12 Ways Credit Card Debt Is Killing You… Time To Switch To A Cash Budget?

Accumulating debt is not fun. It’s months, years and sometimes even a lifetime of grief, despair and humiliation. Sure, you have a lot of stuff to show for your spending, stuff you thought you really needed. But therein lies the debt trap. While you fully intend to pay off your credit cards, you soon realize that the interest is more than you bargained for. Now the accumulating interest is eating into your household budget. So, you strategize and pay back just enough to cover groceries, your cell phone and the electric bill. Before you know it, you’re in a never-ending cycle of debt. Worse, the stress associated with credit card debt can diminish your dreams, affect your marriage, and even impact your health.

Credit score

In case you didn’t know, your credit score matters. Your credit score plays an important part in your overall financial life. It also has a direct impact on whether or not you will be approved for a loan or mortgage, and what interest rate or terms you’re offered. One of the ongoing myths is that you need to carry debt on a credit card to improve your credit score, but that’s not true. Carrying a credit card balance that’s too high may actually kill your credit score, and the impact of a low credit score can be felt for a long time.

But before you rush out to cancel a credit card, keep in mind that doing so may increase your debt-to-credit ratio, which can also lower your credit score. However, don’t assume that means you have to keep credit cards forever. If you close an account, it is possible that your credit score will be affected. But, over time, it will rebound, especially if you continue to pay down your debt.


By the time you retire, you hope to be mortgage-free, have a little money for travel, and be free of debt. Unfortunately, that’s not always the case for a growing number of retirees. A survey conducted by the Canadian Imperial Bank of Commerce (CIBC) found that three-quarters of baby boomers, between 45 and 64 years old, were in debt, and 42 percent of them saw their debt as obstacles to reaching their financial goals. Credit card debt is one of the most expensive forms of consumer borrowing, says CIBC. While it’s easy to accumulate credit card debt, it can be difficult to get out of it.

Emergency funds

Everyone needs an emergency plan — the washing machine breaks, your car dies. But your cards are maxed out, there’s no money in the bank, and there’s definitely no “rainy day” savings tucked away. If you don’t have an emergency fund, it puts you into crisis mode every time an unexpected expense comes up. Stop paying with credit and switch to a cash budget. Tuck a little money away each paycheck. One thousand dollars probably won’t make a huge difference in your debt payoff, but it could make a huge difference in an emergency.

Home ownership

Saving for a down payment on a new home is admirable. But what you may not realize is that your credit card habits can kill your chance of obtaining a mortgage, suggests mortgage lender Total Mortgage. Banks may hold off approving your application until you get a handle on your credit card debt.

Even making minimum credit card payments might not be enough to qualify for a mortgage. Lenders look at entire credit history, and if your credit cards are maxed out, that could raise your debt-to-income ratio and influence whether you qualify. Additionally, applying for too many credit cards doesn’t look good either. Banks check credit history and also look at your number of recent credit inquiries. If you’ve applied for multiple credit cards in the span of a few months, the bank may think you’re experiencing financial hardship and desperate for credit.

Emotional well-being

Most of us have been in this situation — depressed and anxious, worrying about our debt. For some, hopelessness occurs when there doesn’t seem to be an end in sight. Research conducted at the University of Nottingham in Great Britain studied the link between debt, depression and anxiety. What they found was that those who struggled to pay off debts and loans were more than twice as likely to experience mental health problems, including depression. The study also found that 29 percent of people who experience stress from high debt, also went on to experience severe anxiety. 

Unfortunately, depression affects more than just your mood. Common symptoms of depression include aches and pains, chronic fatigue and insomnia. Over time, these symptoms increase your risk of physical illness including heart disease, suggests WebMD.


Credit card debt affects far more than just your finances. The stress of harboring all that debt can cause mental and physical ailments that can shave years off your life. When we experience stress, our muscles tense. Normally, when stress passes, the muscles loosen. But, with chronic stress, like that associated with credit card debt, muscles remain taut and tense for long periods of time, which could trigger other reactions in the body and even promote stress-related disorders such as heart disease.

A study on the impact of financial debt looked at the mental and physical health ramifications associated with being in debt. Researchers looked at stress, depression, blood pressure, psychological health and general health. What they found was that among young adults of various nationalities, household debt played a significant role in poor health.


There’s no denying it, we’re a very materialistic society. People often measure their self-worth with how much money they have, and even by their credit score. 

“When a faceless entity is making decisions on your creditworthiness based solely on a credit score, then you believe they are making a decision about you as a person,” says Jay Fleischman, a bankruptcy lawyer. While no amount of money or credit score number can tell us how good we are, a declined credit card can sure erode a person’s self-esteem.


Credit card debt weighs on you like a dark cloud. The stress associated with debt “may even completely eliminate all the happiness that you can get from spending your money,” says Ryan Howell, associate professor of psychology at San Francisco State University, for Business Insider. Debt carries a huge stigma. “Real financial stress — it eats a person’s soul,” says Howell, “in a way that’s very different than other parts of our lives.”

Dreams and ambitions

How often have you wished for a little extra cash to put toward night school, a trip to Australia, a new home, or even to start your own business? Whatever your dream, there just never seems to be enough money to fulfill your goal, right? But, if you sat down and started calculating how much money you actually pay toward credit cards each month, you’d probably be surprised. The personal cost of credit card debt can be high, especially when dreams and ambitions are tossed aside to make room for mounting debt.  

Family relationships

When credit card debt is building, sometimes you have no other choice than to borrow from a family member. But what happens if promised payments aren’t met? Nothing destroys relationships faster than money. Family loans tend to be open-ended, says personal finance blog Money Crashers. Often, instead of making a payment schedule and including interest, both parties are left with uncertainty.

The loan may no longer be a priority for the borrower, and the lender feels uncomfortable asking for payment. Without penalties, the borrower is not motivated to pay back the loan. Family gatherings become awkward when any conversation regarding money and purchases comes up. Meanwhile any other family members who were aware of the loan may also feel uncomfortable and resentful that payment was never made.


Marriage is supposed to be one of the happiest experiences in life; yet, according to the American Psychology Association, 40 to 50 percent of all marriages end in divorce. No surprise, debt is the number one reason cited for the cause of divorce, suggests the website Family Share. In a society that relies so heavily on credit, it’s not surprising when debt rears its ugly head. And when topics such as budgeting and paying off debt arise between a couple, that’s when sparks fly, especially when one partner is debt-free and the other has racked up significant credit card debt. Debt can drag a marriage down and prevent a couple’s financial plans from moving forward for years.


When people incur debt in their lives, it’s normal to feel depressed. But when credit card balances grow and then disaster strikes, like a layoff or illness, paying the bills can be unbearable to the point where suicide is contemplated. But why would someone consider suicide as the only solution to debt?

“When someone is suffering from depression, their brain doesn’t think logically or rationally, so they’re not able to consider options. They’re not able to find resources. They’re not able to get out of bed let alone make a phone call. They can’t take care of themselves; depression literally takes over their life,” says Daniel J. Reidenberg, psychologist and executive director of Suicide Awareness Voices of Education (SAVE).

Some people can handle debt; some people can’t handle debt, and the feeling of hopelessness can lead to suicidal thoughts and possible actions. 

If you’re struggling with high debt, you’re not alone. The average US household accumulates approximately $15,762 in credit card debt. When you pay with cash, emotionally you feel like the money is leaving you. Yet, when you pay with credit cards, you feel nothing emotionally. A study of credit card use found that people spent 47 percent more when using credit instead of cash. If you can relate to any of the above, maybe it’s time you switched to a cash budget.

—Katherine Marko

Katherine Marko is a freelance writer, author and blog creator. Her areas of expertise include food, health, style, beauty, business and nutrition. Marko holds a Bachelor of Arts in English, a diploma in photography, graphic design and marketing, and certification in esthetics.



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