20 Reasons Why Debt is Bad: The 10,000+ Word Complete Guide!

Table of Contents

In today’s expensive, highly-inflated world, it’s easy to see how debt could make sense. “We can’t REALLY afford that, so let’s just borrow money to buy it and only pay the minimum,” is the mindset of millions of people who are financially struggling.

But debt sucks. It robs from you and steals away your future. And yet so many people sign up for it everyday. It hurts me to see. So that’s why I wrote this post. Because I want to see you win with money. Not get trapped in a vicious cycle of debt and misery. So I won’t keep rambling. Let’s check out the 20 reasons why debt is bad.

20 reasons why debt is bad (and why it really sucks)

#1. Debt means you don’t know how to manage money

It’s the truth. And the truth hurts sometimes. Whenever someone tells me that I don’t know how to do something it usually make me mad enough to want to do something about it. It makes me mad, so I’m telling you. YOU don’t know how to MANAGE MONEY. What I’m saying is that if you have debt, you don’t know how to manage money correctly. Isn’t that statement rude? Doesn’t it make you a bit angry or mad? GOOD.

That’s where I want you. I want you to think about the money you don’t have anymore. The money you wasted. The money poorly spent. I want you to think about all of the debt you do have and all of the BS that you’ve gone through with debt. You’ve been taken advantage of and squeezed. Debt has controlled your life, even if you haven’t realized it until now. Okay…Let’s get down to business.

Now that you’re mad and you know you need to learn more about money and destroying debt, let’s look at two simple concepts: Debt-Holders vs. Money-Holders and the art of using money instead of spending money. Spending money entails working for your money. Each day you wake up, go to work, put in 8-12 hours, come home, pay bills, buy things, then go to sleep and repeat. Yes, it is admirable that you work hard and I respect that. But this person definitely knows how to spend and borrow money. This is the life of an average, in-debt individual. The so-called “debt-holder.”

But there are a few people in this world that are the complete opposite. We will call these people, “money-holders.” These individuals have great success with money because they know how to use money. Instead of simply working for their money, they are making their money work for them.

For those who use money correctly and manage it accordingly, the wealth-building possibilities are endless. If there are any wealth-building entrepreneurs in this category with debt, it is usually either a very small amount, mortgage loans on a personal residence, or debt leveraged toward investment property or general investments. Essentially there are only a couple of reasons why wealthier people carry debt. Most millionaires, though, don’t carry ANY debt.

So as we look at the two types of people, the debt-holder and the money-holder, who do you believe you are? I can tell you now that if you are reading this post, you are most likely the debt-holder. Right now you don’t manage your money correctly. Right now you work for your money. You might have a couple thousand in savings and a 401(k), but haven’t yet discovered how to use money correctly.

You are probably great at spending; that’s only part of what we need to address. Your habits and your mindset drive you into failure as well, and that’s the kicker. You must address all of the problems that hurt you finances if you want to have a chance and not be broke forever. You must learn how to manage your money properly.

#2. Debt Allows You to Spend More Than You Can Afford

This may, at first thought, seem like a good thing. I can assure you it definitely is not. You may look at the first sentence and say, “Hmm, you’re right! I can buy a whole lot more!” WRONG DECISION. Debt affords you the ability to buy on credit much more than you could possibly afford to pay on a regular salary with cash or paying off a card every month.

Spending more than you can afford, though, can put you in the hole VERY quickly. It’s also probably one of the main reasons why you’re broke. It will seem okay at first. “I can put it on the card and pay minimum payments on the card. That’s okay, right?” NO! What you may not realize is that those minimum payments will continue charging interest, making the cost of those items more and more every month. With a 20% interest credit card, a $100.00 purchase could really cost you $115.00-120.00 or more!

I used to have a credit card that initially had a 0% interest rate while I paid off all my debt. Even with 0% interest, the minimum payments had my projected payoff date [for only $2,500.00 dollars] at 6 years and 7 months away. The website also told me I would pay an extra $3,000.00 dollars. That’s more than I owed which seemed insane! So think about $10,000, 20,000, or even 50,000 dollars on a credit card. You could potentially be in debt for decades. I paid it off quickly and never looked back.

After all of the facts, you will see that, yes, you will be able to buy much more than you can afford. BUT YOU CAN’T REALLY AFFORD IT. This kind of thinking is why you are broke and in debt. Debt will only continue to pile up and your mindset will make you open to more cards and more revolving debt. Eventually you will file bankruptcy and your life will be changed forever. That’s not the road I will let you travel. If you want to have money, you have to manage your money so you don’t live above your means and spend more than you can afford.

#3. Debt Promotes the Fallacy of a Great Job and a Great Life

This is big. The concept is not difficult to understand or overly complex. Debt allows you to think you have a better life than what your bank shows. It can also make other people think you have money when you don’t. It’s actually one of the main reasons why you’re dead broke. A $50,000 beamer (BMW) and a half a million dollar house can easily be financed by anybody with a meager salary. What you have to get with this misconception is that it builds directly off of #1 and #2.

If you make $5,000 dollars a month and have $6,000 dollars in expenses, you’re financing a fake life. A life you cannot afford. Because you can use debt to spend way more than is affordable, you can easily fool others into thinking that you have wealth, no debt, nice stuff, a nice life, and a very lucrative job. But what happens when that “lucrative” salary is cut off and you lose your job? How will you afford everything? You won’t be able to. Your car will get repossessed and your house will get foreclosed upon. Relationships become strained and debtors come to collect.

The need to impress others is only part of the problem. The major problem here is your mindset. Believing that you have a great job and great wealth when you don’t is extremely dangerous. The habits you create by continuing with this fake life can have a monumental impact on your future, your job, those pointless overpriced material possessions, and your overall financial health for the rest of your life. If you keep living with a mindset to please others, you will soon find a hole that you can’t dig out of.

#4. Debt Can Lead to Bad Habits

There’s a hard truth to this chapter. Bad habits are born every day and the level of difficulty required to break a bad habit is tremendous. But let’s get down to the root of what drives bad habits. A habit is a behavior pattern acquired by frequent repetition. A bad habit is essentially doing something the wrong way over and over again until it becomes a habit.

And you may very well have these poor personality characteristics that we call bad habits. But here’s the real question: does the debt you have lead to those habits or do those habits you acquire over time lead you into debt? To some extent, bad conduct with money involved usually lands most into debt. But having debt itself also helps to develop many of those bad behaviors.

Just to name a few of those patterns of behavior in which debt is responsible, we see: Impulse Buying, Lack of Planning, Out of Sight, Out of Mind, Laziness, Paying Minimums, Keeping Up With the Joneses, and Living Above Your Means. Let’s take a better look at what all of these are.

Impulse Buying – This is when you are not planning on buying anything until you see something you like and want, then buy it immediately. Since you have credit and have the means to buy these items, you will always spend the money. This is one of the most difficult habits to break when in debt.
Lack of Planning – On the other side of impulse buying comes what I call lack of planning, or what some may see as a lack of budgeting and controlling your money. Financial Planning, though, is one of the easiest ways to start taking care of your money. It’s one of the easiest good habits to pick up. Lack of Planning is one of those behaviors that happen automatically because, well, doing nothing is the easy. Doing nothing is automatic when you start spending. After accumulating a great deal of debt, a lack of planning will seem like the easiest path to take, because tackling a mountain of debt takes way too much effort for some. Developing a plan seems too complex and not many people want to admit that they have a debt problem. In fact, most want to quietly sweep it under the rug.
Out of Sight – Out of Mind – an easy bad habit to pick up when handling money poorly. To put it as simply as possible, “if we forget about it and never speak of it, it goes away, right? WRONG!” That debt continues accumulating, credit is ruined, and collectors start calling. Part of what drives this habit is another habit that is so easily picked up.
Laziness – What may not seem like a bad habit to some, laziness is a behavior that so many in younger generations love to acquire. Why is laziness so great to some? It’s easy – laziness is doing nothing. Being lazy, or the art of lounging, chillin’, hangin’, and not getting anything done, is awesome. It’s a habit that I personally had and still have occasionally. It’s okay sometimes. Laziness in finance drives the majority of people in this world, and it is the chauffeur for those with debt. If you are lazy all the time, it might be the reason why you are broke. Like I said earlier, a mountain of debt is hard to climb. The average individual does not want to even make an effort, so their state of mind is, “why even try? If I do nothing, or only the minimum, everything will fine.”
Paying Minimums – This means that you have an outstanding balance on credit cards or loans ($3,000 dollars for example), but the company allows the individual to pay only a minimum amount due ($100 dollars on that $3,000 dollar debt). The reason this habit is bad is because you end up paying a significant amount more for everything and you never really get anywhere paying only a tiny percentage of what’s owed. The credit card company always wins. But let’s scale our debt down to $1,000 dollars for this example. The credit card we have allows us to pay a $30 dollar minimum payment every month on $1,000 dollars. On that $30 dollars, roughly $5-10 dollars or more will be interest owed. Only $20-25 dollars gets applied to the $1,000 dollar principle balance. Aside from that, paying minimum payments of $25 bucks after interest will be about 40 payments toward that $1,000 balance. You will pay it off in about 3 years and 4 months or 40 months. You also paid the credit card company $200-300 extra dollars in interest. If you would have saved $200 dollars for 6 months AND waited until the Superbowl deals weekend or Black Friday, you could have gotten a bigger, better, more awesome TV with an added sound bar for the same price. It’s absolutely ridiculous that people give in to this mindset. But I can sometimes see why…
Keeping Up With the Joneses – The average, financially undereducated person gets sucked into a trap because they want to keep up with the Joneses. Keeping up with the Joneses is a financial nuclear bomb that will eventually explode. Basically what this means is that the Joneses are people or families that seem to have it all. A nice home, nice cars, nice clothes, and awesome tech and gadgets are just a tiny percentage of the things that those people choose to focus on. They have all that stuff, but the reality is, they have NO MONEY. They have enormous debts that must be kept up with and the salaries don’t match. But we are human. And what do we want? The next best thing? That awesome BMW? That SMART TV? We want those things now, and because we all see the Joneses with that stuff, we want to try and keep up with them. The Joneses also have another bad habit among them: They live much higher than their means.
Living Above Your Means – This is one of the most dangerous financial habits a person could possibly have. This habit, in my opinion, is single-handedly the cause-and-effect for all of the other bad money habits because you are prone to: impulse buying, lack of planning, paying minimums, “out of sight, out of mind,” lazy behavior, and trying to keep up with that Jones family. Living above your means is defined as, “a person living a quality of life much higher than what they can afford and/or spending much more than their income.” The luxuries you have in life are much greater than the means you have to buy those luxuries. Essentially, you SPEND TOO MUCH and you MAKE TOO LITTLE.

Yeah, I know, if you believe that you have some of these habits, you probably do. I had ALL OF THEM. I wasn’t worried about taking care of my finances every month. And I don’t blame you for any of it. Yes, it is your fault for going into debt. But it’s normal in our world. Society drills these bad habits into us. People who are, “normal,” work against us until you either go into debt or you learn to control your money. I chose to learn. Don’t be normal. Be weird.

#5. Debt allows you to pay off Debt with Debt

This is exactly how it sounds. An individual in debt pays off their debt with other debt. They pay off their debt with a personal loan, private family or friend loan, other credit card, or any other loan they can get. Most of the time, this is some of the most dangerous borrowing. What the average individual doesn’t realize is that they are simply accumulating more debt. They use an 18% interest credit card to pay off a 20% interest credit card. This seems logical, right? The first card has less of an interest rate: 18% interest as opposed to 20% interest. But if, for example, you pay off $1,000.00 dollars with another credit card, that second card still has interest adding up.

Let’s say you’ve done exactly this. You’ve technically paid on your debt, but you haven’t paid anything down. The 18% interest card now has the original $1,000.00 balance on the card, plus an extra $60.00 of interest (this interest is a conservative estimate and may be more). After two months, you’ve tacked on another $60.00 or more. After your third month (and use of another credit card, your balance is at $1,180.00 or more. Doesn’t this seem wrong? No, not my numbers, but the sticky situation you’re in! You pay off one card but you owe more money on the other. The cycle is vicious. 6 months later and you owe $1,500.00 bucks for a TV and a sound bar that originally cost you $1,000.00 bucks.

Let’s try something different. If you have insanely high interest and fees, you could consolidate your debt into a low interest loan. That’s the only way that I would ever tell you to use borrowed money to pay on borrowed money. This isn’t going to save you a whole lot, though. Maybe a few hundred dollars. But you can do this if you’d like.

#6. Debt Costs You Money

We’ve already been over this some in the last paragraph, but let’s revisit. With debt, there is usually interest. Minimum monthly payments mean we are paying mostly the interest and items will end up costing you more. Those items will cost you more using credit regardless. That interest adds on a lot more cost to what could have been cheap if you would have saved up for it. It works the same with student loans as well.

Even though student loan interest is fairly low, 4-6% interest for 20 years on $50,000 dollars is about $358.00 dollars per month. You will end up spending an extra $36,000 dollars in interest alone over 20 years. That $50,000 dollar degree in 18^th Century German Art History just cost you a total of $86,500 dollars AND 20 years of your life slaving to pay it off. Was it worth it?

I’m going to take this even further and show you how much something like years of debt can cost you. On the flip side, debt is costing you more money because you don’t have that money to invest. That $86,000 bucks could have been deposited into a mediocre 7% retirement account for 20 years and made you a cool $183,675.19. That degree just cost you a house. I seriously hope that 4 years of frat parties and skipping classes was worth it. Wow.

If you think about it, though, it’s more than just student loans. It’s credit card debt, store financing debt, car loans, and every other debt imaginable that forces some people to pay $1,000 dollars per month or more for crap they don’t need. That $1,000 bucks could be saved in a 0.25% interest savings account and make them more money. That same $1,000 could also go into a Roth IRA, high-yield mutual funds, or stocks and bonds and your money would grow exponentially.

Here is one more example: John has to pay $1,000 dollars per month on a credit card for all of his debts. If instead he could save and invest $1,000 per month, that’s $12,000 dollars per year. If he saved this money up for 20 years in a mediocre 7% interest rate retirement account, he would have a grand total of $495,815.59. That same amount for 30 years would net him $1,141,141.69. A million bucks!

Let’s go even further with this example. John was smart and found a mutual fund with a 10% rate of return. His $1,000 per month at 10% for 20 years has made him $694,027.49. He kept it for 30 years and his total deposit of $360,000 would turn into 2 million dollars. Sounds like John should have cut up those credit cards.

#7. Debt is Financial Slavery

Debt truly is financial slavery for those who have it. I wish it wasn’t true, but debt pulls you in and binds you to what you owe. And with most debt, “you have to pay or else!” That last quote came directly from a debt collector that called one of my friends a few years back. My friend had collected some debt and a collector had called to force my friend’s hand. “You have an outstanding debt with us, and if you don’t pay you will regret it!”

With my friend being 18 years old and hot tempered, you can guess how the rest of that conversation went. But that’s what happens when we acquire debt: we have to pay or else our “credit score suffers,” our chances to own a home decline, and life in general becomes more difficult (more about these last few things in later chapters).

With that being said, debt means you are locked in. Locked in until you either find a way to pay it all off, declare bankruptcy, or die. I would prefer you go for the 1st option. Of course, there is a 4th option: continue paying it every month and staying enslaved with the chains of debt servitude. That, of course, is the easiest option. It’s also the laziest, most aggravating, and most expensive option. With option 4, you have what I call, “one boss, two supervisors.”

In this scenario, debt is your boss. He pisses you off, yells at you, and demands a lot. You have to perform (pay the money) to keep him happy (having debts paid up for the month). The first supervisor is your job. What I mean is that you must keep up with your boss’ demands, so you must keep your job. You need your job in order to pay your debt. No job equals no money paid on the debt. You are a slave to your boss, to you job, and to your second supervisor: money. Instead of having your money work for you, you have to work for your money. You need that money. You have to pay your debts.

But the scariest part about all of this is that this is what society makes us believe. We are made to believe the system. That debt is normal and having it is no big deal. Society as we know it promotes entitlement for material wealth which easily correlates to people thinking those individuals having a tremendous amount of wealth. What a crappy situation, right? And when people try to change their life and get out of debt, others make fun of them and put them down thinking they are nuts. The cycle is viscious and it’s ridiculous. I know, I’ve been through it. But I’m here to tell you there is a better way. A better life to live. A life with no debt.

#8. Debt is Downright Stressful and Shameful

Well here’s the understatement of the century: Debt is down right stressful and very shameful. Let those words sink in for a minute while I explain further. The stress with debt starts when you start buying. Once you buy with credit or loan, you owe. Now you are in debt to that person or establishment for the item(s) you bought.

If you pay off your card every month then you’re good. That’s not a huge issue. I will still say that you shouldn’t spend money before you get it, but the issue lies in collecting debt. The majority of people do not pay off their debt every month and that debt accumulates. If you keep on buying, your risk with debt continues to increase. Then comes the month you forget to pay or fail to pay enough to cover the minimum balance. Not a huge deal, but you are going to be hit with penalties.

These include penalties of interest rates going up permanently, collections costs if you just altogether fail to pay, late fees on all money, and even item repossession in some cases. Now Best Buy isn’t going to use the Geek Squad to come and repossess your TV, but failure to pay will hit your credit where it hurts…your credit score. If you miss 3 or more payments with your new overpriced, overzealous BMW, the dealer will definitely come take that back.

As you build up more and more debt, the pressures increases with risk, variable interest, fees, repossession, foreclosure, and the ultimate form of being broke, bankruptcy. It may look good on the outside but one’s financial statement will often say otherwise. Once a person starts to realize all of the dangers of collecting an excess of debt, they will see the stress.

Hopefully you will begin to see the errors in your finances and begin to take appropriate actions to remedy the problem. I don’t want to be the bearer of bad news if you don’t see the stress yet, but I would rather have you mad at me and beginning to change than continuing the same bad habits on a path to failure.

So this debt we have can cause shame? Uh, yeah! Debt, in the context of having a lot of frivolously spent money owed to lenders, is extremely shameful. Once I started learning more about money and destroying debt, I only felt more and more shame for the stupidity in my ways. Now I’m not calling anyone reading this, stupid, nor am I calling myself that. But just like the decisions we’ve made, which have been dumb, debt itself is dumb and the ways of the majority of “debt holders” is dumb.

A few people reading this can honestly say that life has caused them debt. Some things with kids, lack of income, tough life problems, and other life situations can often cause disasters among finances. I believe that these problems can be remedied and you can gain the knowledge to solve anything. The other 95 percent of people, on the other hand, live above their means, put everything on credit cards, get loans, buy expensive cars and houses, and just don’t understand the pressure that is to come. That was me fresh out of college.

Back in the day, when I was in college, I had a night that still haunts me to this very minute. After a few drinks in my dorm room, I went out and ended up stopping by my mailbox and checking the mail. I opened one letter up and it was a refund check from the school. “Whoa! $2,500 bucks?!” Yeah, at that point in my life, paying off debt, saving, investing, and retirement had only been phrases and words heard in passing.

So I did what college guys do best: I spent it! IN 2 MONTHS! I had no bills, no car payment, no insurance payments, or any other debt payments. I bought fast food, clothes, a pair of Oakley sunglasses, movie tickets, beer, and anything else I wanted. I think back to that night and I kick myself for being so dumb. Then I racked up money on a new credit card.

I was ashamed after the refund was gone, because I had debt, no money, no diploma yet, and I hadn’t really amounted to anything. It was a low point for me. I learned that summer that you have to know about money, how to spend money, and how to use money. Simply knowing how to spend money is incorrect and will lead you to debt, depression, and shame.

#9. Debt is Aggravating and Annoying

So we already know that debt is stressful and shameful, but it’s much more than that. Debt also gives us the joy of aggravation and annoyance. I’m being facetious when I say joy, but I do like to be frank with people when it comes to money and I’m here to tell you that debt is just plan irritating. Why would you want that in your life? You don’t let people who annoy you hang around, so why would you let debt stay in your life? “Because it’s too hard to pay it,” or, “You can’t get rid of debt as easily as an annoying person.” You’re absolutely right. But that still doesn’t answer my question: why do you let debt stick around?

But why is debt aggravating? Well, for one, the aggravation comes from the worry of debt. This causes the stress we get from having to pay debts on time, worrying about higher interest rates, worrying about how much debt we have total, worrying about what you would do if you lost your job, and worrying about collection and repossession. I, personally, don’t want any of that. Why would you?

I mean, debt really sucks. Sometimes it just makes you think, “screw this!” I know, because I’ve been there. You know how crappy debt is and you’re probably in the thick of it now if you’re reading this. Debt is hard to pay off and way too easy to gain. It takes years sometimes to pay off all debts (even with aggressive payment plans) and only a couple of hours shopping with a credit card to acquire that same amount owed. I want you to think about how freaking stupid that is.

Another part of the aggravation lies in having an emergency plan. Like I’ve already said, debt is way too easy to gain. If you don’t have an emergency fund or emergency plan, when something serious comes up, that money goes on a credit card or personal loan. Before I paid off all my debts, this happened to me so many times that I thought I was going to lose my mind. There are hundreds, if not thousands, of situations in life that require emergency funds.

For example, my dog has a weird fetish for eating socks and underwear whole. Imagine a tiny weiner dog swallowing a pair of boxers whole. Yeah, no exaggerating here. Anyways, I had to take him to the emergency vet when this happened. That’s $400 bucks. My wife’s car tire blew out, which ended up being another $400 for new tires (since we needed new tires anyway). Then I got sick and ended up in the emergency room. I still don’t know how much that ended up costing in total. I stopped counting. I had a small amount in an emergency fund, but my debt still went up. It threw my whole plan off a few months. I was mad. But it happens. Just get through it.

Lastly, debt is aggravating just because you have to pay so much. The fact that, on top of all your bills, you still have to pay more on debt is terrible. Think about what you could do with all that extra money. Think about not being annoyed because of debt, or aggravated when you click submit to those payments online. Ask yourself this question: “Is debt really worth all of this BS?!”

#10. No Distinction Between Wants and Needs

The fact that you can accumulate debt makes things interesting. Sometimes good, but mostly negative. When it comes to the fact that it’s so easy to spend money and use debt as a way to supplement your income, the lines between wants and needs get blurred. We can buy things so easily that it’s almost too difficult not to buy. Companies like Amazon give us a platform to buy anything we want. People can’t distinguish between their wants and their needs. And debt allows that to keep happening.

So what are wants and what are needs? Your wants are the desires you have to own or possess things. I want a new car, a personal chef, or to go on a trip to Hawaii. Your wants are not necessarily bad, but are not really essential to your survival either.

Your needs are different. Needs are essential to your survival and are things required for you to continue living and thriving. Needs are shelter, clothing, food, etc. But with our ability to leverage money, debt blurs the two categories together and absolutely crushes your chances to not be broke.

Most people simply don’t understand this debt-free thing I keep talking about. They work, make money, and spend it quicker than it comes in. Then they see stuff they want. Those people believe that they need it. They rationalize the want as a need because it will look nice in their house, it is generally awesome, or because they think it will be worth it in the long run to own it. NO, IT WON’T. You will be broke in the long run.

What makes things even harder is that there is so much cool stuff out there. I meticulously control my spending but still buy stuff regularly. Amazon, Walmart, Malls, Technology stores, and other retailers you like often spend millions per year to sell and market awesome products. They make it hard for you to understand your wants and needs. They market their products as a need and give you tremendous credit to increase your buying power. They make it hard to not buy their stuff and they make it tough to not be broke. It’s sad but true.

#11. Debt Limits Opportunities and Takes Away Money from Important Things

This point is a very short, but very valid. You may not have realized this, but all that money and extra interest you pay for loans, credit debt, and a nice car takes away from other important life purchases. With an extra $200, $300, $500, or $1000 bucks a month, you could save up a great down payment on a house, own a car with cash, pay for a child’s private school or college tuition, or buy nice stuff with the cash you saved up and a little bit of patience. Debt also takes away from your ability to use your money to buy stocks or bonds, real estate, better retirement, or other investments.

I want you to think about some important things you could purchase with saved up cash instead of credit cards or personal loans. What could you do if you had no debt? What kind of opportunities could you pursue if you had no creditors to pay and cash to invest. I’ll tell you: a helluva lot more than you can do now. You can do this thing. I know you can.

#12. Debt Can Keep You from Owning a Home

A lot of people own homes and if you don’t own one already, you probably will at some point in your future. I’m speaking to you specifically. Owning a home is an important asset in your wealth arsenal. Owning a home is special. It gives you freedom from debt and the opportunity to grow your nest egg. I don’t care what some financial professionals say – a paid off home is an asset. The average millionaire. pays off their home in 10.2 years.

But having a lot of debt changes things. It’s always becoming easier to buy things with debt and the amount of debt given out steadily increases every year. However, when you want to buy a home, it’s possible that debt can keep you from owning that home. Yes, debt can keep you from this purchase, because the banks and other lenders look at all of your debt and consider that as a factor. They don’t just see that credit card debt. They also look at other mortgages you may have, credit utilization rates, private loans (When possible), student loans, car loans, and any other debt to your name.

The next thing considered is your debt to income ratio. This ratio is the cost of all your debt payments (sum of all debt payments) divided by your monthly income. Let’s say the cost of all your debts is $1,000 dollars per month. If you only make $1,600 dollars per month, your DTI ratio is 62% (1,000 ÷ 1,600 = 0.625). This is not good. But if you make $3,000 dollars per month and your debt cost $1,000 bucks, your ratio is 33% (1,000 ÷ 3,000 = .333). Most banks and lenders would prefer your DTI ratio to be lower than 43% or $430 dollars of debt payments per $1,000 dollars that you make. Over that and you may not be qualified for a mortgage.

Debt to Income ratio is a big factor, but mortgage lenders also look at your credit history when it comes to mortgage loans. They like to see a good score over 650, at least a few years of, “responsible borrowing,” and whether you have kept up with your payments. Mortgage lenders don’t like those who have mishandled money, and if this is you, it’s just another reason why you are broke.

#13. Debt Collectors and Tow Trucks

So aside from the limited opportunities from debt and the possibility of not being able to own a home, there’s a scarier part of debt that people see far too often: Debt Collection and Repossession. I call this part, “Debt Collectors and Tow Trucks,” because that’s all you hear and see when the situation gets this dire.

Collections is a tricky, and sticky, situation to be in. The very first thing that gets hit is your credit. You’ve already been warned about your overdue bills and more overdue bills. Now your accounts face collection. After a few months of no payments, the debt collectors start calling. AND CALLING. AAANNNDDD CAALLLLINNNNGGGG!! Ruthless just isn’t the word that describes some if these sorry individuals. The majority of debt collectors are just doing their jobs, but a few go, “above and beyond,” and act like true a-holes. They get on the phone to rile you up and threaten you with hopes that you will pay. Why they are like this, I don’t know. It usually doesn’t get them anywhere.

For those with auto loans, which is a solid majority of the population, there comes an imminent threat to those who don’t pay: repossession. This is really quick and dirty. Tow Truck drivers have a job to do, too, so when a car comes into repossession status, tow trucks roll up and take your car. Imagine waking up and your car is gone. You might have thought it was stolen, but then again you probably already knew it was going to be taken back by the dealer soon.

But YOU have decided against this life. YOU have decided to do something about it. This is where you decide to change it up and actually learn how to manage your money.

#14. Debt and Marital Stress

Obviously this section is call Debt and Marital Stress but it’s dedicated to the problems debt brings in to any serious relationship. I say serious because most early, less-serious relationships don’t focus on the couple’s finances or how the two people will have to figure out debt, bills, student loans, and the like. As a couple enters the more serious stages of their relationship, most will start to focus on how the money thing works.

So in this section, I am highlighting the stress that gets put onto serious relationships. Personal Finance is one of the most argued about topics amongst relationships. Further more, debt is another one of the most argued on topics amongst couples. The sad thing is, that’s not even the end of a many couple’s financial struggles. Spending habits, budgeting, and planning for debt are all seperate arguments in themselves. Ramseysolutions.com states here that 86% percent of Americans enter into marriage with debt. With that being said, it’s easy to see why many relationships end. Most couples just can’t get the money thing right. With married couples, debt puts a strain on both partners that sometimes can’t be undone.

But why do couples not get along when it comes to debt? Frankly, its easy to see if you look hard enough. Couples usually fuss about whose debt is whose. Is it my debt or yours? They don’t think about, “ours.” If one person has debt, questions sometimes come up on the topic of frivolous spending. It’s too easy to spend too much. Sometimes debt plans cause conflict if one person is too radical or too lenient.

Debt success largely depends on both partners and when one is committed and the other isn’t, the plan doesn’t work. Debt can also come into play if one partner doesn’t work or is unemployed. If not any of the previous, children’s expenses can cause unnecessary tension. Extended family situations and emergencies are relationship killers. Even trying to fund big purchases is sometimes a chore and can cause money stress.

This stuff really runs the gamit, but is blown up full-scale when debt becomes involved. They can end a once extremely happy relationship in just a few short months. Debt is one of the worst family members that you can have in your house, but if you and your partner work together, you can kick him out. And I will say this, if you and your partner can conquer debt and money problems, it can help you have one of the strongest relationships anyone could ever dream of. That’s what I decided to do with my wife, and we as a couple have only grown stronger.

#15. Debt Can Ruin Friend and Family Relationships

With debt, as I’ve heard Dave Ramsey and many others say, the person who lends money to another is master over his servant. Think about that for a minute. The borrower is slave to the lender. So with this section, I’ll tell you that I have personally lost some of my best friends and family because I lent a lot of money to them. Up to this point, we have established that debt is not really something we want in our lives. So to add personal debt lending or borrowing into the equation only adds trouble.

Im sure you understand that debt is hard to pay, and without the threat to your credit score, personal debt can go unpaid. That’s the point I’m trying to get at. Personal debt is hard to manage, because if someone doesn’t pay, how are you going to incentivize them to pay? You know how loan sharks in New York City get people to pay? They hurt the borrowers. The, “don’t make me break your kneecaps,” lending joke is funny in passing, but is real in some circles.

Loan sharks hurt the borrowers who don’t pay by beating them up, breaking fingers, or even killing them. Yeah, it’s gruesome but true. Credit card companies and banks use your credit score to help you understand that, if you don’t pay, your credit will get ruined. They use mental pain to get people to pay them. How will you get family members to pay you if they stop paying one day? That’s the point I’m trying to get at.

Once you make a friend or family member your debt servant, and they miss a payment, things can go awry very quickly. You want them to pay so they may start avoiding you if they don’t have the money. Pretty soon you don’t see them anymore and family gatherings can get very awkward if your, “servant,” is someone in your family. If it’s a friend, you will notice that they stop showing up to hang out, they avoid your calls, and become very distant.

This is where I was with one particular friend. I lent him $300 dollars AND I let him stay with me for a few months. We agreed on a price for rent, which was almost nothing compared to what I was paying. After about two months, we had to kick him out because he wasn’t buying groceries, he was eating our food, he kept couch-crashing even though we had a room set up for him, he was coming in and out at all hours of the night, wasn’t paying us any rent, and through 3 paychecks had not paid me back for any lent money.

We said, “dude, we’re sorry but you have to move out.” After that, he told me on 10 plus occasions that he would pay me some money but never did. I stopped seeing him but once every 3-4 months. Every time I would see him, he swore he would get me the money, “soon.” He told me he would pay me the whole amount but I saw him less and less.

Finally, because I didn’t want to lose a once-great friendship, I just flat out told him that the debt was forgiven and he owed me nothing but a beer and some hang-time. I made all of the debt a gift in hopes of saving a friendship. But the damage was done. The Master (lender) – Servant (borrower) relationship that was established because of debt really cut deep, especially to my old friend. He always felt ashamed to hang out and still wanted to pay me back when he saw me the last time. He told me how sorry he was and why things had gotten that way. In the end, even though I had forgiven him, I couldn’t kick that, “you owe me,” mindset. It hurt us both and now I haven’t talked to him in years.

Another example I had was when a buddy of mine accidentally backed into my car. It wasn’t much, but a $571.00 repair bill can easily hurt any friendship. I got onto my friend many times, but he had only managed to pay me back about $200 bucks. He swore he would pay more but didn’t for years. After the $200, nothing else ever came. My car was fixed but my friendship was damaged. He moved far away and I really couldn’t do anything more than beg him to finish paying. I decided that the angry approach wouldn’t get me anywhere other than a middle finger.

Long story short: I forgave him for the rest of the debt and we are still really great friends. He has more than paid me back after that. He paid for fantasy football leagues, food when we would hang out, bar tabs, and just about everything else you can imagine. I wasn’t worried about the money, but he knew that he owed it to me and eventually got it all back to me.

So the main thing I want you to remember is that the master-servant lending relationship just isn’t worth it. You will lose friends, family, and time trying to deal with the drama. I recommend never lending anyone close to you money and if you do give someone cash, give it as a gift and tell them that it’s a gift. Great family and great friends always pay you back down the road even if you don’t want them to.

Tell them this, “all I ask is that you help me or someone else out down the road when you are in my position.” It makes things less grey and shows them that they can get to where you are.

Lastly, if you are in this process now, and have lent money, tell them you forgive them and that the money is a gift. If you are the borrower, pay your debts and never borrow from family or friends again. The damage that can be caused is painful and you don’t want that.

#16. Debt Can Change Your Life

Okay, so in some of the previous chapters, we’ve highlighted the various negatives of debt. Let’s say, some of the various specific examples of why debt is bad. But now I want to take you from the specific to the general. I want you to understand more than just debt collectors, credit card screwups, and Marital problems. Debt causes all of those, but in your life, it poses bigger and much deeper problems. Debt hits you [of course] financially, personally, and poses a serious detriment to your life.

Financially speaking, debt can ruin your life. Debt does this partly by making you a slave to money for all of the years that you live. And the worst part is that most people voluntarily live this way and continue on forever, not knowing what freedoms could come from no debt.

Most people exist with debt and continue to barely stay afloat until they, “retire.” Then they suffer more with even less income. There are also those who keep sinking and sinking and eventually drown in debt. Debt has ruined them financially and they file bankruptcy or go off the grid (seriously, people do this). For the most part, for the financially illiterate, debt seems like a tool that conveniently allows us to have anything we want and allows us to pay it off [at outrageous rates] later. I can tell that you want to be smarter than this.

We already talked about what happens when debt becomes intertwined in a relationship, with friends, or with family. Bad things happen. But what most don’t see is the big picture. Debt can affect all of the personal relationships we could and do hold dear, then ruin them in a similar fashion due to debt and poor finances. Once any and all relationships are strained, they tend to break apart. Your personal relationships are important because they help to strengthen your mental health and that’s very important.

When debt gets involved, it tends to disregard your mental and physical health. Irritation and stress can become major concerns. If you have too much debt, and your in deep sh*t with your finances, all of the worrying and stressing can really put a damper on your beneficial way of living. And If you lose you mental and/or your physical health, the issue can get more serious. Let’s take a look at this further in the next section.

#17. Debt Can Literally Kill You

I cut the last chapter a little bit short because I wanted and needed to get into this last chapter a little bit faster for those who may be in a bad spot right now. I want to help you in any way that I can. My intention previously has been to try and scare people out of debt, but I understand that you may be hurting more and more because of what’s going on right now.

You may be depressed and that’s not okay. Financial distress because of money loss and major debt has put a serious strain on a lot of people. It has pulled many great, worldly people to a place where you may possibly be right now. Close to the end. Close to a place where others have been. Close to suicide. Debt and financial strain have killed before. I don’t want this for anyone. Debt is a temporary problem that can be solved. People think that death us the only solution.

For some, like I started on in the last section, the weight of debt or financial troubles can lead a person to suicide. I want you to know that if money has you depressed, I can help you. Many people can help you. Friends and family can help you. If you are seriously considering the permanent option of suicide, give 1-800-273-8255 a call. That’s the number for people who want to talk about their issues and have dedicated service representatives help them.

This isn’t the end, though. Money doesn’t have to cause that. Life is grand and should be celebrated. Let us help you with your money issues. You can also email dollardollarnowofficial@gmail.com and get a response. Things can always get better. During the Great Depression in 1929, thousands of people ended their lives because of money. They lost everything they had made and decided that this was the end. Money, or the lackthereof it, killed those people. Don’t let it kill you, too.

But you may not be depressed. Let me tell you what other physical ailment can be caused by the presence of debt and financial strain. Debt can cause serious stress. The more debt, the more stress. More stress can cause or contribute to a slew of other problems like: heart disease, diabetes, Alzheimer’s disease, depression-like symptoms, gastrointestinal ailments, asthma, headaches, anxiety, accelerated aging, poor sleep or insomnia, and premature death.

I hope that you can understand that we are all stressed out way too much anyways, so don’t let financial troubles do more damage. High debt. High stress. Lack of money. Those things suck, so let’s try to turn it around.

18. Debt Can Make You Desperate

Being desperate is not ever a good spot to be in. Desperation is a state of despair or a state that results in rash or extreme behavior. When a person has debt, and that debt starts to weigh down on them, the reality of the situation usually hits most people hard and makes them very desperate. Way too hard to cope with the situation normally.

Normal financial coping, or positively dealing with one’s responsibilities, problems, or difficulties, with financial indebtedness that includes feeling ashamed of debt and having what I call a, “want to,” when it comes to paying off their owed monies.

Irregular financial coping is the outcome of desperation, including extreme actions or simply nothing at all. Sometimes a person just says, “to hell with this. I’m not paying anything.”

What I mean by irregular coping and extreme actions is that a person doesn’t think about debt in a normal fashion. They don’t intend on paying down debt normally or paying their debts at all. They don’t have the, “want to,” to pay off their balance. Some individuals want to pay it off, but the balance is scary. They do not look at the big picture – being debt free – so they simply stay in debt and make payments for the rest of their lives.

As the pressure of those payments and the total amount of debt begins to weigh them down, it makes a person desperate, so they turn to extreme measures for a short-term outcome. Something I like to call a Financial Band-aid.

The majority of people see a way out of debt with more debt. They think a second or third credit card or a personal payday loan can fix the problem. The irony is brutal in that they just create more problems. More credit cards and more loans just mean more interest and fees. And the average person only pays a minimum balance on their debts, so the balance doesn’t really decrease very much. Further, that person may continue to charge money onto a credit card or acquire more loans while they stick to, “paying minimums.”

Normally, a couple of tanks of gas and some lattes from Starbucks equals more than a minimum credit card payment (if you have a lot of credit card debt, the minimum will obviously be more). But although this behavior is irregular for me, this is the norm for way too many people today. That’s a big reason why people are so dang broke.

Normal or not, desperation does pull a few people into behavior so extreme that it literally is a crime. What’s the worst kind of financial desperation? Well, committing crime to pay your debts is a shoe-in for the winner.

When a person resorts to crime to pay off their debts, it is apparent that there is a huge problem. The best fictional example I can give you is the movie called, “Fun with Dick and Jane,” featuring Jim Carrey and Tea Leoni. The husband, Dick, has been highly successful but loses a high-paying job after the company goes bankrupt and he is blamed for the faulty accounting failures.

Dick tries to land another job, but his reputation is ruined and he can’t get a job making anywhere close to his original salary. Because of their upper-class lifestyle, and the desperation that follows when they start to lose it, Dick and Jane turn to a life of crime to keep their status and pay their bills. It’s a great movie, but shows what could happen if someone gets desperate enough with money.

Paying off debt with crime may show that there is a problem that is beyond fixing. I’ve worked with people for years in law enforcement who were hardcore convicted criminals. Many of those offenders decided that they would turn to crime to pay their lawyers and their court debts. The crimes were usually larceny, robbery, shoplifting, or other theft charges that all brought community sanctions or jail time. Those offenders didn’t think about the long term and only thought about how to make a quick buck.

Even though most were arrested, larceny and stealing, to them, is way easier than actually working. The mindset was, “why would I spend 10 hours working for a petty $75.00 bucks when I can steal a chainsaw or weedeater and sell it for $80.00” That sounds logical, but it almost never works out that way. It all comes back to desperation, because debt changes people.

Debt can wreak havoc on your life if you let it. Some are torn apart by the struggle and allow debt to permanently scar their mental health. It’s sad, but you don’t have to let debt grab ahold of you. Yeah, you can’t get rid of it unless you pay for it or declare bankruptcy, but you can beat debt. In that regard, I will say that debt isn’t easy.

19. Debt is Hard

I waited to write about the struggle of debt until I had stated the facts of every other part of why debt is bad. Debt is seriously a struggle and I’ve experienced it firsthand in my own debt journey. Because it is extremely hard to get out of debt, or at least change your spending habits toward erasing your debt. But why is it such a struggle?

This is most commonly answered with the salaries of most individuals. There are some who make a decent chunk of change, but most people don’t make a lot. I, myself, started out fresh out of college with a $9.00 per hour full-time job. I made $1,200-1,300 dollars per month. I was fortunate to have a wife who worked and a made a little bit more than I did.

Aside from not making enough money, those nasty little monthly payments we call “bills” always got in the way of paying off more. We scraped by and I paid off as much debt as possible. We lived well below our means so that we could get rid of debt slavery.

To add on to the massive pressures of the debt and all the bills, there are the high interest rates on most credit cards and loans. The interest rates make paying off debt feel impossible because of how much we have to pay monthly.

The interest alone on a sizeable amount owed could be $10,20,50, or even 100 dollars or more. A person making an average income would easily get weighed down with the standalone interest. And if you miss a payment, the accrued fees and higher interest rate will only make things more chaotic.

Lack of income and bills may seem like the hard part, but in paying off all of your debt, the length of time plays a huge role in the struggle.

In my journey, I knew that I wanted to get rid of my debt as soon as possible. This is the route that I chose and IT IS TOUGH. I fell off the wagon several times, so to speak. There was stuff I wanted. I bought it sometimes. But it ended up pushing me back. It originally took me almost four years to pay off my debt (a combined amount of about $30,000) instead of three years or less. That really hit me when I thought about it. But I did it. And If you commit, you have to have the strength and persistence to finish it all.

With all that being said, debt is tough because it’s not about the money or what you want or what you spend. Well, some of this is about that. But debt is ultimately about a person’s behavior. Debt is so damn hard to beat, because in order to get rid of debt and never go back to it, you have to change YOU!

You have to change your behavior about a lot of things: how you spend your money and what you pay with if you do, your attitude toward money, how you pay off any debts, how you behave when you finally get out of debt, how you track your spending, how you save, and how you conquer your old, frivolous money habits.

YOUR BEHAVIOR got you into debt, now it’s time to try something new so that you can change yourself and get back out.

20. Debt is Dumb

So hopefully the first 19 reasons are enough to convince you that debt is just plain dumb. I mean, debt is REALLY dumb. That’s about as plain and simple as I can put it.

You’ve made your way through the 19 other reasons explaining why exactly you shouldn’t mess around with debt and I hope that you’ve gotten this far and you feel angry. Maybe because you have a lot of debt or maybe because I’ve offended you and you’re mad at me. GOOD.

I want you to get angry about debt. I want you to get mad at the poor decision you have made that put you into debt. I want you to want to change. You need to change because you have the ability to change. Debt is always a terrible idea and even if you have gotten into some trouble, it’s never too late. Even those on the brink of financial disaster can find a way to turn it around If they address the issues head on.

But there is a way and I found it. I made a decision that debt was just plain stupid and I eliminated it from my life. Now it’s YOUR TURN.

If you’d like to learn how to get out of debt and build wealth, I highly recommend the Total Money Makeover program from Dave Ramsey. You can check it out here. My wife and I have used this program to get completely out of all consumer debt and build a $300,000 dollar net worth by 30 years old! Check it out here (not an affiliate link – just love the product).

Also, if you’d like to learn exactly how I got out of debt, check out guide here: “How to Stop Borrowing Money: 10 Step Guide to a Debt Free Life.”

So that’s it

If you’ve stuck around this long, you are SERIOUS about getting out of debt. Good on you. I want you to keep fighting because you CAN get out of debt. YOU can do it. Don’t let debt crush you or hold you down any longer. If you’d like to turn it all around, check out the related content below for some other posts to help you destroy your debt and bulletproof your finances!