If you think that your little credit card purchases will not hurt you at all, have a rethink. Most people in debt started with that one purchase and soon found themselves in some really serious financial crisis. Debt, especially credit card debt can accumulate faster than you can imagine and it can lead to the potential ruin of certain areas in your life.
What you need to realise is that debt teaches you one bad lesson - spending more than what you can actually afford. Once you get used to this lifestyle, it leads to all sorts of difficulties and problems. It can be an addicting habit to have. It gives you the false sense of wealth that you think you need to keep up with family and friends.
Instead of just paying for a car that is worth N950,000 in cash, purchasing through a line of credit will add more than that amount. You will end up paying more because of the interest amount that lenders put on top of your principal debt. Instead of adding it to your personal wealth, you are contributing that to your creditor’s wealth.
And as you keep on incurring debt, you should know that you are actually hurting your future through the bad financial choices that you make today. Your future self would have to share their limited income with the debt payments of your purchases you made at present.
The debt that you incur today can seriously affect any financial plans that you have in the future. If you want to purchase a house or start your own business, getting financial aid may not be as easy as it should be because you have a balance to pay off. Until you have that under control and lowered it to an acceptable amount, you can say goodbye to your financial goals.
Another aspect of your life that can be ruined by debt is your health. Being in debt can put you in a very stressful situation, especially when you know that you cannot afford to make payments. When creditor and collectors start calling you, that can add to your stress significantly. Instead of being able to focus on growing your debt payments, you will be harassed, distracted, threatened and abused verbally as they try to get you to pay what you owe.
Finally, debt is capable of ruining any personal relationship that you have. The mounting debt problem and your stressful self can prove to be too much for the people around you. anger can happen especially when you have to force everyone into a frugal budget just to make ends meet.
Make sure debt will never have this effect on your life by not acquiring it in the first place. And if you already have them, prioritize reducing your debts. It pays to be smart when it comes to your finances to ensure that your future is free from worries.