These days, more and more Americans are finding themselves falling into debt. People are constantly making unnecessary or unwise purchases that they simply just can’t afford in the first place. This causes a domino effect of negative consequences starting with credit cards that can’t be paid off, leading to mounting interest rates, and ending in debt. If you find yourself struggling to make ends meet because of continual debt problems, there are steps you can take in order to avoid these issues. What it boils down to is self-control, and an understanding of what items and purchases you can actually afford, and those that you cannot.
If you’re in debt, the following 5 reasons could be why:
1.Credit cards— In our current society, it’s common for one person to have as many as three credit cards, or even more. While credit cards are sometimes unavoidable and may be necessary, this is extremely rare and people should do their best to stay away from credit cards altogether. After all, the entire reason behind opening a card is likely due to the fact that an item is desired, but cannot be afforded, which is the epitome of debt. Peoples’ lack of self-control, greediness, and yearning to have the best and newest products lead them to believe that debt is a better alternative than not getting what they want, when this is anything but true. The pleasure from purchasing will be temporary and short-lived- your debt will not be. It’s important to focus on long-term factors and disregard the unimportant, short-term factors like how good you’ll look in an expensive, new car.
2.Large, excessive and unnecessary purchases— With our electronic and technology obsessed world, it’s hard to stay up to date and current on the best and newest electronic accessories like phones, laptops, and TVs. As soon as you finally get the one item you’ve been wanting, an even better, more expensive one comes out. It’s a never ending cycle of chasing after the next best thing. That’s why people need to realize that if they possess a functioning device that does its job effectively, there’s no need to purchase a new one just for the fun of it. While it’s tempting to splurge on these unnecessary purchases, and nice to have the newest gadget among your friends, is it worth future debt and financial issues? It’s highly doubtful that your insistence for a new electronic today will make sense five years from now when dealing with potential monetary problems.
3.Spending rather than saving— It seems as if people have forgotten how to save up for a large purchase before just going out and obtaining it on credit, or with a loan. This is because many people have a mindset focused on spending rather than saving, and it should definitely be the other way around. If you’re young, have little obligations and bills, or both, you need to be saving as much as you can, while you can. Set a budget, make sure it allots money for savings, and stick with it. This way you can pay for the items you desire with cash instead of charging them to a credit card.
4.Unexpected life emergencies or accidents— People who fall into the above category of spenders rather than savers will have major problems when dealing with life emergencies that demand us to spend money, which is pretty much any life emergency. Whether it’s a death in the family, a car accident, bodily injury, or major house damage, these life emergencies can obviously be handled much easier if you go into them with a healthy bank and savings account, rather than one drowning in debt.
5.Unemployment or pay cuts— Unfortunately, the American economy has been experiencing a slow downward trend for some time now. This has caused pay cuts, people being laid off, and a general, overall decline in business functioning and success. Although this has been happening for some time now and hasn’t been a sudden or abrupt change by any means, Americans are still failing to appropriately adjust their finances and budget. If your paycheck has been reduced by any amount, you need to adapt your spending to match this reduction or you will soon run into financial issues. While it may seem difficult to make a change at first, especially when it comes to superfluities you are used to having such as thousands of television channels, super-fast internet, or an expensive gym membership, doing a thorough examination of your budget will help you determine exactly which luxuries you are comfortable with giving up. Many people will find that they aren’t even forced to completely give something up, but rather moderate and monitor themselves.
While debt can seem like an overwhelming obstacle to overcome, with a little willpower and discipline, you will be back in the green in no time.