Debt effects? Debt has an insidious nature – it gives temporary pleasure initially, but its lingering effects gradually accumulate to produce great pain eventually. While many of us seek financial freedom, we do not realize that accumulating debt can be shackling.
Effect of Debt
There are three major effects of debt:
Loss of freedom – Debt constrains your choices in life considerably. If you are struggling to make debt payments every month, your monthly income brings you no increase or progress from your present state. All your income goes into helping you merely avoid pain.
Financial freedom can only be achieved if you are able to curb your spending, and use your present income to accumulate wealth instead of generating more debt
Loss of financial opportunities – As Bill Gates suggested, he did not get rich because he was lucky; he got rich because he was prepared to take action when an opportunity presented itself. Many other people saw the magazine cover of the Altair 8080 that sparked his ideas, but they were not prepared to take action. Debt prevents you from taking full advantage of an opportunity for financial gain when it presents itself.
Loss of time – Accumulating debt leads to incessant hours of worry. The mere thought of debt is a black hole that drains much of your mental energy merely in thinking about it.
Indeed, debt effects can be crippling. And no one is automatically immune: even the most brilliant college graduates have ended up in piles of debt. School unfortunately does not teach you how to manage money. More on how to avoid debt.