Budgeting Managing Your Debt 10 Ways Your Debt May Be Hurting You By Miriam Caldwell Miriam Caldwell Miriam Caldwell has been writing about budgeting and personal finance basics since 2005. She teaches writing as an online instructor with Brigham Young University-Idaho, and is also a teacher for public school students in Cary, North Carolina. learn about our editorial policies Updated on June 24, 2022 Reviewed by Pamela Rodriguez Fact checked by Emily Ernsberger Debt is something that is easy to justify because it seems like everyone is dealing with the debt of some kind. If you have student loans or a car loan, you may even feel like the debt was justifiable. However, debt can hold you back and limit the things you are able to accomplish. If your debt to income ratio is higher than 25%, you may be in serious danger and your debt can do some real damage to you. There are steps you can take to address your situation such as setting up a debt payment plan to get out of debt much more quickly. Here are 10 ways your debt may be hurting you. 01 of 10 Affecting Your Quality of Life Caiaimage / Paul Viant / Getty Images According to one study, 56% of Americans say that debt has negatively impacted their lives. When you are worried about your debt or your money, you may have a difficult time concentrating or sleeping. The stress of too much debt can lead to illness and depression. It can seriously affect your ability to be happy and stress-free, and it can affect how well you sleep and how you perform at your job. If you are starting to notice these signs, you need to begin taking steps to get out of debt now. 02 of 10 Investing for Retirement JGI / Jamie Grill / Blend Images / Getty Images One of the biggest ways that too much debt can hurt you is by limiting the amount that you can afford to put in your retirement accounts. This will affect you far into the future and can make it difficult for you to retire when you want to. If you are carrying so much debt that you cannot afford to contribute 15% of your income to retirement, you should start making changes in your finances today. 03 of 10 Lowering Your Credit Score Richard Foreman / E+ / Getty Images Your credit score is determined by a number of factors and the amount of debt you have, called "amounts owed," is one of them. If you have too much debt or if you are using too high of a percentage of your credit cards, you will likely have a lower credit score. This, in turn, can make it difficult to borrow money and get a better interest rate on your money. 04 of 10 Making it Difficult to Find a Job Are you ready to move onto a new job?. skynesher / Vetta / Getty Images There are some jobs that require a credit check. This is usually part of the interview process, but depending on the field that you are working in, this can make a difference in whether or not you can find a job. If you have a large amount of debt, some hiring managers may consider you a greater risk to handle certain assets within the company or for customers. 05 of 10 Holding You Back From Quitting Your Job People Images / Getty Images If you have a large amount of debt, you may be forced to stay in a job you hate so that you can continue to make your monthly payments on time. It can be very discouraging because you begin to feel trapped by the debt since it may be limiting your options. If you have fewer bills that you must cover, it is easier to take risks and go for your goals. 06 of 10 Preventing You From Buying a Home Glow Images, Inc / Getty Images You may not be able to qualify for a mortgage if your debt to income ratio is too high. If your credit score is low because of the way you handled your debt, you may end up paying higher interest rates, which means you end up paying more for your home. If you are getting ready to buy a home, you should work on reducing your debt load, especially your consumer debt so that you can qualify for better mortgage terms. 07 of 10 Stopping You From Opening Your Own Business Hero Images / Getty Images Too much debt can affect your ability to open a business in two ways. It can stop you from being able to borrow capital in order to open the business. Many banks are reluctant to give small business loans to consumers that are already carrying a lot of debt. Additionally, it may make it more difficult for you to take the risk or make the next step if you are worried about how you are going to cover your bills and stay current. 08 of 10 Preventing You From Taking Your Dream Vacation Blend Images / Colin Anderson / Brand X Pictures / Getty Images If you dream about touring Europe or visiting Asia, your debt may be stopping you from taking that dream vacation. You may not be able to take an extended time off of work because you have your monthly bills to pay. You may also have a difficult time paying for your vacation, especially if you have already maxed out your credit cards. You can use this vacation as a motivation to help you stay focused on getting out of debt. Reward yourself once you have paid off your credit cards by saving up for and going on your dream vacation. 09 of 10 Prevents You From Going Back to School Emma Innocenti / Taxi / Getty Images You may have a difficult time qualifying for student loans or quitting your job to head back to school if you have a large amount of debt. It can be difficult to qualify for some student loans with too much debt, but it can also hold you back from taking the opportunity to better yourself. When you own monthly payments, you are obligated to work to cover them. When you do not owe that money, it is easier to take the chances you need in order to reach your goals. 10 of 10 Makes It Difficult to Cover Your Daily Expenses Vincent Ricardel / The Image Bank / Getty Images If you are at the point where your debt payments make it difficult for you to cover your other monthly expenses, it is important to begin taking action to change your situation right away. This may mean that you need to take on a second job or sell items to begin to make your debt more manageable. You can turn your situation around, but it will take a concentrated effort and hard work to do it. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Journal of Accountancy. "Debt Is Causing Americans Significant Stress and Anxiety." Clinical Psychology Review. "The Relationship Between Personal Unsecured Debt and Mental and Physical Health: A Systematic Review and Meta-analysis." FICO. "What's In My FICO Scores?". National Foundation for Credit Counseling. "Why Personal Credit Matters When Applying for a Business Loan."