With so many consumers falling deep into debt, it is no surprise that there are so many different reasons that eventually result in someone being far behind on their bills. Although every consumer’s situation is unique, the following are some of the most common reasons that people throughout the country get into debt:
No emergency fund
It can be easy to get into debt if you don’t have any money saved up and the unexpected happens. For example, if you’re living paycheck to paycheck and then you suddenly lose your job, or get sick and need to pay for medical bills, you may need to turn to credit cards or loans as a solution. Paying back those loans or credit cards can be difficult, especially if the amount of money you borrowed is substantial, or if you no longer have a steady income. Because you never know what could happen, it’s always important to have an emergency fund ready, even if it’s a small one. If you could contribute just a little bit of money from each paycheck towards savings, you may be able to avoid maxing out credit cards or taking out a large personal loan if you’re suddenly in a tough spot financially.
Lack of income
Whether you were terminated from your job, quit in order to seek other opportunities, or you were injured and left unable to work, being without a steady income can shake anyone’s world financially. Even with money in savings, it can eventually run out before you’re able to find work again. It can be difficult to take care of bills and other financial responsibilities when you’re no longer receiving a steady income, and it’s easy to see why this is one of the main reasons that people get into debt.
Lack of budgeting is another common reason why people get into debt. Consumers are often unaware of just how much they spend on certain things, or they spend too much on things they shouldn’t, and end up falling behind on bills. If you haven’t already, create a realistic, sensible budget and stick to it. Make sure your budget allows for adequate saving, while also making it possible to pay your bills. Ideally, you’ll want to create a budget that allows you to pay off your debt in larger chunks, rather than just the minimum payments. If it means making a few sacrifices, it could be worth it. If an emergency comes up later on, you’ll be happy that all or most of your debt has been paid off, and it will be a lot less stressful on you.
A gambling addiction can easily drain someone’s financial resources, and they may end up using all of their money for their addiction, rather than paying their bills. Once a gambling addict has used up all of their cash, they sometimes turn to credit cards and loans in order to fund their habit. If they borrow excessive amounts of money, it can be difficult to pay it back and can easily result in debt.