Many modern societies today have been described as ‘nations of debt.’ That phrase refers to the fact that people in those societies are so used to the idea of living with humongous amounts of debt – and they probably don’t even think twice about it. The good thing is that more and more people are starting to realize that there is a way to live a comfortable life without being buried in debt.
One way to deal with the problem of debt is to understand how and why you are facing this problem in the first place. Once you understand the potential reasons, then you will be able to address specific issues and stop yourself from going back to the vicious cycle.
What are the most common reasons people get into debt? Here are 10 reasons people unnecessarily find themselves struggling with debt problems.
Having the wrong mindset
Most problems regarding debt stem from this major issue. People have misconceptions about and the wrong approach to their finances. As a result of incorrect thinking, debt tends to accumulate fast.
- I deserve to have this and that. This way of thinking is very common among people these days. Our sense of entitlement is so intense that we find ourselves purchasing things that we want simply because we feel that we deserve them. At the end of the day, many of these things are not necessary, and maybe, we don’t even really deserve them.
- When in Rome…NO! Just because everyone else is living a life of debt, it doesn’t mean that it is okay for you to do the same. This reasoning has been repeated so many times that it is more than cliché. However, people still fall for it again and again and again. Needless to say, they find themselves mired in the mud of debt
- I don’t care! Some people simply don’t care. While it may seem cool to some, it really is quite foolish to think this way. So you don’t care if you live with tons of debt? Think about just how much easier and more fun your life would be if you weren’t saddled with all that! Don’t fool yourself into thinking that you don’t care, because at the end of the day, you will have to deal with your debt issues.
Ahh, the necessary evil – credit cards; but are they really necessary? For certain things, perhaps they are. However, I know quite a lot of people who have had bad experiences with credit cards (either due to their own fault or the credit card company’s) and, as a result, have lived without the plastic for many years. So don’t think credit cards are absolutely necessary. On the other hand, they are not totally evil either. It’s really in the way you use them.
- False sense of security. One thing is for sure – credit cards tend to give people a false sense of security. It is so easy to swipe the card and even when you have no cash, it almost feels like you can actually afford the purchase. Don’t fall for that – that’s how a lot of people find themselves with thousands of dollars in debt. When you use your credit card, make sure that you actually have the funds to make the purchase if you didn’t have the card in the first place.
- The trap of minimum payment. This is all I need to pay for this billing cycle. Credit card companies are really crafty this way. They give you a minimum amount you have to pay to avoid additional fees. It seems great, but what happens is you end up paying more in interest if you only pay the minimum amount due. The solution: pay in full if you can. If not, pay as much as you can.
- Miss payments. If you miss a payment, then rest assured that your next statement will be much much higher. All sorts of fees can be applied to your already existing debt. Never ever miss a credit card payment.
- Having several credit cards. What’s wrong? If you are already experiencing problems handling your credit card debt with one card, why would you get another one? Beats me, really, but it seems people never learn and keep getting one card after the other. There’s really only one path to take – STOP getting new credit cards. Deal your existing ones first.
For sure, there are more than three wrong practices leading to debt that people engage in. These are the 3 most common, in my book.
- Gambling. Sure, it can be fun, but gambling is also addictive and can lead to more than debt problems. Gambling addiction is a serious condition. Don’t get suckered into that trap.
- Leasing. So you can’t afford a new car or a new LED TV. Why not lease one instead? Here’s a suggestion: why not NOT buy it when you can’t afford it? The only thing that leasing can give you is temporary possession (not even ownership) of something that you can live without. That and debt.
- Retail therapy. Not everyone has this problem, but those who do easily find themselves with a lot of debt. Couple the dependence on retail therapy with credit cards and you’ve got yourself a double whammy. If you find yourself needing to do retail therapy frequently, then maybe you ought to seek help to resolve whatever issues are driving you to do so.
Not all debt is bad, but if you are in debt because of these things, you ought to take a step back and rethink your position.