The Hidden Costs of Being in Debt in Texas

The average American is more than $16,000 in credit card debt, and that doesn’t even include student loans, mortgage payments, or other kinds of obligations. Texas residents are no exception. In fact, many of them are having debt problems caused by an increased reliance on credit cards to deal with inflation. Nearly everyone knows that too much debt is unsustainable; it impedes forward progress. But have you considered the hidden costs of being in debt in Texas? Let us explore.

The Situation in the Lone Star State

Texas these days is a bit of a mixed bag. Some of the state’s industries – livestock, agricultural, and fishing industries, for example – are faring well. For instance, Texas has more farms and acreage than any other state and leads the nation in the generation of livestock products revenue.

But that’s just part of the story. When it comes to quality of life, education, and opportunity combined, Texas is ranked at just 36th among states, according to Business in Texas. And just two years ago, the state’s per capita income – 32nd in the country – was $49,945. Not exactly something to brag about.

Then there’s credit utilization. Among Texas residents who seek debt relief, the average credit card utilization rate is 75% — much higher than the national average of 25%. High credit card usage usually signals looming financial woes. The state’s consumer debt rating is the third highest.

The fact is that debt is piling up in Texas due to joblessness, relatively low pay, and a boat load of hard-to-manage debt.

The Problem with Debt

For all the vilification, not all debt is bad debt. Student loans and mortgages come to mind. Here, debt is an investment since a house or degree can make you even more cash later. For other debts, such as from credit cards, you can get help from reputable and accredited companies such as Freedom Debt Relief.

But what’s not often talked about, concerning debt, is the opportunity costs it creates. Those hidden costs in Texas can be life changing.

Say you, a Texas resident, drops six figures on an Ivy League degree. Naturally, you’ll get your share of offers. But what are the sacrifices? You’ve got those student loans now, so what about your dream of backpacking across Europe for a year? What if you feel your calling is teaching, or working for a non-profit organization or in the social sector? Can you pay off your loans with such historically low wages? What if you want to start your own business? Can you do that while paying $1,000 a month in loan payments?

The point is that when Texans take on such debt, they’re essentially surrendering everything they could do until those loans are cleared. What they’re really giving up with such large balances and decades-long terms is flexibility. That’s why some major employers absorb relocation and closing costs when you purchase a new home – once you carry a mortgage, it’s more difficult to jump ship.

Staying Out of Debt

After gaining control of their financial situation, Texans would do well to stay out of debt in the first place. That means budgeting, so that you know where your money’s going, and reining in your spending, which is what likely got you in trouble.

The author Josh Kaufman, who writes about business and entrepreneurship, lives by this rule: if whatever you have your eye on won’t make you more cash within the next three months, don’t go into debt to purchase it.

Ultimately, knowing the hidden costs of being in debt in Texas can give you more control of your life. If you’re already in over your head, remember debt settlement with Freedom Debt Relief.