Top Causes of Debt
While most people have the best of intentions, debt can happen to the best of us. From simple overspending to financial fiascos, millions of Americans find themselves in debt every year. But there are ways to climb out of that hole and into a brighter future! In this guide, we’ll go over some of the top causes of debt and how to move on from financial stress. You’ll enjoy debt free living in no time with the right research and techniques!
Poor Money Management
You might be surprised how poor money management can eat away at your finances, no matter how much money you earn. One of the top ways to avoid debt is to avoid spending what you can’t afford to lose. That means keeping tabs on your household income, bank statements, credit card statements, and getting those bills under control. When you track the money coming into your life, you know how much extra cash you have to spend on fun stuff – so you won’t get a serious shock when you get the bill for that impromptu shopping spree!
Sometimes life throws curveballs at you that are difficult to predict. Unexpected medical expenses, divorce, unemployment, and other drastic life changes can change your household finances tremendously. While there’s no way to truly prepare for these events, we recommend taking inventory of your savings to stay debt-free. If you haven’t started saving for the future, there’s no time to start like the present. Most experts recommend saving six months worth of living expenses, but no amount is too small when you’re just getting started. Keep adding money to your savings to gradually build a nest egg.
Sometimes people have the income necessary to live a perfectly happy life, but poor financial literacy can lead them into a debt spiral. Think about your own financial literacy. Do you know how to do your taxes? Do you know how to balance a checkbook? Do you know when to spend or pay off debts? There's no need to feel self-conscious if you need some debt help, but the important thing is to gain the knowledge that you need to stay financially independent and debt-free. Consider looking for personal finance resources to keep you up-to-date on everything that you need to know. You can find plenty of great information through courses, books, and even online. Keep striving to learn from the best, and you'll learn how to pay off debt fast!