Debt is a common problem that many people face nowadays. Have you ever wondered why and how people get into debt? These are the top few reasons:
1. Reduced Income: When people are in their comfort zones and are faced with a sudden reduced income, failure to adjust expectations and spending accordingly will inevitably lead to debt.
2. Divorce: For many, divorce is not jus a separation of two people and their family but also a very costly thing to go through. Other than the cost of hiring a lawyer, a divorce can be a messy one where one party would demand too much monetarily. Divorce settlements can lead to debt.
3. Poor Financial Management: Needless to say, failure to budget your spending will lead to debt. Having a monthly budget and knowing how much you can or cannot spend is crucial to managing your finances.
4. Gambling: This is a rampant problem. Gambling can be the cause of debt and it can also be the effect of debt. Whatever it is, it will be a vicious cycle and should never be made a habit.
5. Medical Burdens: This can happen suddenly without warning. An accident or a sudden chronic medical condition may require a huge sum of money that you do not have. It is always good to have backup plans and money for rainy days so that you do not fall into debt from a sudden medical burden.
Now that you know about some of the reasons why and how people get into debt, you can start thinking about how to prevent this from happening to you. Debt is never fun and it can ruin your quality of life and even relationships. Do not let yourself become a victim of your own inability to manage your finances.