Understand the effects of debt on financial stability from "summary" of The 7 Most Important Money Decisions You'll Ever Make by Mary Claire Allvine,Christine Larson
Debt can have a significant impact on your financial stability. When you take on debt, you are essentially borrowing money that you will need to pay back with interest. This means that you are committing a portion of your future income to repay the debt, which can limit your ability to save, invest, and achieve other financial goals. One key effect of debt on financial stability is the burden it can place on your cash flow. When you have debt payments to make each month, you may find yourself with less money available for essential expenses, savings, or emergencies. This can leave you vulnerable to financial instability if unexpected expenses arise or if your income decreases. Additionally, carrying high levels of debt can impact your credit score, which can affect your ability to borrow money in the future. A lower credit score may result in higher interest rates on loans, which can further stra...
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