11/02/2022
Debt is an incredible burden on your wallet and your relationships, well-being and confidence. Beyond the obvious interest on credit cards or loans, the actual price of debt is reflected in other areas of your life. Understanding the actual cost of your financial decisions can help you make better choices and ultimately keep you out of debt.
So, what is the actual cost of debt? While most people calculate the cost of debt as the actual cost of interest paid towards a loan or credit card.
That is a simple calculation; for many people, it can take months or even years to pay off a loan. As interest accumulates over time, it can be difficult to know how much youâve truly paid for an expense.
In addition to the financial cost of the loan (i.e. interest), many people fail to realize the lost opportunity with that money. That is, what could you have done with that money instead? If youâd invested it, you could have made money.
While debt has financial repercussions, there are also other physical repercussions. People who deal with financial stress are twice as likely to report poor overall health, four times as likely to suffer from sleep problems, headaches and other illnesses, and more likely to experience strain in their personal relationships. Chronic stress can lead to complications like heart conditions and diabetes, among the most serious, and can even lead to excessive weight gain, hair loss and depression.
Ultimately, the actual cost of debt differs for every person and family. Managing your finances effectively and striving to pay down your debt (and not accumulate it) is the only way to reduce your financial stress.
If youâre struggling with debt, contact me for a free consultation. Link in bio!
