As reported on https://www.fool.com/, studies have shown that a majority of American citizens are currently in debt. While somewhat depressing to have confirmed, this a fact that is unlikely to come as a surprise to the vast majority of people. Debt is a way of life; something that most of us live alongside, causing worry and stress, but seemingly an inevitable part of the modern experience.
However, while debt may be common, it is always worth remembering that it is not necessary. With financial management, advice learned from the likes of https://debtconsolidation.co/, and stringent budgeting, debt can be controlled and, eventually, eliminated. Millions of people live their lives without debt; so it’s clear that debt is not a necessary part of life that everyone has to experience. So if we can eliminate inevitability as the cause of debt, what actually is the reason so many people live their lives alongside debts.
The reasons people get into debt may surprise you…
When people imagine a person who is in debt, they likely think of a prolific spender – someone who is constantly shopping, making extravagant purchases, and generally failing to take care of their money. This is how people in debt are portrayed in TV shows and movies – but it couldn’t be further than the truth.
Thousands of people have written about the reason for their debt online, via blogs, diaries, forum posts, and social media. One thing that these stories have in common is not extravagant spending; it’s that debt is a slow, gradual process that builds over time.
The simple truth is that most people get into debt because getting into debt is normalized. Credit cards, loans, and other financial products are actively “sold” to consumers; movie characters make jokes about being in debt; and there are countless reality TV shows focused on people who are in debt. As a result, many people find that when their income falls short of necessary purchases, getting into debt to cover their expenses just seems like the obvious solution.
The other reason people get in debt is due to unexpected changes of circumstance…
As well as the normalization of debt causing people to believe borrowing is the right choice for them, the other major reason people get into debt is due to an unexpected change in circumstances – for example, a job loss or pregnancy. These things are inherently unpredictable, and while people can – and should – prepare their finances for the unexpected, this is not always sufficient protection against such a radical change.
The reasons that the vast majority of people get into debt are not centered around making huge purchases and living a life of luxury. Instead, people get into debt meeting their everyday needs or in response to a change in circumstances. The situation is then further complicated by a financial landscape that has normalized debt as a viable option.
How do we avoid too much debt?
It is therefore important to keep an eye on your finances and your regular expenditure – unfortunately, the experience of others suggests that just being cautious with your spending and avoiding regular big-ticket purchases is not sufficient protection against debt. By keeping tabs on your finances every single day, and avoiding seeing debt as a normal option when experiencing cash-flow problems, you should be able to avoid getting into – or deepening existing – debt in future.
Check out these other great resources to help you with your personal budgeting –
Also, here are the books and resources I am working with for our family budgeting…
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