If you’re carrying a large load of debt, especially if it comes from high interest rate sources such as credit cards, you know how painful it is to pay so much for the money you owe. Sometimes it can even spiral out of control, to where you cannot pay your minimum payments, never mind actually paying them off anytime soon.

And that, in a nutshell is the first harm that carrying debt can do. If it gets out of control, your life can feel like it is out of control. But there’s much more that carrying excess debt can do.

It lowers your credit score

A part of your credit score relates to how much of your available credit you are actually using. If it’s out of proportion, your score goes down. And your credit score determines the APR you get on things that you really have to have credit for, such as buying a car or a home.

It’s hard on the budget

Just think of how much more money you would have to use or to save if you weren’t paying off debts. For many people this is several hundred dollars a month. Wouldn’t you rather be able to use that money for something you want now? Or to be able to save it for retirement or a rainy day?

It makes you miserable

Too much debt is strongly related to being unhappy in your life. It’s stressful.

When is credit and debt appropriate?

All that said, there are times when debt is appropriate. Buying a house or a car, as I said above. But to get the best rates you do need something of a credit history.

This is where a well-managed credit card comes in very handy. Use it. But pay it off or carry the smallest balance you need to at the moment. Don’t overload it. Don’t apply for every single credit card or store card you hear about.

Debt can serve a purpose, but misused it can destroy your life. As much as your personal circumstances allow, don’t let it take your life over.

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