top of page

Stop Excessive Personal Debt

Personal Debt: The Top 5 Causes and How to Avoid Them

Most people's biggest worry is excessive debt. Financial issues are one of the leading contributors to divorce and suicide. We are bombarded with opportunities to increase our debt every day, through credit card offers and financing opportunities.
While there are many things that can create excessive debt, the following 5 are among the primary culprits.
  1. Unemployment can force you to rely on credit to make ends meet. Most families lack an emergency fund, and the credit cards are put into action rapidly.

  2. Overspending is easy when you use credit, and this can lead to financial problems down the road.

  3. No budget accountability often leads to uncomfortable situations. It's important to have a budget and financial goals in order to achieve the good things you want in life. Having a spending plan and setting aside money for yourself will help you reach your goals and improve your overall financial situation.

  4. Unwise use of credit is a way of self-soothing. Some people overeat or drink. Others find healthier ways to cope, like exercising. One of the most damaging ways to make yourself feel better is by shopping. It becomes very easy to use a credit card to temporarily improve your mood by buying something that has caught your eye. If you have credit card debt with high interest rates, it can be difficult to manage your debt.

  5. Divorce can be a costly and time-consuming process. Not only can you lose half of your possessions and your net worth, you might be paying your ex-spouse for years to come. You’re also likely to be stuck with a big attorney bill. If you’re considering a divorce, it’s important to consult with an experienced family law attorney to learn more about the process and what to expect.

With determination and effort we can get out of debt; only use credit as a tool, and never as a crutch. Unemployment is a difficult reality for many people. Consumer debt can quickly become a necessity for survival when someone loses their job. Research and act on alternate streams of income. Most families lack an emergency fund, which means they have to rely on credit cards. It's important to try to avoid falling into the habit of just doing enough work to not get fired. Instead, put in the time and effort to become an indispensable member of your company. If you believe your job is in jeopardy, start looking for a new position! Being proactive is key. Lastly, start your emergency fund today. If you already have one, great!

Before making a significant purchase, always ask yourself if it's something you need or truly want. Sometimes we can be self-indulgent and lack discipline when it comes to spending money. This can lead to problematic financial situations, such as high personal debt or unhealthy levels of obesity. If you take the time to earnestly consider your purchases, you can avoid these consequences. How many items have you purchased in a moment of weakness that you don’t ever use or take the time to enjoy? Put off significant purchases for a couple of weeks and see if thee level of enthusiasm for purchasing it remains. Remind yourself that $100 invested at 10% is almost $750 in 20 years. That $500 watch or purse is really costing you $3,750 when viewed this way. Over 40 years the cost is almost $5,500 per $100. That $500 item is then $27,300!
Not having a budget or financial goals is a recipe for disaster. Good things rarely happen without a plan, and your finances are no different. It’s important to have a spending plan and financial goals to keep yourself on track.
• Create a budget that supports your financial goals. Develop habits that support your budget.
• Regularly review your progress toward your goals and your adherence to your spending plan. When it comes time to make major financial decisions, like purchasing an expensive item, ask yourself if this purchase supports your financial goals.

By having a budget and financial goals, you increase your chances of financial success. So start planning today!
As previously discussed, excessive or unwise use of credit can easily lead to debt and long-term financial pain. While this may provide a temporary fix, the long-term pain of excessive debt ultimately replaces that temporary boost. If you find yourself using credit to improve your mood on a regular basis, it's time to find healthier coping mechanisms.
Before getting married, it is important to consider if your situation warrants a pre-nuptial agreement. Divorce can be messy and costly, so be sure to seek out professional counseling if conflict begins in your marriage.

Avoiding debt in the first place is much easier than getting out of debt. You can avoid debt by being mindful of your spending, creating a budget, and sticking to your budget. If you’re already in debt, you can get out of debt by creating a plan and sticking to that plan. Order your action coaching planner now and get started!

bottom of page