7 Reasons you are in debt

What lead people into debt? This was the topic that I was discussing last friday at our local church where I was invited to deliver a lecture on debt free living. A person asked me there, "I spend too frugally. Then what is the reason behind my debt problems?". Does overspending solely lead people into debt? Is this the only reason behind people's debt problems or there are more?

Being myself in debt has made me very compassionate towards these people who got into debt for licit reasons. Take a look at some of the reasons why people get into debt.

  1. Medical bills: If a dear one of your is hospitalized, you can't neglect and agree to bear the costs whatever it is. Even, most of the times your insurance doesn't cover everything. For example, maternity was not covered as per our policy and we had to bear the expenses of sonograms. Still today we are paying for the debt. Usually, medical bills add up quickly and you can't help.
  2. A job loss or pay cut: Crises come without any intimation and you should remain prepared for any unfortunate circumstance. If you face a job loss and don't have an emergency fund to aid the situation, then credit is going to tide over.
  3. Overspending: I've seen people draining their credit cards every other day at malls and restaurants. Credit card companies make this pretty easy for them providing with the money they don't have. Overspending is buying a car in credit or going for a vacation that you can't afford.
  4. Taxes: Tax debts are easier to accrue and stressful to deal with. Perhaps, you just overlooked and didn't file any return for five long years. Perhaps you withheld too little from your paycheck. Or, perhaps you expected a return & never had. All these make you owe huge tax debt at the end of the year.
  5. Divorce: Along with the emotional stress, the financial stress that you're going to experience in a divorce is not easy to handle. Apart from the debt that is incurred in a broken marriage, sometime, you could be in debt just for the lawyer fees.
  6. Student loans: Do you have any clue how you are going to pay off your student loan once you graduate? Is there any surety of getting a job? Going for a high-end degree without any proper planning like how you’re going to pay for it can be devastating and you can end up with thousands in debt.
  7. Home and car repairs: Money drain out and sometimes bury you under debt when an air conditioning unit gets broke unexpectedly in the dead heat of Texas summer and you replace it. Often your car breaks down and your insurance comes of no help.
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