It’s important to learn why people remain in debt and can never seem to get out. This is especially true if you’re one of them!
Don’t worry, you can get out of your debt. No one is doomed to his/her debts. However, one must learn why he/she is (always) in debt in the first place.
Here are the 5 major reasons for remaining in debt:
- Living beyond your means – This can be explained pretty simply. If you live more than what you earn, guess what? You need to take debts to sustain that lifestyle. Many people sink in debts not because they’re financially troubled. They’re financially troubled in the first place because they live beyond their means!
- Lack of budget – A person with no budget doesn’t have any proper allocation for their money – so they just go out and out, until they find themselves spending money that they didn’t earned (debt). Even if you have a budget, it’s another thing to stick to it. Once you have a budget, be sure to stick to it. Otherwise, it’s like you don’t have a budget at all!
- Spending before saving – This doesn’t apply to necessary expenses, of course. But if you spend more than you save, how can you keep money? The problem with spenders is they often tie with #1: living beyond their means. They’re spenders after all! They spend a lot, until they realize they have no money left – but still, they spend some more using debt!
- Making impulsive buying decisions – Some don’t consider their budget (if they even have one) before buying something. If they impulsively want something, they’ll buy it – even if there is no immediate purpose for him/her. Usually, this happens on a “Sale”. On some occasions, one would even take an auto loan or house loan without considering one’s personal cash flow. That’s another example of impulsive buying.
- Absence of emergency funds – These people often don’t save, let alone have an emergency fund! Since they spend more than they save, and since they live beyond their means, it’s natural that they’ll have nothing left for emergency funds. When things took a toll, they’ll take debt instead. Sometimes, they are already under a debt!
These are some of the reasons why people remain in debt. If you sound anything in the list above, it’s time to consider handling your debt well and prioritizing your budget carefully.
If you think you’re on a verge of bankruptcy, consult a bankruptcy lawyer to give you legal advice on the matter.