Have you ever wondered why so many people have debt problems? If you’re one of the lucky ones who has a credit score in the 800s and a savings account with tons of money in it; you probably haven’t even considered the less fortunate. Conversely, if you are one of the people whose credit score is in the 500s and you have no savings account; you may wonder what you have done so wrong. There are many reasons why people fall on hard times and their credit score tanks. Here are the six most common reasons why people are in debt.
1. They Have No Budget
Those who follow a strict monthly budget tend to fare better than those who just spend aimlessly. A budget keeps things on track and will allocate funds for specific things. The free spirited person might just live from one day to the next.
2. Lack of Discipline
So many people are in debt because they choose to buy that new purse or pair of shoes other than to pay the cell phone bill. When they remove that money from the equation, it becomes a “rob Peter to pay Paul situation.” The bills should always be paid first. If there is any money left over, it can be used for extras.
3. Financial Set-Backs
“At some point in time in life, everyone will face a financial setback,” said Consumers Alliance Processing Corporation. This can come from a car that quits running or an electric bill that is way too high. If there is no savings account to fall back on, a financial setback can cause major issues.
4. Loss of an Income
Whether you or your spouse lost a job or a source of income, it can sting badly. As a creature of habit, you prepare your monthly living around how much money you have coming into your home each month. When the money is suddenly reduced, it can leave you in a real bind.
5.Sickness
Medical bills seem to be one of the worst financial issues. When a person has a medical issue and they cannot work like they should, the combination can be devastating. Medical bills tend to rack up very quickly. Even with the best insurance plans, sickness can cost big money.
6. Too Many Credit Cards
Credit cards are one of the foremost reasons why people are in debt. Many people live for the day and then don’t ponder how they will pay for their purchases later. Plastic cards make some people think they have more disposable money than they do. These cards should be used for emergencies and not for frivolous purchases.
For most people, debt is a gradual process that stems from either bad habits or bad circumstances. By developing good habits as a young child, it is easier to carry those with you throughout life.
