Sunday, December 2, 2018

3 Ways Debt Is Scarier Than It Was 20 Years Ago

The concept of debt has been in place for centuries, and many people across the ages have become heavily indebted to others. Some people carry as much debt as they did a few decades ago, or they carry even more debt. 

While any debt balances can be detrimental, significant debt may be a scarier matter to deal with now than it was only 20 or 30 years ago. Consider these points as you determine how to manage your finances well going forward.
Job Security

Several decades ago, it was more common for workers to remain employed with one company for many long years. Some employees held long-term positions with only one or two companies over the entire length of their working years. 

This provided an element of financial security that is not present today. Many people job hop frequently, and others may deal with multiple layoffs. Decreased financial security may increase the problem with debt, and it may also make it more difficult for individuals who are in between jobs to make ends meet. 

In addition, those who are inundated with debt may not be able to pay for unexpected expenses as easily, such as when they need bail bonds after an arrest, when they need to pay a large insurance deductible and more.

Retirement Plans

Pensions and employer-sponsored retirement plans were more common many years ago. Some companies continue to offer employer-matching 401k contributions, but this is not uniform. 

This is combined with decreasing spending power from Social Security income and a higher cost-of-living, and the result is that many adults are retiring later in life or must continue to work at least part-time throughout much of their retirement.

Credit Analysis

High debt balances, late payments and other factors can dramatically reduce credit scores. While this has been the case for decades, a credit analysis is more commonly used in many situations. For example, your credit report may be reviewed when you apply for a job, when you set up a new utilities account, when you get new smartphone service and more.

While debt has been a problem for generations, it may have more serious consequences today. Managing finances responsibly is essential if you want to avoid debt. This includes saving regularly and living below your means. If you are already in debt and need to pay off huge account balances, reducing your living expenses may be necessary so that you can afford to pay down debt balances at a faster rate.

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