Debt is a terrible thing in that it can very easily creep on you without you noticing. Before you know it, you owe a lot of money to a lot of people. But, how did it happen? Somewhere along the line, something must have happened that put you in debt, but what was it?
If you’re reading this in 2020, you can thank the coronavirus pandemic. But what if it’s a regular year, going about your normal life, and you look up and realize your in debt up to your eyeballs? How did that happen?
Well, the obvious reason for debt is that you can’t afford to pay for things or forget to pay certain bills. But, the roots lie deeper than that, as surely something happened that made it harder for you to pay your bills? Today, we take a look at some of the common causes of debt, and some advice on how to fix/avoid them.
You Went On A Credit Card Spending Spree
One of the most common reasons people end up in debt is because of their credit card spending habits. You go on a bit of a spending spree, max out your credit card, and get hit with a huge bill at the end of the month. I think this is probably the cause that shocks people the most because it really sneaks up on you. If you don’t track your spending, then you can easily spend way more than you intended to, particularly when you use a credit card. The bill comes through in the mail, you can’t pay it, so you opt for the easy way out and pay your minimum fee. Everything you didn’t pay gets added to next month’s bill, along with a fat interest fee. Before you know it, you’re spiraling out of control in a mountain of debt.
One good option here is to look to the likes of https://lendvia.com/ to take out a low-interest loan that can pay off your card debt. It is essential to then stop spending on your cards.
Listen, you can get out of credit card debt, but it’s so much easier to just prevent it in the first place. If you’re in debt, you should start by cutting up your credit cards. Stop using them, or you’ll just add to the debt. Then, work on saving money so you can pay off what you owe bit by bit. Gradually pay as much as you can so the bill slowly goes down, rather than saving up to pay it all off in one go. Doing the second option just means you give the bill time to accumulate more interest. Preventing credit card debt is simple; don’t be reckless. Know your limits, and only spend what you can afford. This lets you pay your monthly bill in full, getting rid of any interest rate issues.
You Got Into An Accident
Accidents happen all the time, in many different settings and scenarios. When you end up in an accident, your first thoughts lie with your physical health. Some people end up seriously hurt and injured, meaning your life is now devoted to getting better. But, what you don’t realize at the time is that being injured costs a lot of money. There are hospital visits, medical treatments, and don’t forget you could be put out of work as a result of your injury. All of this adds up and means you have huge bills to pay, while also possibly not getting your regular source of income.
It’s easy to see how things can go from bad to worse after an accident. However, there are ways you can try and get yourself out of debt caused by this scenario. There are legal companies like Finkelstein, Meirowitz & Eidlisz, LLP that fight for injured parties to gain workers compensation. This helps you get money when you’re too injured to work. It can help pay off your medical bills, and get you out of debt. Again, from a legal standpoint, you should also seek out personal injury attorneys to help you gain compensation for your accident. If someone caused your accident – for example, they crashed their car into yours like an idiot – then it’s their fault, and you can sue. Going down the legal route is the best way to gain money to cover your medical bills when you’re hurt, and stay clear of debt.
You Took Out A Loan
Most people end up in debt at some point in their life, and it usually comes from a loan of some sort. Many of these loans are ‘good’ loans because they help provide you with something useful. For example; a student loan or mortgage. They’re often the only way you can afford to finance something like your education or a home, so they’re not a bad thing. Normally, debts like these are seen as ‘good’ debt because you do gain something from being in debt. What’s more, paying off this debt is normally quite relaxed, and you can do it with small payments over many, many years.
The problems come when you take out short-term loans that are used as quick fixes when you need money. We’ve all seen the TV adverts for payday loans that claim to give you instant money and take away your problems. A lot of people turn to these when they have bills to pay – such as that big credit card bill we spoke about earlier! They use the loan to pay off the bill, thinking they’ve avoided debt. But, most quick loans will come with massive interest fees, meaning it costs a lot to pay it back. So much so that you can’t afford to repay your loan, and you end up in more debt.
If you’re in a situation where you have a short-term loan to pay off, then you need to focus all your efforts towards it. Get the loan off your back, and you will get out of debt. Alternatively, save yourself all this hassle and just avoid loans. Loans that are advertised as ‘quick fixes’ are often terrible and will cost money. If you need money fast, look for alternative options like selling some of your old belongings or getting a second job.
You should be able to fit yourself in one of the three scenarios mentioned above. These are common root causes of debt. They often lead to you owing people money, which quickly spirals out of control. Hopefully, my advice helps you get out of your debt, and avoid it in the future.
Do you have some tips to share on getting out of debt? Leave them below in the comments.