Are there problems attached to living in debt

[Carpon]

When we look at the international market, you will find out that most countries are debtors especially the developing countries. They make budgets and source for it's funding from debt and they have a percentage that is allocated to paying off previous debts. And then you will discover that a country will collect loan to pay loan, plus their internal sources of funding.

That gave rise to my question of the fact that there are huge dangers and grave consequences attached to being and living in debt. Since considering the explanation and analogy I have above, some countries are thriving and doing well with debts on them and still they keep collecting.

- Personally I came to the conclusion of the fact that if it is possible, one should live debt free but if that is not possible, then living in debt should not be a matter of raising financial alarms.

Do you think the same way as I or what are your different thoughts?

 

[Abigael]

Living in debt has always been portrayed as a big negativity in personal finance. But your analogy of most developing countries living in debt make it look like it is not a bad thing. Though you must admit that personal finance and a country's finance are two different things. Being in debt as an individual comes with the following effects;

• Mental health problems because you are always in pressure to pay off your debtor.
• Poor financial stability, you may have to forego some of your needs in order to pay off your debts.
• It gets even worse when you have to take a loan in order to pay off another loan. It becomes a never ending financial crisis.

But that is not to say that loans are not useful. If you have a plan on using the money really well and are able to repay it, you will not face these negative effects.