Following are seven different behaviors that can place a family in debt fast.
1. Reduced Income without Reduced Expenses
During corporate restructuring, due to the last financial crisis, many Americans suffered cuts in their earned income. People can also experience reduced pay when they are forced to change jobs. Whenever this happens, it is essential to immediately cut expenses to reflect the new income. Failing to do so will lead to the rapid accumulation of debt.
The very nature of divorce primes an individual to find themselves in debt, beginning with the cost of divorce. Divorce often leaves one person bearing more of the community expenses than their income can cover. While this can be difficult to manage, it can be properly managed by not allowing emotions to drive a person to fight for property and belongings they cannot afford to take care of.
3. Poor Money Management
Even a person who earns an above average income can find themselves in debt if they fail to properly manage their finances. People overspend on items like clothes, food and more. However, by using online coupons from discountrue.com, you can get your favorite clothing brands at a great price. Another way that a person or family can effectively manage their finances is to create a monthly spending plan. Without a monthly spending plan, it is impossible to keep track of where the money is going.
4. Banking on a Windfall
This is a huge mistake that many people make. People who are expecting some type of financial windfall, whether it is a bonus from their employer, an inheritance or tax refund, will often spend based on what they are expecting. Not only does it lead to overspending, there is always the chance that the windfall never comes in. Never spend what is not there.
5. Financial Illiteracy
When a person does not understand the basics of finance, it is easy for them to find themselves in a financial bind without understanding how they got there. Consider taking a free community class or researching information online. Of course, it’s always help to talk to a financial advisor as well. You can also start by finding spreadsheets that already have columns set up to calculate your finances. All you have to do is input the information in.
Gambling has actually become a form of entertainment that is becoming increasingly popular. The problem is that gambling can be highly addictive. When a person loses, they will begin to borrow to cover their habit.
7. Failing to Save
A person should develop short and long-term savings goals, and then initiate a savings plan that is designed to reach those goals. Failing to do so can lead to a cash deficit, leading to the individual having to borrow money.
While there are other causes of going into debt, these particular reasons play a significant role in getting into debt. Take a look at what changes you need to make so that you can spend less and save more. Even starting with small changes can make a big difference over time.
- Carolyn Warren
- Publisher: Bookmark Publishing
- Edition no. 2 (02/15/2016)
- Brandon Weaver
- Publisher: Independently published
- Paperback: 35 pages
- John Harris
- Kindle Edition
Last update on 2020-03-19 / Affiliate links / Images from Amazon Product Advertising API
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