ECONOMICS
CREDIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Debt can cost you your friends and family.
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Debt can lead to overspending.
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Debt obligates your future income.
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Debt can increase your insurance premium.
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Detailed explanation-1: -Debt Financing While debt does not dilute ownership, interest payments on debt reduce net income and cash flow. This reduction in net income also represents a tax benefit through the lower taxable income. Increasing debt causes leverage ratios such as debt-to-equity and debt-to-total capital to rise.
Detailed explanation-2: -When you have debt, it’s hard not to worry about how you’re going to make your payments or how you’ll keep from taking on more debt to make ends meet. The stress from debt can lead to mild to severe health problems including ulcers, migraines, depression, and even heart attacks.
Detailed explanation-3: -Your debt will go to a collection agency. Debt collectors will contact you. Your credit history and score will be affected. Your debt will probably haunt you for years.
Detailed explanation-4: -“What can Happen if I Don’t Pay my Debt?” If you stop making your required payments on general consumer debts (like a line of credit, overdraft or credit card), your creditors will generally charge you a fee for defaulting on (missing) payments and start reporting those defaults on your credit history.