Debt is an unfortunate reality for millions.
According to a recent Federal Reserve Bank of New York report, total household debt rose to a staggering $15.2 trillion in the third quarter of 2022. And that includes everything from mortgages and student loans to credit cards and auto loans.
Credit card balances alone totaled $974 billion in the same period, while student loan debt stood at a staggering record-high of $1.69 trillion. Delinquency rates on student loans also increased, with 8.4 percent of student loan balances being 90-plus days delinquent or in default. Meanwhile, more than 6 percent of auto loan balances were also 90-plus days past due.
These statistics highlight the significant risks associated with debt and the importance of taking proactive steps to manage it.
The problem is that you might not fully comprehend the multifaceted risks of debt until it’s too late. These hidden dangers can significantly impact your financial and mental health.
High-interest rates, for instance, can impede your financial flexibility and limit your buying power, further compounding debt woes. Damage to your credit score can also have serious ramifications, hindering your ability to obtain credit or loans in the future.
And beyond financial repercussions, the emotional toll of debt can also strain personal relationships and even have physical health consequences.
Recognizing these hidden dangers is critical, and taking proactive steps to mitigate them is essential.
Debt can pose significant financial risks, some of which could have long-term consequences if left unattended. Some of the most prominent financial dangers include:
Those, of course, are practical consequences. You may face legal action, such as wage garnishment or even bankruptcy as two examples if you’re unable to keep up with your payments,
Finally, debt limits your financial flexibility. Without the freedom to adjust your financial situation, you may feel trapped in a cycle of debt that’s hard to escape.
And that segues into the non-financial dangers. Simply put, debt can take a toll on your mental and physical health and strain personal relationships.
Start with the emotional toll. Worrying about debt and managing multiple payments can cause stress, anxiety, and depression. It can also affect your sleep.
Debt can also strain personal relationships and have a negative impact on physical health. Studies have shown that people with high debt levels are more likely to experience physical health problems such as headaches, back pain, and stomach problems.
In fact, the non-financial risks are just as real and impactful as the financial ones. Some ways to manage the stress of debt include:
Effectively managing debt is no doubt challenging and should be considered a marathon, not a sprint. But it’s also crucial for avoiding the hidden dangers that come with it. Here are some practical tips to avoid falling behind on your financial obligations:
By taking proactive steps to avoid the hidden risks of debt, you can improve your financial and mental health and avoid long-term consequences.
Seek out help, create a plan, and prioritize your financial and mental well-being. Connect with us today at the Van Horn Law Group to help you get back on track with your mounting debt.
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