There are so many people out there
looking for advice on dealing with debt and how to avoid debt. There
ways to avoid debt are as simple as looking at what causes
1. Less income/ same
When a reduction in income happens,
it is easy to keep living the same and allow debt to fill the gap.
When changes happen the entire budget must be recalculated to fit
the new level of income.
Over half of today's marriages will
end in divorce. It can be very expensive and incur thousands of
dollars of debt. If you aren't divorced, you can see what it's like
by selling all of you assets for $50 bills. Then go out to the roof
of a tall building and compete with your spouse to see who can
through the most money off the fastest. It won't take
3. Poor management of
Having a budget is necessary. If you
don't have one, how do you know where your money is going? You could
be spending hundreds of dollars each month and still charging things
that you don't need. All you have to do is write down your expenses
and income and subtract to find the difference. Once you make the
right decisions on where you spend your money, you will feel in
You may feel that you are only in a
temporary situation and that a better job is just around the corner.
Okay, but you still need to get your expenses to match your income.
If you increase your income later, then you can add resume some of
your previous spending.
One of the fastest growing luxury
spending categories is gambling. You are guaranteed to lose more
money than you will make. Gambling is highly addictive and loans are
freely available. You can even mortgage your house at a casino while
under the influence! Well, this is entertainment at its
6. Medical expenses When you have
a lapse in your insurance or a gap between policies you could pay
dearly. The increasing costs of health insurance are affecting
millions of people. Every doctor's office will take credit cards,
and it isn't for your convenience. The doctor wants to get paid
immediately. This means more debt for you and less for them.
7. Not saving enough
The best way to avoid debt is to
prepare for the unexpected. You should have in savings enough money
to pay three to six months of living expenses. IF you have an
illness, job layoff or divorce, you will not be immediately trying
to find a loan to help you get by. If you pay yourself first, you
won't have to pay someone else in interest. No one has ever said, "I
wish I hadn't saved."
8. Not talking about money
Your entire family should talk about
finances. Be open and honest with your spouse about your financial
goals and spending. There is always a way to compromise, you just
have to be honest and accountable. You have to know what creditors
you each have, because most likely you are responsible. Many people
wake up one day to find out that their partner has racked up
thousands in untold credit card debt. This often leads to number
9. Banking on tomorrow
It is so easy to spend what you don't
have yet. When I get that raise, I'll pay off this card or we'll
spend the bonus on this. Job bonuses are never for sure until they
are in your hand. Inheritances are set in stone. Don't spend the
money until the check clears the bank.
10. Financial ignorance
Most people just don't understand how
money and debt works. You need to know how money grows, how to save
and invest and how to balance your checkbook. Schools don't teach
this vital information, and many of our parents didn't truly
understand it either. You must teach yourself and your children.
Financial mistakes can cost you dearly. Get the knowledge and take
control of your financial future.