Debt, a four-letter evil word that makes you awake at night and thinking of it increases your blood pressure and stress levels by bounds. It’s no wonder that it sounds like death. It is like quicksand the more struggles the faster your sink. To get yourself out of the debt, you have to examine why you are in debt in the first place. Knowing the root cause will give you the idea how to get rid of your debts.
According to the survey here are the top 5 reasons for rising debt burden.
Low income or no income at all is the biggest blow in your savings. It is the hardest blow in your finances especially if you don’t have savings. It affects people who lost their jobs or have taken a pay cut. The loss of income or reduced in income does not align with the lifestyle that they used to, this will result in debt. We are creatures of habit, even when the status of our finances change our spending habit will not likely to change immediately. Typically, we resort to our credit cards and buried ourselves in debt,
- Poor financial management
Skills managing money is as important as skills in making money. Financial illiteracy can lead us to debt problems. It is important to regularly analyze your income against your expenses in order to budget your income properly. Spending only the amount you can afford is the best way to keep yourself out of debt, and the best way to get out of debt. Creating a sound credit card debt reduction plan can also help you in managing your credit card debts properly to avoid amassing more debt.
Divorce is not just emotionally exhausting, but it is also financially exhausting. Divorce is expensive, and some people are doing it more than once. In fact, divorce is more expensive than the wedding itself. Legal fees, alimony, child support and other things you need to pay for can drive you to debt gutter. Also, going from a two-income household into one can significantly affect the budget and the bank account. The solution for this actually is very simple: do not divorce. But sometimes, this simple solution is not viable so you have to find a way to alleviate the cost divorce.
Medical expenses are expensive and these expenses are unavoidable. If possible pay your medical expenses that are not covered by insurance with cash. It can help you keep up with the expenses and there are places that offer discounts to those who pay cash.
The fastest way to acquire a mountain of debts is by gambling. If you are looking for ways to reduce debt, gambling is not your solution. In a study conducted in the US, a gambler in American have an average debt of $55,000. Unless you have an inexhaustible source of money and you don’t have history addiction in your family tree, stay away form of gambling.