True Causes of Debt That You Should Be Aware Of

Think you’re safe from getting stuck with debt problems? Better not be too confident. Everyone should be aware of his payment obligations and take these obligations seriously at all times. No one is exempted. Here are the major causes of debt that can happen to anyone, even to you, if you’re not careful:

Spending more than your income permits. Before you say you’re not guilty of this, take out your pen and paper. Jot down each and every single thing that you spend for each month. Include your utility bills, transportation expenses, groceries, and your personal expenses. Calculate the total cost and subtract it from your monthly salary. Now, are you spending more than what your income allows? You could be surprised to know that you are.

Not setting aside for your savings. Do you have enough savings that can last you at least 6 months in case you lost your job? Surprisingly, only a few people save up for emergencies and although some people have savings, it is still not enough to support them for more than a month. People should be setting aside at least a third of their earnings to their savings account each month.

Not setting a budget. One of the reasons why people overspend is because they don’t have a budget plan at all. An effective budget plan should include your monthly expenses, your personal expenses, debt payments, savings, insurances, and extra cash for miscellaneous needs. You should be able to distribute your monthly income among these expenses without sacrificing the most important things. If your income isn’t enough to cover everything, make adjustments on your luxuries.

Gambling. People get addicted to gambling without even realizing that they are already being a victim. Don’t ever rely your financial future on any form of gambling. Don’t spend your money on lottery thinking that if you win, you’ll be able to pay all your debts anyway.

Not securing an insurance policy. Insurance policies save you from the possibility of getting stuck in huge debt when unexpected circumstances arise. For instance, a health insurance will be a big help in case you or one your family members fall ill. Medical expenses can instantly rob you of all your money and savings in the bank so before you start thinking about upgrading to a new car, perhaps you should think about securing an insurance first.

Not setting priorities. It is easy to get drawn with all the hype of the latest gadgets, sophisticated appliances, new car models, and all the other attractive things in the market. If you don’t know what your priorities are, you could be living beyond your means without even realizing that the financial stability you enjoy today may not be the same tomorrow. Be wise. Know what your priorities are and stick with them.


About the Author:

Suzy Vanstrusen is a credit analyst and a writer on the website She has been providing consumers with tips and wise information about credit repair as well as helping you out more with your bad credit loans.  Copyright © 2010

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