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Debt Can Be Bad for Your Health
You've seen those commercials: "You're not just in debt, debt is all around you." Or how about the one with the Huns rampaging in to pillage with their murderous interest rates? Or the counselor who says: "Our clients are going off a cliff and at the bottom lies a bankruptcy"?It's enough to keep you up nights. In an Associated Press/IPSOS poll of 1,000 adults taken in early December, half of all Americans say they worry frequently about their debt, many of them saying they worry "most of the time." Given all this worry, why do people get into so much debt? Economists say some people need to use credit in slow times; psychologists cite more reasons—to punish spouses or stuff down their pain in brief bursts of consumption-related satisfaction. The average household has 10 credit cards, and the average interest rate is 19%. To pay each card off at the minimum monthly payment alone would take decades. To make matters worse, the cards have almost saturated the market and are now looking for more ways to make money, such as upping interest rates even when you have not paid late or making canceled accounts payable in full. And on top of that, the all-important FICO score based on your handling of credit now governs not only the amount you pay for a mortgage, but whether you get a job or insurance, in some cases. Debt Can Be Bad for Your Health continues…
SOURCES: Loral Langemeier, author, Guerilla Wealth; founder, Live Out Loud, San Francisco. Rudy Cavazos Jr., director of education and community relations, Money Management International, Houston. Originally published January 3, 2005. Medically updated January 2006.
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