Consumer debt in the United States is around $3.95 trillion. And that number continues to rise as Americans continue to borrow money.

Almost every American carries debt, whether it is student loans, a mortgage, or credit card debt. But what is the real cost of debt for you? You may be surprised that your debt is costing you more than just the monthly payment you agreed to.

Read this for a look at what debt costs your pockets and life.

Busts Your Budget

The major cost of the debt you have is that it busts your budget.

Take a few moments to think about your monthly budget, everything from groceries to your electric bill. Now how many of those budget items are debt payments? Start adding up those payments and you'll get sticker shock. What Debt Costs You

Think about what you could be doing with all that extra money each month if you didn't have those debt obligations. Maybe you could take a family vacation or retire a few years earlier than planned.

By adding up your monthly debt obligations you get a rough cost of debt calculation. To get a clearer view of the cost of debt, concentrate on your interest payments. This takes a little bit more work to figure out.

Wondering how to calculate the true cost of debt? To get this figure, you take your total loan amount and multiply it by your interest rate. This is how much more you will end up paying if you used a loan instead of cash for the purchase.

Heres a cost of debt formula example if your loan is $10,000 and you have an interest rate of three percent.

$10,000 x .03 = $300

So the cost of debt calculation for this loan is $300.

This is why it's so important to choose your debt carefully. Make sure you are borrowing money carefully to save your current and future budget.

Bad for Your Health

Having debt doesn't just impact your budget, studies show it also impacts your health.

The number one health impact of debt is sleepless nights. Instead of sleeping soundly, Americans with a lot of debt spend their evening's worrying about their financials. A loss of sleep results in increased stress and decreased concentration.

Having an excess of stress in your life can cause the following medical conditions:

  • Heart disease
  • Obesity
  • Diabetes
  • Depression or anxiety

A recent poll discovered that two out of five Americans say their debt impacts their overall happiness. And one out of five says it negatively impacts their health.

Can Lose Your Assets

Too much debt can make it challenging to keep up with all your payments. And if you fall far enough behind on those payments you can end up losing your assets.

When you fail to make payments on a vehicle it is at risk for repossession by the lender. The same concept applies to your home with risk for foreclosure.

Another way you can lose your assets is if you need to sell them to keep up with your payments.

Often times, the family heirlooms or large purchases are easiest to sell off for quick cash. At desperate financial times, this may be the best option.

If you know you are in over your head with debt, you need to act quick before you start to lose your assets. Learn more about how programs like debt settlement relief can help you.

Hurts Your Future Finances

Not only does debt affect your current finances but it also hurts your future finances.

The biggest impact debt has on your future finances is your credit score. Your debt amount is the second largest factor of your credit score, accounting for 30 percent. Your credit score uses your credit utilization rate, which is the ratio between your credit limit and your credit balance.

So if you have a credit limit of $10,000 but have a balance of $9,000, your credit utilization rate is 90 percent.

The largest factor of your credit score is your payment history. People who are drowning in debt from multiple sources are more likely to miss a payment trying to juggle everything. This has a negative impact on your score.

But why is a credit score so important?

Your credit score is what qualifies you for acceptance of future loans and better interest rates.

If you have a bad credit score, you will end up with a higher interest rate. This, in turn, increases your cost of debt. Use the cost of debt calculation mentioned above to see how a lower interest rate on your loans could affect your cost of debt and monthly payments.

A bad credit score also affects your future approval odds. You may find yourself in the need of buying a new car or co-signing on your child's student loans in the future. But with a bad credit score, you may be denied for those loans.

Save yourself the future trouble and get control of your debt now.

Beyond the Cost of Debt

Now that you know the true cost of debt, you will hopefully be more apprehensive before signing your next loan or swiping your credit card.

But some debt is unavoidable. It's unlikely you can afford to pay for your house or even a new car in cash.

If you do find yourself in need of a loan, take time to make sure it's the best option for your current financial situation. Is the new purchase necessary and are you in good financial standing to receive a favorable loan?

Do your research so you don't end up with buyer's remorse down the road. Check out this article on how to borrow responsibly when you need a loan.