This is a topic i know all too well. From buying one small item on my first credit card over 20 years ago, i have seen my debt spiral and then found myself in a debt trap. One that i am only beginning to escape in recent times. But why do so many fall into the same traps as me? We took a look at reasons you get into debt.
Reasons You Get Into Debt – Drop In Disposable Income
Other things can also alter. What if you moved property and your council tax band increased, or your landlord increased your rent, or your interest rate increased?
Rather than straining to make ends meet while adjusting to life changes, talk to those you owe money to. Explain the circumstances. Companies are more than prepared to impose a repayment break on your account or cut your payments for a month or two if you are upfront and honest about your financial position.
Reasons You Get Into Debt – No Savings
If you have a tiny fund set aside for when the worst strikes, you can perhaps avoid going into debt. If your car breaks down or your refrigerator freezer needs to be replaced, even £500 in a savings account can come in handy.
Four out of ten adults, or 21 million people, have less than £500 in savings. This is according to the Money Advice Service. Even if you only save a small amount each month, you may quickly build up your emergency fund. Set up a standing order. Transfer a small amount each pay day, and the savings will add up rapidly.
Turning A Blind Eye
You will soon go in debt if you do not open the mail that falls on your doormat. Or do not answer phone calls from creditors, and actively ignore financial concerns. Have faith in me. I’ve been there and then had to sell it to pay off my debt. Maybe you don’t have enough time to deal with your money, so you just avoid them outright. Or you assume that by not opening your mail, the problem would go away? Both are incorrect.
Things will only become worse if you don’t deal with the matter. If you can’t afford to pay a household bill, phone them. Or acquire an email address or write if you can’t bear calling. Explain why you are unable to pay and what you intend to do about it.
Reasons You Get Into Debt – Bad Debts
If you disregard a bill, it will quickly become a bad debt. The next letters will come from a debt management firm or a lawyer. Instead, they’ll begin pursuing the money. Your credit score will be severely harmed. Fees will be applied on top of that. You could be prosecuted and handed a CCJ. Enforcement Agents (also known as bailiffs) can show up at any time of day and knock on your door unannounced.
Reasons You Get Into Debt – Living Beyond Your Means
You might not even be attempting to keep up with the Joneses in terms of purchases. You might discover that you only buy the most basic brands, rarely go out, and don’t indulge in any treats. If you are living paycheck to paycheck and yet fighting to make ends meet, you may be tempted to go into debt to help you get by when times are tough.
The question is, do you really know how much money you have coming in and how much money you have going out? Create a budget and include every cent you make and receive in benefits, as well as everything you spend on rent/mortgage, home bills, groceries, and other routine expenses. By seeing things in black and white, you can get a better understanding of them.
Trying To Live The Life Of Others
The neighbours just got a new car, your coworker is on another vacation, and there are 12 cousins who are all shopping for Christmas gifts for each other.
Spending money because you believe you need to have the same things as others or because you require the most up-to-date technology will quickly put you in debt if you cannot actually afford them. We live in a society that values instant gratification. Fashions change with the seasons (some worse than others), and the media encourages people to love and crave certain things. It’s easy to become engrossed in the spending.
