- The average American household carries a significant debt, hindering career growth and increasing job-related stress.
- Debt can be a liability for employers and may affect the outcome of background checks and security clearances.
- Creating a budget, prioritizing debt repayment, and considering debt consolidation are effective ways to manage debt.
- Filing for bankruptcy could provide a fresh financial start if the debt becomes insurmountable.
- Seeking professional financial advice can help individuals navigate debt management and plan for future financial stability.
Anyone who owes debts and is still struggling to pay their bills can attest that the experience can be incredibly stressful. Debt can prevent you from achieving your financial goals, ruin your credit score, and result in significant interest and fees. Here’s what you need to know about Americans’ debt, how to get out of debt, and how to plan for future financial stability.
According to recent statistics, the average American carries significant debt. This includes credit card debt, student loans, mortgages, and car loans. In fact, as of 2020, the total household debt in the United States was $14.56 trillion. This means that the average household carries a debt of over $90,000.
Impact of Debt
Having debt can have a major impact on your financial stability. Here’s how debt can affect your career in the future:
1. Hindered Career Growth
One of the ways that debt can affect your career is by hindering your career growth. When you have unpaid debts on your record, it may impair your ability to get promotions or even land your dream job. Employers are interested in hiring individuals with a history of sound financial practices. They may consider your debt history a sign of poor financial management, which might result in them hesitating to give you the promotion you deserve.
2. Liability to Employer
Debt can also be a liability for your employer, particularly if you hold a sensitive position. If an employer owes a credit card or other debt, you may be unlikely to handle confidential information properly. This liability may lead to long-term damage to the company, jeopardizing your employment or career.
3. Increased Job-Related Stress
Debt-related stress can have an enormous impact on your personal life and workplace. It is known that financial stress contributes to health problems such as anxiety, depression, and other stress-related disorders. As a result, financial stress may hamper your productivity and impact your relationships with colleagues, ultimately leading to negative job performance, job security, and career development.
4. Background Screening Failures
Employers may run background checks on your credit history when applying for specific jobs, especially those in the financial industry. A negative credit history with non-payment of debts, bankruptcy, or collections may reflect negatively on your background check, leading to job rejection.
5. Difficulty in Getting Security Clearance
Various jobs require a security clearance. Security clearance checks typically involve an in-depth look into your financial history. If you have debts, you may be denied a security clearance, affecting your ability to secure those high-paying, high-profile jobs. Jobs such as an attorney under a government agency, an Armed Forces member, and other positions involving personnel with confidential and sensitive information have strict eligibility criteria, often including a credit history check.
Ways to Get Out of Debt and Plan for Future Financial Stability
Here are some tips to help you get out of debt and achieve financial stability in the future:
1. Create a Budget
First and foremost, create a budget to track your expenses and income. This will help you identify areas where you can reduce spending and save more money to pay off debt.
2. Prioritize Debt Repayment
List all your debts and prioritize them according to interest rates. Start by paying off the debt with the highest interest rate first while making minimum payments on the others. This will help you save money in the long run.
3. Consider Debt Consolidation
Debt consolidation involves combining multiple debts into one payment with a lower interest rate. This can make it easier to manage and pay off your debt.
4. Consider Filing For Bankruptcy
If you think that your debt is insurmountable, you may want to consider filing for bankruptcy. This can help eliminate or reduce your debt and provide a fresh start for your financial future. If you want to file for bankruptcy, you’ll need an experienced bankruptcy attorney to help you. They can guide you through the process and help you make the best decision.
5. Seek Professional Financial Advice
If you’re struggling to manage your debt, seek professional financial advice from a certified financial planner or credit counselor. They can provide personalized advice and strategies to help you get out of debt and plan for future financial stability.
Carrying high levels of debt can significantly impact your career and future financial stability. It is important to take steps to manage and pay off your debt to achieve your financial goals and avoid potential consequences in the workplace. Consider seeking professional help and implementing strategies for a more stable financial future. So, it is always recommended to manage debt wisely and avoid getting into excessive debt in the first place. By creating a budget and improving your overall well-being. Remember, the journey to financial stability may not be easy, but with determination and discipline, it is achievable. So, take charge of your debt today and plan for a brighter financial future.