How Do People Get into Debt?
There are two main ways that people find themselves crushed by the weight of their debts:
- Some people find that debt hit them like a ton of bricks when they lost their job, or experienced a medical issue that resulted in the inability to work or excessive medical expenses.
- Other people find that debt has sort of "snuck up" on them, over years of casually using credit cards for little purchases that they just didn't have the cash to pay for; or from taking on large purchases like a new vehicle or a home mortgage- only to find that unexpected expenses or changes in income have made it near impossible to keep up with all of the monthly payments.
Regardless of how you got into debt, it's agreed that it's definitely easier to get into debt than it is to get out of it.
Sometimes, it is completely impossible for an individual to avoid debt. As mentioned above, there are times when you unexpectedly lose your job, and suddenly you have to find a way to pay for all of the expenses you were paying for previously with your full time job on the new, lower, unemployment income (if you qualify). Finding a new job isn't always as easy as applying, and some people go months without a steady income. It's easy to see how these individuals can wind up in over their heads in debt.
Another unavoidable situation that results in large amounts of debt can be when you or a family member is injured or becomes ill. If your health insurance isn't adequate to cover your medical expenses, you can quickly be overcome by excessive medical bills and not have enough left over to pay for your regular monthly expenses. This scenario also has a tendency to result in a "double whammy" because if your medical issue results in your inability to work, and your inability to work causes you problems paying for your medical expenses and other obligations- debt is going to take over.
For every person who has unavoidable debts, there are probably 10 who are in over their heads in debt that could have been avoided. These are people who have relied on credit cards to stretch their income a little further- and then over time, and with the help of excessive credit card interest rates and late fee charges, found that they were suddenly having difficulty keeping up with all of their expenses. Many people use credit when they don't have the cash available to buy something they want, and don't take the time to consider how long it will take to pay off that impulse purchase. It's usually not until it's too late before people realize just how far they've gone into debt by using credit cards to make purchases and then not paying them off the moment the statement arrives.
Retail therapy is a common reason for people to find themselves overwhelmed with debt. People who are unhappy about something and make themselves feel better by shopping. Often, people who don't have as much money as they would like later find themselves at the mall, armed with a few good credit cards to forget the troubles- or find themselves taking a few days vacation, always with the intention of paying the bills off right away.
Whether you are in debt because of unavoidable situations or avoidable circumstances, debt is debt, and it is much harder going off than it was going on- just like weight loss.
Destroy Debt has the advice and resources you need on debt consolidation and other financial topics.