Unfortunately, debt has become an all too common problem. Purchasing a home, buying a vehicle, or paying for college tuition can be extremely expensive. For most people, the only option they have is to take out a loan. And while there are many different types of debt consumers can land in, these are the most common that tend to follow you for 10 to 20 years.
Credit Card Debt
Credit card debt by far the most common type of debt. This is because it is usually the easiest to get. Once you turn 18 the credit card companies come a knocking. By the age of 25 most individuals have several thousands of dollars of credit card debt. This type of debt can easily spiral out of control and before you know it, you have maxed out all of your credit cards and can barely afford the monthly payments.
Medical bills can be very expensive. Especially if you don’t have insurance and are forced to pay all the fees out of your own pocket. Some health issues take years to show up while others strike with no warning at all. If you run into a health problem and don’t have adequate insurance, you could easily pile up hundreds of thousands worth of medical bills.
Most people can’t afford to pay cash for a home. As a result they are forced to take out a mortgage in order to get the home they desire. While the bank loan will pay for the home, you will be required to come up with the down payment on your own.
A mortgage payment is a monthly payment you will make for up to 30 years depending on the terms of your loan. If something happens and you are unable to make your mortgage payment, you could find yourself homeless and in even more debt.
Student Loan Debt
Every year it seems as though the price of a college education continues to rise. Most people find themselves needing to take out a loan just to make it through college. If you decide to seek a post-secondary degree such as a Masters or Doctorates degree, that will cost you even more money.
Over the course of six to eight years of education, you could find yourself with a quarter million worth of student loan debt.
The good news is most student loans have a very low interest rate while you are in school. However, once you graduate or decide to drop out, that rate has the potential to rise quite a bit. If your interest rate goes up, so will your monthly payment. Because of this many people find themselves unable to make the required payments each month. You could easily spend 20 years trying to pay off your student loans.
These are four of the most common types of debt that can plague you for many years to come. If you are struggling to pay down your debt, consider looking into some sort of debt consolidation.