Ace Your Money Smarts 2026: Conquer Personal Financial Literacy Module 4 with Confidence!

Not managing debt properly can lead to financial insecurity and stress, which are significant long-term consequences. When individuals do not handle their debt effectively, they may face increasing interest rates, late fees, or even collections, all of which can create a cycle of financial distress. This stress is often exacerbated by the uncertainty of not being able to meet financial obligations, leading to anxiety about future financial stability. Over time, the compounding effect of unmanaged debt can erode one’s financial foundation, resulting in a more precarious economic situation that affects overall well-being.

In contrast, the alternative choices highlight outcomes that are generally associated with good financial management rather than poor debt management. Increased savings and improved credit scores stem from effectively managing debt and maintaining a healthy financial life. Higher disposable income is typically a result of disciplined budgeting and debt management, enabling individuals to allocate funds toward savings or investments.