Top 5 Common Causes of Debt

Getting into debt is an issue that has the potential to affect all different kinds of people in varying walks of life. If you have already experienced this personally, you will already know what a potentially damaging experience this can be. Of course, there are a number of different ways of dealing with debt, but it also helps if you know some of the most common causes of it so you know whether you are at risk.

Reduced Income

If your income is suddenly reduced but you continue enjoying the same kind of lifestyle, this is an extremely common way of getting into debt. The best way of dealing with this is by adjusting your spending as soon as possible. A good way of doing this is by drawing up a monthly budget so you can see what your money is going on each month. The essentials are what you will want to focus on continuing to pay while it is the nonessential items that you will want to cut back on.

Divorce

With such a high proportion of marriages ending in divorce, this is something which many people don’t want to think about but it is still a possibility. And if it does happen, the results can be financially devastating, especially if the split turns nasty and there is no prior agreement in place. Though the money conversation can be a difficult one to have with someone you care about, it is still worth getting all your cards on the table as early as possible.

Poor Money Management

Often, debt is caused not by a single big event, but by something as simple as poor money management. If you don’t keep track of your finances and rack up costs on credit cards, you are at a much higher risk of getting into serious debt. Credit card debt also has the future effect of damaging your credit score so check out http://fixmy.credit/ if this has happened to you. Financial planning doesn’t have to be complicated - it can be as simple as writing down your expenses and income in two columns and analysing them.

Having No Savings

If you have nothing in the bank, you have no backup plan which can get you through if times get tough. Sometimes, you end up getting hit with unexpected costs that can come from all different areas. So, try to make it a rule that you have at least a couple of month’s salary saved in reserve in the bank just in case you should suddenly need access to the money.

Addiction

Something which can eat money quickly is addiction of any kind and you can quickly find yourself in difficulties. If this is something which you think you are suffering from, you should seek out professional help as soon as possible.

These are just five reasons why debt can strike you as well as a couple of potential ways in which you can react to deal with the issue.