Does it matter if I am in Debt?

Some people do worry a lot about debt and if they are in debt they feel very stressed. However, there are also some people who do not really worry that much about being in debt. You may wonder whether you should worry about being in debt or not.

Worry vs awareness

Worry can be a big problem for us. If we worry and panic about things it can make us think less clearly, distract us from our day to day lives and even make us ill. This is not a good way to be. However, if we have no concerns at all then we can end up getting ourselves into all sorts of trouble too, such as piling up the debt without caring. It is therefore wise to have a balance between the two.

It is good to always be aware of how much we owe and who to so that we can make sure that we budget and spend accordingly. If we owe a lot of money, then we probably want to be paying back as much as we can, rather than spending lots of money out on things. However, if we stress and panic about it, it will not help us to get out of the situation and so a calm methodical solution is really what is needed.

Good vs bad debt

It is a good idea to understand the difference between good and bad debt. Once you have bad debt you cannot change your mind but being aware of it can mean that you can make some changes bad debt is expensive and/or unmanageable. This means that you are paying more than necessary for it and/or you are struggling with the repayments. If it is expensive then you may be able to swap to a different lender. It is worth doing some research and finding out if you can and you will immediately begin to save money and if you want to repay the debt early this will be easier if your interest payments are lower. Do check if there are any fees associated with swapping and if there are make sure that it is still cheaper for you to swap. If you are struggling with repayments, then you might be able to negotiate lower ones with the lender. They might let you repay less each month over a longer term. You may also want to consider trying to cut your spending in other areas and use some of that money to repay the debt. You could also look to see if there is any way that you can increase your earnings so that you have more money to repay it with. Even selling a few things that you own and no longer need can generate some cash that you will be able to use to repay some of the debt.

Having plans in place

It is wise to be aware of your debt and think about how you will repay it. Some people just make the repayments as required by the lender and do not think about it otherwise. Some would like to repay early and so make overpayments and make sure that they tweak their budget so that they can afford to do this. It may be that you will need to tweak your budget just to afford your repayments.

There are some loans which do not have a regular repayment plan. Things like an overdraft, which is just repaid when you put money into the account and a credit card, which you only have to repay the minimum amount will be different. You will need to be motivated to repay these as there will not be pressure to make regular repayments. It is wise, with a credit card, to repay as much as you can afford each month and even to cut your spending on other things and to try to earn more in order to get it paid off more quickly.

Does it Matter?

Whether the debt matters to you will depend on a lot of things. If it is good debt and you know that you will be benefitting from it this can be a big plus. As long as you are managing the debt well and able to make the repayments and that it is not overly expensive. If you are finding it stressful then try to concentrate on a solution to the debt, such as finding ways to earn more money or send less so that you have more money available to pay it off.

If you are not worried about debt and it is getting out of control then you really should try to take stock, find out what you owe, stop overspending and try to get some of those debts paid off. There is no need to worry and stress about them but working on them is important or else it could make things tricky in the future.