A new report from CreditCards.com shows that Floridians have some of the highest credit card debt in the country. In fact, out of all 50 states, Florida ranks as the seventh-highest for the amount of debt borrowers carry. Breaking that down into individual households, Florida ranks 12th in the country. The average Florida household carries $8,620 in debt. Adding to that burden, the report also found that Florida has the 14th-lowest average household income: $55,462.
This is not great news for Floridians, and shows how taking on just a little bit of debt can soon turn into a vicious cycle that it is difficult to break from. Debt can also become very troubling for consumers, and reach into nearly every aspect of their life. Below are the eight biggest ways having debt can negatively affect you.
Debt Makes it Easier to Spend More Than You Can Afford
There is one main reason people take on debt: they want to spend more than they can afford. While this is not always the case, such as those that want to take on debt to improve their credit score, when it becomes difficult to make the payments on that debt, people sometimes still continue to spend more than they can afford. Spending money on credit cards can feel good because it seems as though you are getting something for nothing. When those bills come in, however, it is important to remember that debt must be paid to avoid serious financial consequences.
Debt Costs You More Money
People often spend money on their credit cards and take out loans because their cash flow is limited. Although borrowing money can be an alluring thought when individuals cannot afford to purchase something on their own, it is also much costlier to rely on debt. Nearly all debt, of course, comes with an interest rate, which is how credit card companies and debt collectors make their money. The higher the interest rate, the more your debt is costing you. Some credit cards have interest rates as high as 21 percent. That could make a person’s financial situation much worse in the long-run, even if the debt initially helped them out of a bad situation.
Debt Takes Away From Your Future Income
When a person takes out debt, they are borrowing from their future income. Knowing that you are working so hard for something you have already purchased can be discouraging, particularly if you do not derive much value from it anymore. Additionally, sometimes a person’s income is not so secure and, if you lose your job, you will still owe that money to the creditors.
Debt Interferes With Your Financial Goals
When you have to make monthly payments towards your debt, your money is not really your own. That means you cannot put anything away for your retirement, that vacation you have been dreaming about, or even Christmas presents. Having debt can make things so much more difficult, and can greatly affect your future.
Debt Can Interfere With Your Homeownership Plans
If you are applying for a mortgage, all lenders will consider any debt you have, including credit cards, car loans, and even student loans. Lenders do this to determine if you can afford adding a mortgage to your current debt load. When the amount of your other debt is too high, it is likely that a lender will turn you down.
Having high amounts of debt can also hurt your homeownership status if you already own a home. If you are spending a substantial amount of money on repaying your debt every month, it detracts from the amount of money you can pay towards your mortgage. If your debt gets out of hand, you may not be able to pay your mortgage at all, which could mean you may face foreclosure in the future.
Debt Can Have Negative Effects on Your Health
Believe it or not, debt can even have a very negative effect on your health. Debt causes a lot of stress and when that stress adds up, it has very detrimental physical and mental effects. Stress can cause serious health problems, such as heart conditions, depression, migraines, ulcers, and more. Even mild health issues can become more serious in the future.
Debt Can Hurt Your Marriage
It is a known fact that financial trouble is one of the main reasons people get divorced. It places pressure on both spouses and can cause arguments about which spouse incurred the debt, how much debt the couple can afford to take on, and which spouse is most responsible for the debt. Soon, people may find that they are constantly fighting with their spouse and that, over time, those arguments escalate and lead to the breakdown of the marriage. Once the relationship deteriorates to that point, it can be difficult to get it back on track.
Debt Can Hurt Your Credit Score
Many people know that incurring a lot of debt can hurt their credit score. However, few realize just how much. When credit reporting agencies such as TransUnion and Equifax are calculating a person’s credit score, one of the main factors they look at is how much debt the person has. In fact, this makes up 30 percent of the calculation. The more debt a person has in comparison to the amount of credit they have and the balances on their loans, the lower their credit score is. This means you will not be eligible for additional debt, and it could affect your chances of securing a vehicle, or even a job.
A Florida Debt Defense Lawyer Can Help
In addition to affecting just about every aspect of your life, debt can also mean that creditors may take legal action against you. When that is the case, our Fort Lauderdale debt defense attorneys at Loan Lawyers can help. We will ensure that debt collectors uphold your rights, and prepare a defense in case they file a lawsuit. If you are suffering from debt, call us today at (954) 523-HELP (4357) or contact us online to schedule a free consultation.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.