It is Ralph Waldo Emerson’s words, “A man in debt is so far a slave,” that ring so true decades later. In fact, over the past decade, more and more people have plunged deep into more financial debt than ever before.
While the reasons vary depending on everyone’s unique financial circumstances, some top causes of debt keep accumulating the financial burden until it seems impossible to stay afloat. Anyone who has spent a good percentage of their life in debt probably knows how overwhelming it can be. There is no easy way to deal with it.
The truth is that the journey to get out of spiraling debt can be both wearing and heartbreaking. And often, paying it off can take years or decades on end. But no matter what kind of debt you are under, it is imperative to remember that you are the one in control of your debt, rather than the other way around.
So, let’s head straight into the top causes of debt that are probably keeping you from finding your financial freedom!
1. You Are Not Ready to Make Sacrifices
The first cause of your growing burden of debt is quite obvious; your lack of ability to make sacrifices. Most people who find it impossible to come out of debt have usually backed themselves in a corner with high mortgages, overwhelming expenses and fixed costs, and high insurance premiums. The hard truth is that if you are in such a situation, you will never be able to pay off your debt.
In fact, if you are not ready to make sacrifices, you are going to have a very hard time tackling debt. Living in a world that tells us we can have whatever we want doesn’t make this any easier. So it is important to remember that instant gratification is just that; instant and temporary. The first step is to reduce, downsize, and cancel. Get rid of anything that goes beyond necessity and put all that money toward paying off your debt.
2. Your Medical Costs Are High
The second reason could be a cost that you have been constantly overlooking. More often than not, it could be medical costs and expenses. Especially if you have to go through a major medical procedure, it is highly unlikely that your insurance is able to cover it.
So people with chronic medical conditions can easily accumulate debt and find it impossible to get out of it. While it is not possible to cut down all these medical costs, you can shop around to find more affordable options. Make sure you don’t have to go to an expensive hospital unless your insurance has it covered.
3. You Have a Lack of Financial Prudence
Do you have a clear picture of where your money comes from and where it goes every month? If you are someone who finds themselves questioning where all of their money goes before the month ends, you are probably suffering from the lack of financial planning.
A good place to start is to find a smart solution to financial planning, like the Doctor Money app. Have a clear picture of your income, spending, expenses, and debt without the hassle of maintaining budgeting spreadsheets. Once you have complete knowledge of your financial situation, you will be able to make better-informed decisions.
4. You Do Not Have a Second Source of Income
Often people who are struggling to pay off debt have only one source of income that they are relying on. But when you are under a lot of debt, it means that you are paying far more than you are earning each month. With interest and fees, expenses keep surging until your financial situation gets out of control.
What you can do to get rid of your debt faster is to have some kind of side hustle. Not only will it help you to pay off your debt more easily, but it will also leave you some extra money. You can then use the extra amount into your budgeting to put more toward paying off your debt.
5. You Haven’t Ditched your Credit Cards
When it comes to dealing with big debts, you’d be doing yourself some disservice if you haven’t cut up on your credit cards. Keeping credit cards for the rainy day means you are going to get back into debt again. And probably even more than before.
The only way to close this door is to cut them up, close the accounts, and bid them farewell for good. Remember that an emergency fund should be your safety net rather than credit cards that come with the baggage of high-interest rates. So good riddance to bad rubbish.
By far, the worst thing about debt is that it robs you of your present and undermines your future. It is a cycle that makes it impossible for you to build up sustainable wealth. And while it chases away your financial dreams, you are unable to notice because of how caught up you are in this mess.
The only way to get out of the vicious cycle of debt is to identify what is keeping you in debt. Know that there are so many like you who decide to stop being in debt and are actually able to turn around their lives. The journey is going to be long and difficult, but you can do this. And today is your turn to start!
If you need a smart solution to help you with financial planning, download the Doctor Money app today.