Excessive debt is a major concern for most people, and it can contribute to divorce and suicide. We are bombarded with opportunities to increase our debt, making it challenging to get out of debt. The credit card offers and financing opportunities are a constant temptation. There are several reasons why people accumulate debt, but the following five are among the primary culprits:
Unemployment: The loss of a job can force people to rely on consumer debt for survival. Most families don’t have an emergency fund, and credit cards are used quickly.
- To avoid losing your job, strive to become an essential employee by putting in time and effort.
- Be proactive by looking for a new job if you believe your current job is at risk.
- Begin building your emergency fund, or if you already have one, evaluate if it’s sufficient.
Lack of self-control: Our society tends to be indulgent and undisciplined, which contributes to high levels of personal debt. Impulsive buying is a common habit that can lead to unnecessary purchases.
- Before making a significant purchase, ask yourself if it’s something you need or genuinely want. Consider if it’s something you will use and enjoy.
- Delay major purchases for a few weeks to see if the level of enthusiasm remains.
- Remind yourself that purchases today can cost significantly more over time due to compound interest.
Lack of budget or financial goals: Without a plan, it’s challenging to achieve good results. Having a spending plan and financial goals is essential.
- Create a budget that supports your financial goals and develop habits that support your budget.
- Review your progress towards your goals and adherence to your spending plan regularly. Before making a significant purchase, evaluate if it aligns with your financial goals.
Excessive or unwise use of credit: Using credit to soothe oneself can lead to long-term debt that outweighs temporary happiness.
Divorce: Divorce can lead to significant financial loss, including losing half of your possessions and net worth, paying alimony, and legal fees.
- Think twice before jumping into a marriage.
- Seek professional counseling when conflicts arise.
- Consider a prenuptial agreement to protect your financial assets.
Getting out of debt is more difficult than avoiding it in the first place. It requires time, planning, and discipline. By avoiding these five primary debt mistakes, it becomes easier to avoid debt. If you’re already in debt, these strategies can make it easier to get out of debt.