With the ease of obtaining credit cards and personal loans these days, people tend to consider debt as commonplace yet have little to nothing in savings. In fact, according to a survey, about a third of the U.S. population have nothing in savings, another third have less than $1,000 in savings and only 4 percent have between $5,000 and $9,999. Besides being able to save money, there are quite a few advantages for Ohio residents who work to rid themselves of their debts immediately, just as there are many disadvantages to carrying large debts.
Too much debt can make people financially unstable. For instance, a leaking roof, a car repair, or a major accident or illness could easily put people into a hole. Therefore, being debt-free allows people to save money and be prepared for possible emergency situations. Paying off debt quickly also helps shrink the overall interest that accrues onredit cards. Whenever people make only the required minimum monthly payment on their credit cards, they are only prolonging their debts, which actually grow over time.
A further benefit to speedily paying down debt is that it will improve a person's credit score over time, since debt makes up about a third of it. Thus, when people have big credit card debts compared to their credit limit, their credit score will usually be negatively impacted.
Credit card bills, college loans, unexpected medical expenses and car repairs can make people feel like they are drowning in debt and have no hope. However, in seeking a fresh financial start, they might want to discuss their finances with an attorney who could offer various financial solutions appropriate for their circumstances, such as a Chapter 13 bankruptcy.
Source: National Debt Relief, "Why Dealing With Your Debt is an Emergency Situation", Arthur Khmura, March 7, 2017