One of the biggest worries for a family is debt. But it’s a reality for a lot of households in the US. In fact, one in eight Americans is in some form of debt! And once you are in money trouble, it’s very hard to get out of it. It can affect your credit score and jeopardize your chances of buying a house or a car in the future. As well as this, it can affect your family as a whole. Kids in families that are suffering from money trouble are more likely to get involved with a bad crowd. And debt can often be the reason for couples splitting up! Therefore, it’s so important that you try to keep your family in good financial order. Here are some of the top reasons why families fall into debt, and how you can avoid it!
When a family member loses their job
A lot of us get comfortable while we are in a job. If you have been there a while, it’s easy to think it’s going to last for the long-term. And you might start spending a lot of your money. But you never know what is around the corner. The company might start having money troubles and might need to let you go. Or in the tough economic environment, they might need to cut down the amount of people they employ. And without a job, it can leave your family at risk of money woes. After all, with the current job climate, it’s not so easy to find a new position. Therefore, it’s so important to always ensure you have some savings you can rely on if you do get into debt. Don’t overspend every month; make sure you put money away which can be used if you do lose your job. It’s always important to have a backup, so you don’t fall into money trouble!
When someone falls ill in the family
When it comes to our health, we never know what’s around the corner. People can be well one day and then end up in the hospital with an unexpected illness. And then if they need a medical procedure, it can end up costing your family a fortune. It might mean that you end up with thousands of debt that you can’t afford to pay back! To ensure this doesn’t happen to you, it’s so important that you make sure you have a good health insurance. That way, they will pay out for most of the procedure so that your family can stay afloat. Make sure you read the policies before getting any health insurance; you want one which covers a wide array of illnesses!
When they spend too much money on vacations
Vacations are a great way for families to spend time together. After all, you and your family get to stay in a beautiful location for a week or two. But a lot of families make a mistake by choosing somewhere that is out of budget. It means they end up struggling to pay for it in the long-run! Therefore, it’s so important you make sure you choose a holiday that won’t leave your bank accounts empty. Staycations are becoming more popular for families. It still ensures you get to spend quality time as a family, but it won’t break the bank! Kids often enjoy it more as it’s less traveling for them to deal with!
When they don’t pay their bills on time
It’s so important that you make sure you keep on top of household bills. A lot of families get behind with payments as they forget they have to pay the bill. And by the time they remember to pay it, they haven’t got the funds to afford it. The interest on the bill can rise over the weeks, and it can end up leaving families in debt. They often have to then get debt consolidation loans to help them pay the bills and get back on the straight and narrow. To avoid all this occurring, you need to make sure you keep a calendar of when bills need to be paid. That way, you won’t ever miss a payment and can keep a good credit score.
When they are expecting another baby
A lot of people end up getting into debt when they decide to have a baby. After all, it costs a fortune to bring up a child in the current climate. There is so much you need to buy for the newborn. And that’s before the expense of childcare. Also, losing one person’s income can be a challenge for a family! It can soon see them spiraling into debt. Therefore, you need to make sure you sit down and decide if you can afford to have a baby before you start trying. And once you find out you are expecting, you need to make sure you don’t overspend on items. Stick to buying essentials so that you don’t waste money!
When they try to compete with other families
So many couples try to give their kids the best of everything. They try to keep up with other families to create a middle-class life. They buy their kids the latest gadgets and clothes to keep on trend. But it’s often a lifestyle they can’t afford. As this feature says, more than 40% of American families spend more than they make which leads to debt. Therefore, it’s so important to make sure you aren’t spending more than you can afford. Your children will still have a great life if you cut back on the latest items. In fact, they will be better off with you not worrying about making ends meet!
When they spend too much at Christmas
The average person spends over $2700 on Christmas presents for friends and family members. This amount can often equate to two months salary for some people! And it can leave them struggling with debt in the new year. Therefore, this year sit down and work out who you need to buy presents for. You might be able to cut a few people off the list. And you could always make some handmade gifts this year for friends and family!
And remember to make sure you are not relying on credit cards to make purchases!