What are the Top 5 Causes of Debt?
Did you know that more than 50% of the American population are in debt? That is about 1 in every 3 Americans that holds 10 or more credit cards or have requested for bad credit installment loans.
Where does this debt come from?
Without further ado, here are the top five causes of debt in America:
1. Reduced income/same expenses
When we experience job demotion, our salary drops for some reason our expenses do not fluctuate. This is why the most common cause of debt is when income is reduced and expenses either stay the same or increase. In order to avoid this, just make a conscious effort to be aware of any changes to your income or expenses so that the balance is not thrown off.
We may have all heard the statistic that 1 in 2 marriages end in divorce, but we sometimes do not think about the financial impact that divorce can have. For marriages that involve joint accounts, mortgages, vehicles, and children divorce can truly be a complicated web of financial chaos. Some individuals find that signing prenuptial agreements can provide the safety net they need in case of divorce.
3. Poor money management
This may seem simple, but mismanagement of money is a leading cause of why the majority of Americans live paycheck to paycheck.
An easy money management mantra to live by does not spend more than you have.
The job market in America is slowly getting better, but it isn’t happening overnight. Because of the struggles that our economy has faced, employers are not able to pay what they should be able to. Most Americans earn less than they need to pay their monthly bills, which leads to little amounts of debt every month that eventually add up.
5. Medical expenses
With or without insurance medical bills can be extremely expensive, but we need to take care of our health. No one wants to deny themselves of their family medical care, but it does come at a cost. Emergency medical expenses are one of the top causes of bankruptcy in the United States today.
No matter where debt comes from it can quickly take over your life and cause you stress. There are options to get rid of your debt whether it be through bankruptcy, debt settlement, loan consolidation or credit counseling. If you feel that your debt is becoming too overwhelming for you to handle on your own then do not hesitate: call a professional immediately before your situations get worse.