Top 10 Bad Results of Carrying Heavy Debt Loads

Top 10 Bad Results of Carrying Heavy Debt Loads

Debt has become so much a part of life that it is often viewed as a necessity. With costs rising faster than inflation, it is not hard to justify financing purchases. Consider 2015 cost of living numbers. The median price for a home is $213,800, the average car sold for $31,252, and the average cost for a year of college was over $30,000. These staggering costs are difficult to save money in a culture that wants everything today.

The truth is, carrying debt in any form has consequences. Wise use of credit will allow you to build wealth and grow your income faster than paying cash for items like a college education or a home. Leveraging debt for these purposes can have positive results.

On the flip side, there is the negative aspects of carrying debt, especially when it becomes more of a burden than a benefit. When you finance wants instead of needs, debt can take control over your budget. When you begin financing disposable goods instead of appreciating assets, you become a slave to debt payments long after the goods have lost their value. Read more

Credit Card Debt: Reaching Record Highs

Credit Card Debt: Reaching Record Highs

Consumers are once again carrying record levels of debt, according to the latest Federal Reserve Board report. The recent holiday season was not good for brick and mortar retailers, as holiday shopping moved to online platforms like Amazon. However, credit card companies saw the benefits of increased spending, which is represented by higher personal debt totals.

Consumers are now carrying an average debt load that is at the highest level since 2009. At that time balances began a rapid decline mainly due to the high level of charge offs, rather than payoffs. Today it is estimated that 25% of the population is at the verge of financial ruin.

As of December 2015 the total debt balances were $936 billion dollars. Over a 30-day period between November and December consumers added $6 billion dollars to their personal balance sheets. This debt trap is at risk of crumbling household financial stability that could occur from any number of financial events.   Read more