Top 8 Causes of Debt in the USA

23 06 2011

People today are getting themselves into more and more debt.  This growing problem is especially bad in America.  Here are 8 top causes of debt.

  1. Spending money before you have it
    Credit cards make this very easy to do.  It can be tempting to buy something when you have a credit card which will allow you to buy something before you have the cash in hand.  The trick about credit cards is that every month you don’t pay off the bill in full; the money remaining accumulates interest.  Credit card charges rack up very quickly and before you know it, you owe your card company more money than you actually spent. Banks also raise interest rates as soon as a payment is late making it even harder to pay off the debt.
  2. Little or no savings
    One of the easiest ways to avoid going into debt is to have savings.  Life always has unexpected costs that will throw you into debt if you are not prepared for them.  Sometimes there are unexpected costs that are pressing and cannot be postponed like a pipe breaks in your home flooding all the floors, or your car dies and you need to buy a new one.  These are not things that can wait, so saving for a rainy day is important. 10 % of your paycheck should be put aside for unexpected events.
  3. Divorce
    With more than 50% of Americans being divorced, this is an important thing to consider.  Divorces are not really something you can plan for financially.  Its just one of those unexpected costs that happens in life.
  4. Medical Expenses
    Even with health insurance, medical bills can still pile up.  Most doctors and hospitals accept credit cards as a form of payment.  This is because the professionals want their payment at the time of service to ensure they receive it.  This unfortunately is one of the things that add to credit card debt.
  5. Gambling
    The thought that you can go into a building with little money and walk away with tons is intoxicating to some.  People these days love to gamble, whether it is because of the thrill or because they are just desperate for money.  The reality of it is most people end up leaving with negative money.  Gambling addictions are by far some of the worst, especially when it comes to staying out of debt.
  6. Poor Money Communication
    It is crucial to communicate about spending and saving with your spouse and/or children.  If one of you is someone who spends lots of money it is important to know this and anticipate a larger bill at the end of the month.  When dealing with shared accounts this is one of the most important things to do. Consider setting aside time to discuss financial philosophies and priorities before it becomes a problem!
  7. Poor Money Management
    Basic things like balancing a check book and keeping track of your spending are very important to get in the habit of doing.  These little tricks will help you realize where most of your money is going and allow you to cut back on unnecessary spending. If you pay everything online then visit your online accounts once a month to keep yourself informed about your accounts.
  8.  Reduced Income
    The current state of our economy has been the cause of   people losing   jobs or possibly experiencing pay cuts.  If this happens it is important to cut back on spending, unless you have a reserve of cash to subsidize yourself. If you are receiving less money you need to spend less money. 
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