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Top 10 Reasons That Cause Debt
Debt can slowly creep up on you, one credit card transaction at a time. It is insidious, and it becomes almost seductive. Here are the top 10 reasons that drag many debtors into a serious debt trap.
1. Expenses Increase / Income Remain The Same.
Inflation effect has cause the increase of expenses due to the increase of household expenses. While in the bad economy situation, salary will normal remain if not reduced. With the increase of household expenses and income remain the same, you many fill any shortage in spending with your credit cards. Later, when the credit card bills come, you pay the minimum of due amount only and let the balance bring forward to next month. Be aware that the balance you bring forward to next month due does incur interest. The sooner you adjust to your new reality of economy downturn, whether it be temporary or permanent, the better off you'll be.
2. Divorce
It’s commonly happen to housewife who fully depends on her husband financially, suddenly get divorce. If she does not have other savings as backup and can’t find a job to cover for needed household expense that she “temporary” charge to her credit cards, debt incur and rolling up.
3. Poor money management.
A monthly spending plan is essential. Without one you have no idea where your money is going. You may be spending hundreds of dollars unnecessarily each month and end up having to charge purchases on which you should have spent that money. Planning is no more difficult than writing down your expenses and income and reconciling the two. You will be surprised at how powerful you'll feel when you are making thoughtful decisions about where and when to spend your money.
4. Underemployment.
For people who under employment, the risk of being laid off are always there, they should always prepare to face it financially with a backup emergency fund. But, unfortunately, many employees do not have the awareness. Most people who are not prepare to face any changes in their life events such as job termination will go in debt. When you loss your source of income, you are trying to remain your life style with the money from your credit cards and hoping to get everything back to order with a new job. But most of time, you need some time to get a new job after being laid off.
5. Gambling.
Call it America's new entertainment or (considering the boom in tribal casinos) the Indian's revenge. Either way there is a guaranteed exchange of money from you to "the house." It can be addictive, hard to stop and loans are freely available. Gambling establishments may be the only place you can mortgage your house while intoxicated and have it be legal. Gambling industry is one of the highest profitable industries and you may be one of the contributors. In return, you are in debt.
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