The Most Common Reasons For Going Into Debt And Tips To Avoid Them
Wednesday, February 26, 2014, 1:00 AM | Leave Comment
Americans owe roughly $2.4 trillion in combined debt, which comes out to nearly $8,000 per citizen. This alarming trend reflects not only a strained economic situation but also deeper problems on a more individual basis. For many people, spending is out of control for a variety of reasons.
Here are some of the most common causes of debt and what you can do about them:
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Less Money, Same Costs
Layoffs, reduced hours, changing jobs or other events can cause your income to take a big hit, but your expenses may still be the same. Unfortunately, many people opt to fill in the holes by going into debt.
While it can help keep you out of more immediate financial trouble, it’s not something you should rely on. A better method would be to reduce your expenses wherever possible in order to fit your current income, even if that means living a bare-bones lifestyle for a time.
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Poorly-Managed Finances
It’s critical that you have a spending plan in place. If you don’t do this, you have no way of tracking where your money is ending up. Without a solid budget, it’s surprisingly easy to lose track of hundreds of dollars every month, which could be money better spent on more important things.
As a result of this habit, many people end up having to pay their bills with credit cards, thereby racking up even more debt. Rather than falling into this financial black hole, sit down and take a few minutes to write out all of your expenses and when they’re due.
This will help you make better choices about how your money gets spent. Be sure to include your current debts too. If you discover that you owe more than you’re capable of paying, it may be wise to seek the help of debt relief lawyers Thompson & DeVeny.
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Medical Bills
Between coverage gaps, canceled policies, claim refusals and overwhelming care costs, many Americans are left with little choice but to go into debt to pay their medical bills.
Perhaps you’ve noticed that most doctors today accept credit cards as a payment method. Unfortunately, this isn’t for your convenience. it’s because they want to get paid right away. They do this because if they’re not paid immediately, they’re less likely to get paid at all.
Even though it can be tempting to just hand over your credit card and get it over with, it’s bad policy. You’re better off entering a payment plan directly with your doctor, which can be paid off over time without accruing interest or late fees.
You may also want to consider pushing the envelope with your insurance company.
While going into more debt may seem like the only option, there are many alternatives to help you pay your bills and live a normal life. Avoiding these common reasons for going into debt is essential for your current and future financial situation.
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