Top Causes of Debt

Many readers are probably asking that question, “What are the top ten causes of debt?”

Well if you ask me and based on the experiences of those around me, here it goes: the top ten causes of debt

So here goes: Your top causes of debt!

Same Expenses and Reduced Earnings. There are times like this when an unexpected occurrence happens in your life and your earnings are reduced. In today’s crisis around the world, it may be happening to almost all of us. As a result, debts are filling the gap of the reduced earnings. Maybe while the earnings are not lessening yet, avoid as much as possible too much neck deep credits.

Poor Supervision of your Money. A plan for your monthly spending is very important. If you have no plan, you will have no idea where your money is going. You may subconsciously be spending lots of money wastefully every month and you end up charging purchases which you should have avoided in the first place. In planning, you will write down your income and expenses and merge the two. It is nice to know and feel when you know when and where you are spending your money and be able to make wise decisions based upon it.

Underemployment. Most people nowadays are underemployed and thinking that this stage is just temporary. So it is normal for them to keep on spending as if they are coming off unemployment with a false sense of relief. But of course, everyone deserves a break. Just get those current income in line with your expenses.

Gambling. This habit can be very addicting. The gambling establishments are the only place where one can mortgage his house while intoxicated and is still legal. It is the tribal casinos, so to speak and the new entertainment of a country. Just be careful as if you get this habit already, it is very hard to stop.

Small Savings or No Savings at all. Better prepare for the unexpected expenses by saving three to six months of living expenses. That is the simplest way to avoid unwanted debt. Do this and your money will grow and it will be there when you especially need it. Remember that no one has ever regretted having savings hidden somewhere.

No communication skills regarding your money. It is important to communicate well with your spouse or your children about finances. Always keep the communication lines open and be able to discuss financial goals and spending styles. If you are married to a spender and you are a saver, a strategy needs to be map out for you both to get what you want. Know what credit accounts you each have and promise each other to be honest with what each other spends.

Storing money only when there’s extra. Spending tomorrow’s money today is very tempting, especially if you believe that tomorrow will come no matter what. A scheduled job bonus may not be a sure thing. The inheritance which is a long time from this period that you believe will come your way may not. The important this is don’t spend the money until the check clears.

Financial illiteracy. Many people don't understand how money works and how it grows, how to save and invest for a rainy day, or even why they should balance their checkbook. The schools don't teach it; your parents may not have sat you down and explained it. Well it doesn’t matter now because you are responsible for your life and your money anyway. Mistakes you make financially are increasingly costly and complicated to resolve. It is better to educate yourself so that you are more in control of your life.

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