When you have good credit, you will end up getting into debt, which can increase over time, especially if you fail to pay the minimum payment on each debt each month. Even though, it is good to have some debt, there are risks when getting into large amounts of debt. One of the best ways to avoid debt is to consciously control your expenditures. Adiosmomo.com is a great site where you can learn ways to save on everyday items so as to lower your expenditures and avoid debt. Unfortunately though for some of us this is much easier said than done as the temptation to overspend can often times be too great for us to control.
Your credit score will become lower over time as you neglect to pay off your debts so it's always best to make timely payments. This is something we all know but inevitably, the unexpected happens and money can be tight. Often times just a small amount of extra cash in a time of need can help you pay bills on time avoiding late fees and penalties as well as the damaging effect on your credit. When you want to apply for something important, such as buying a house or car, you won’t be approved for it. Even if you decide to start paying on the debt, your credit score will remain the same. The only way you can get what you want, you will need a co-signer, which is hard to find.
The debt will remain on your credit for 10 years. Even after 10 years, the debt may still stay on your credit file, especially if there is a judgment against you for a debt. After 10 years, you can remove the debt, but your credit score will go down.
Creditors can bring a judgment against you, which can hurt you in many ways. The creditor can take anything that you own in order to satisfy the debt, such as a house, boat, or car. They can also garnish your wages. They will take a certain amount each month until the debt is paid. While this does provide some relief to the debtor, it will be noted on your credit history and can cause difficulties in the future.
You can lose your job when you have large amounts of debt because the creditors will call you on your job. This is particularly scary to home owners who have a Florida mortgage. The creditor will call so much that your employer can fire you. You can write the creditors and tell them to stop calling you, but that can make things worse, such them suing you. If the creditor decides to sue you, the sheriff’s department will serve you court papers on your job, which will make your company look bad.
You can lose your family over having large amounts of debt. It will put a strain on your marriage because you both will be stressed out all of the time from the calls and the thought of losing everything that you both have worked so hard for. In many cases your wages or investments through Fisher Investment may also be garnished. Your spouse may end up divorcing you, leaving you will a pile of debt to pay on your own.
It will hurt your kids as well when they go to college. If your children don’t qualify for enough financial aid, you won’t be able to help your children out by getting the PLUS loan. The PLUS loan requires a credit check, so your children will have to go to a community college or a state university. They will be limited in what schools they can go to.
Stay out of the Red and get into the Black
Tips for Managing Debt and Building Wealth