondage to your debtor. You have to do things you don't want to do, your choices are limited when you are in debt. How would things be different if you were not in debt. Think about this carefully. For me I could work one day less per week. I would not worry about getting sick and missing work. For most of us we are one week from financial disaster. Think what your life would be like if you had no debt. I would have a great reduction in stress. My family would have more stability and security.I could be using my income to build an emergency fund or build a Roth Ira.