Excessive debt is the biggest worry of most people. Financial issues are one of the leading contributors to divorce and suicide. We are provided with many opportunities to increase our debt, but getting out of debt can be especially challenging.
Think about all the credit card offers and financing opportunities that you're faced with every day. What causes people to go into debt? Read on to find out.
1Being Unemployed Or Loss Of A Job
The loss of a job forces many people to rely on consumer debt for survival. Most families lack an emergency fund, and credit cards are put into action rapidly. Many people fall into the habit of doing just enough work to avoid being fired. Put in the time and effort to become an indispensable member of your company.
If you believe that your job is in jeopardy, be proactive and start looking for a new position! Start your emergency fund today. If you already have one, ask yourself if it's adequate.
2Lack Of Self-Control
Our society tends to be a little self-indulgent and lacking in discipline. These traits are largely responsible for the high obesity rates in the United States as well as the high levels of personal debt. How many items have you purchased in a moment of weakness that you don't ever use or take the time to enjoy? Before making an important purchase, ask yourself if it's something that you truly need or want. If it's merely something that you want, ask yourself if it's something that you would enjoy owning or if you will use it.
Put off important purchases for a couple of weeks and see if the level of enthusiasm for purchasing them remains. Remind yourself that $100 invested at 10% is almost $750 in 20 years. That $500 watch or purse is costing you $3,750 when viewed this way. After 40 years, the cost is nearly $5,500 per $100. That $500 item is then $27,300!
3Not Having A Budget Or Financial Goals
Good things rarely happen without a plan. Having a spending plan and financial goals are important. Create a budget that supports your financial goals.
Develop habits that support your budget. Regularly review your progress toward your goals and your adherence to your spending plan. When the time comes to make major financial decisions, like purchasing an expensive item, ask yourself if this purchase supports your financial goals.
4Excessive Or Unwise Use Of Credit
We all have our ways of self-soothing. Some people overeat or drink. Others find healthier ways to cope, like exercising.
Shopping is one of the most damaging ways to make yourself feel better. It becomes effortless to use a credit card to temporarily improve your mood by buying something that has caught your eye. But the long-term pain of excessive debt ultimately replaces that temporary boost.
5Going Through A Divorce
You might lose half of your possessions and your net worth. And you might also be paying your ex-spouse for years to come. You're also likely to be stuck with a big attorney bill.
Be careful before jumping into a marriage. Once conflict begins, seek out professional counseling. Consider if your situation warrants a prenuptial agreement.
Getting out of debt is much more challenging than avoiding it in the first place. Getting out of debt requires time. You would need a plan and the necessary discipline to stick to the plan.
Try to avoid these five primary debt mistakes. If you can, avoiding debt will be much easier. If you're already in debt, getting out will be that much easier.