Top 3 Reasons People End Up In Debt

The wealth gap between rich and poor has never been wider than now. 

It doesn’t have to be a student loan to cause some severe financial problems. The inevitability ending up in debt scares everyone, but what is it really that causes you to end up owing money in the first place?

Is it that Gucci bag you bought with your first pay-check? Or honeymoon you knew you couldn’t afford but did anyway?

It’s hard to tell, especially after some time, but the thought of it will surely haunt you Escaping an existing debt is impossible, no matter how hard you try, but reflecting on the financial mistakes you made in the past will undoubtedly shed some light on the plans. Here are the most common reasons people end up in dept. Some are more obvious than the others, but in the end, what matters is that we fix what we can, to avoid any further mistakes.

1. No piggy bank

Putting some cash aside is not a priority when you receive your first paycheck, but it should be. Having some extra money for the dark days is not a crazy grandma idea, but a tactical move to avoid excessive debt. No matter how through your financial plan is, expenses are always higher than initially calculated. At some point, your blow dryer won’t turn on, and while this is the smallest expense we could take as an example, you get the point. Additional fees are much easier to manage when you have savings. It doesn’t have to be a lot, few hundred bucks will do just fine, and you’ll avoid borrowing money you never intended to hire in the first place.

2. Going through a divorce

It is not only emotional stress but also a financial one As sad as it is, once you realize that it’s just one pay-check now, money will also become a significant problem. In no time, you’ll be borrowing money, and due to your emotional instability, you won’t be as able to follow up with the amount as usual, which is why divorce is also listed as one of the common reasons people end up in debt. 3. Keeping up with the trends It’s not just our neighbours that influence our lifestyle; it’s also a TV portrayal of standards. Whether it’s Rihanna’s new makeup line or the gaming set, we try to keep up with the world of trends, and more often than think, we end up spending the money we don’t have. When it comes to the luxury, our advice is for you to avoid impulsive shopping. Internet shopping made it even worse, as we often lose track of the money we spend. Our information is one desire at the time, adjusted to your income.

4. No financial planing 

Sticking up the program can be hard, but when it comes to the money management, calculating your monthly income and your expenses is mandatory if you’re looking to avoid debt. Yes, you’ll always spend more than planned, but at least waging your costs on a daily basis will give you an insight on what to do to avoid burying yourself in debt.

Resources:

https://www.cnbc.com/2018/07/12/supreme-court-nominee-brett-kavanaugh-credit-card-debt.html

https://www.americanbanker.com/news/consumer-debt-is-at-an-all-time-high-should-banks-be-worried

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