Good Morning Green Panda Readers.  It’s time to discuss how having debt can not only hurt our credit score but it can also break our budget.  I don’t know about you, but I can think of many other things that I would rather do with my biweekly pay check other than pay off debt.  The major problem with having debt is that it is very easy to accumulate, but it can take a very long time to pay off.

Debt Can Be Very Expensive

The longer it takes for us to pay off our debt, the more costly it can be in interest charges.  For many people their first debt is usually a Credit Card.  This means that we are probably paying 19.99% interest or more.  Even a Credit Card balance of $1000 can cost almost $200 in interest charges per year.

If we do accumulate debt in credit cards, it is important to try and make regular payments and also try to make more than the required minimum monthly payment in order to save on monthly and annual interest charges.

Debt Payments Can Be Better Spent

If we are a student or a recent graduate we may not yet have the monthly budget to support the lifestyle of our dreams.  This means that we are probably just making ends meet every month and therefore we really cannot afford to add a debt payment not our monthly budget.

Very often people get into debt because we are only focusing on the short term.  We use our credit card to make a purchase and we tell ourselves that we will worry about paying it off later.  However the truth is that if we don’t have the money to pay for our items now, we probably won’t have the money to pay for them later either.

If we find our self short on cash flow one month we should try to make cuts in some of our monthly expenses rather than accumulating debt.

Debt Hurts Our Financial Well-Being

People who accumulate a lot of debt at a young age suffer the financial consequences for years to come. Having a large debt load can be very stressful and it can definitely harm our Credit Score.

Having a low Credit Score and being boggled down with debt can harm both our future as well as our financial lives.  When we apply for a new job our potential employer will check our credit history.  If our Credit Score shows that we are financially irresponsible we may not be offered a job.  When we are ready to move out of our parents home our potential landlord will also check our credit history.  If we have a past pattern of paying our monthly bills late then our rental application may not be approved.

If we want to buy a car, purchase a home, or even apply for insurance the companies will always check our credit history.  This is why it is important to pay our bills on time and try not to accumulate too much debt.

We may not realize it at the time, but being financially irresponsible and accumulating a lot of debt that we are unable to pay off can definitely harm our bright financial future.  Before you swipe your Credit Card think twice about if you can afford the monthly payment.

Photo by Images of Money


Tahnya Kristina

Tahnya Kristina

Tahnya is 30 years old and lives in Montreal Quebec. She graduated in 2005 from Concordia University, and she currently works for a major International Financial Institution. She recently launched You can follow her on Twitter @TahnyaP.