Debt: Direct And Indirect Effects

Debt is often thought to be a natural occurrence in life. This is hardly a surprise when you see that four out five people are living with some kind of debt. But, debt can have a number of negative effects on your life. These are not always immediately obvious either.

Some of the direct ways that debt can affect you is by hurting your credit and making it more difficult to get loans (you can read more on how to repair your credit here). It can also leave you short on money to spend on essentials like medical bills or repairs to your home or car.

But, there are also some indirect effects associated with increased debt. Higher debt is associated with higher anxiety, and it’s a key factor in stress.

Higher stress levels are associated with a higher chance of disease and a decreased life expectancy. So, while debt can affect you financially, it can be an unsuspected player in your physical and mental health.

This means that getting out of debt should be a priority for everyone, both young and old. Fortunately, this can be a lot simpler and easier than many people think.

Getting Out Of Debt

Despite the complex effect that debt can have on your life, it’s a relatively simple thing to solve, in theory. It’s a simple matter of having more money coming in than going out.

The tricky part comes when putting this principle into practice. Many people often take up second jobs, increase their income and save but still find themselves in debt.

This is often due to a few key mistakes that a lot of people tend to make when trying to get out of debt.

So, we outlined a few of these common mistakes below to help you avoid them and pay off your debt quicker and with less hassle.

Mistakes To Avoid When Trying To Get Out Of Debt


Raising your expenses to match your new income

One big issue with many borrowers, particularly the younger ones, is that they will often spend money as fast as it’s earned. This means that a new raise at work, or an extra job, is often met with an increase in expenses.

This can be through more nights out or more spent on clothes. In any case, it means less put by for your loans and debts. So, even without more money coming in, you should always try to put a set amount by every week or month as savings for your debts.

This can be done automatically too. You can have a savings account which debits your checkings or current account each week or month. This will help you save a surprising amount and help you stay on top of your debts.

Not prioritising your loans or debts

This is another common issue with those who accumulate debt. Many people will often spread their payments out evenly and treat every debt as the same. But this is a very inefficient and costly way of dealing with your debt.

High-interest loans like credit card loans, should always be prioritized over lower interest debts like student or personal loans. This saves you money on interest, which can pile up over time.

Forgetting to account for other expenses when setting money aside

Many of those savers that do put money aside, often forget to account for other expenses when doing so. Things like gas money, electricity bills, and phone bills can all get forgotten. This leads to an overly ambitious amount of saving that you’ll inevitably have to reduce.

This means more headache and confusion regarding how much you can save and what bills need to be prioritized. So, when looking at how much you need to put by for a certain debt, first sit down and calculate your daily cost of living.

This will allow you to sustain your effort of reducing and eliminating your debts with ease.

Not taking advantage of sources of funding or relief funding

When it comes to certain debts, there are a lot of grants and funding that often go untouched by many. For example, student debts often have many bursaries, grants, and scholarships that all help reduce your student debt directly or indirectly.

Likewise for mortgages and medical debts, which often have relief schemes that many never apply for.

So, checking the type of loans you have, and available funding can be a big help. There are also some sites like which list a number of different grants and scholarships to look at. These can all help massively reduce your debt and decrease your cost of living.

Losing patience

Though this might not always be directly related to your finances, it is one of the biggest reasons that many struggle to get out of debt. Many savers looking to pay off their debt may hit snags or setbacks that may delay their progress.

But, this is natural and happens to everybody. The most important thing once you’ve set a plan to reduce your debt is to stay consistent. While this may be difficult at the start, or during a setback, it always pays off in the end.

So, if you hit a snag when paying off your debts, make sure you remember why you start and remind yourself of the progress you’ve made so far. When it comes to paying off your debts is not a sprint, it’s a marathon.

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