Debt Levels and Interest Rates

It’s amazing to me how easily we become comfortable with something the longer we’re exposed to it. Debt is certainly one of those things. If you look at anyone who lived through the Great Depression, they’re extremely sensitive to debt. It’s not hard to figure out why. People who lived through the Depression had to learn to live on a shoestring, a concept most of us today cannot even fathom. Having debt puts you on the hook for having to work. You have a responsibility to go to work and pay that debt down until it’s paid in full. This causes you to put money in the spotlight, along with how many hours you work, how much you make, how hard it is to get ahead, etc. To make matters worse, even if anything out of the ordinary occurs in your life, you will still need to go to work to pay your debts. It’s a dangerous trap.

Then there’s the issue of the interest rates you’re paying on your debts. If you’re going to carry debt, take a look at what you’re actually paying out for it. It’s amazing how by altering the little pieces you can improve the bigger picture. As interest rates have increased over the past couple of years, many people have found themselves in a real cash flow crunch, because their interest rates were variable instead of fixed. I know far too many folks whose payments are now triple what they used to be.

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