How to Find the Root of your Debt Problems
Getting out of debt is tough, and this is especially true if you don’t understand how you got there in the first place. A lot of people who end up in serious debt trouble don’t know how they got there. Unfortunately, if you try to solve your debt troubles without identifying and understanding these issues, the process is a lot more difficult.
Here are some potential causes of debt issues that may apply to you.
You Don’t Have a Budget
A major reason that people end up in money troubles is that they don’t have a budget, or they do have a budget and they don’t stick to it, or they have a budget that doesn’t make sense for them. If you’re having money issues, sit down and look at your budget. If you don’t have one, that’s likely the problem. If you do have one, review it and see if it’s realistic and if it makes sense for your current financial situation.
Your Income Isn’t Enough
For some people, no matter how much you reduce your expenses and follow your budget, you still can’t make ends meet. In this situation, your problem could be that you don’t earn enough. This can be a difficult problem to solve. However, you might want to consider working overtime or taking up a “side hustle” to increase your income.
Another option is to consider moving to a more affordable location, as housing is a major expense for most people.
You Don’t Have Any Emergency Savings
If you don’t have any money saved for emergencies, an unexpected expense can cause you to go into debt. You can’t possibly plan for everything. Your car could break down or you could lose your job and, if this happens, you’ll need savings to help you out.
If you don’t have a decent emergency savings fund right now (at least three-to-six months of expenses), then come up with a plan to save money each month until you do.
You Try to “Keep Up”
A lot of people overspend because they’re trying to keep up with what they see on TV, social media, or from their friends and relatives. Don’t let this happen to you. Before you spend, look at your budget and your financial situation. Can you fit the purchase into your budget? If you can’t, don’t buy it. You don’t know anyone else’s financial situation, so don’t try to keep up with them.
It’s also a good idea to give yourself some “breathing room” before you make a major purchase. Before you buy anything impulsively, give yourself at least a few days to consider the purchase. Take this time to consider whether you really need/want what you’re considering and if it makes sense for you financially.
You Don’t Keep Track of What You Spend
A lot of people who struggle with debt end up where they are because they don’t track what they’re spending. They make purchases without thinking and, when the bill comes, they have no idea where their money actually went. It’s incredibly hard to budget and save money if you’re not being mindful of your spending.
Education and Medical Expenses
Education and medical expenses can get very large. If you end up owing a lot of money to pay for school or medical bills, that can make it very difficult to make ends meet. If you’re in this situation, you may want to speak with your creditors and/or a financial professional for assistance.
There is Help Available
Your debt may be a result of some of these circumstances, but it could also be due to something completely different. Your financial situation is unique to you. To figure out the root of your debt problems, take a close look at your finances. How much do you make in a month (on average)? How much do you spend? Where do you spend this money? How much debt do you have? Who do you owe this debt to? Answering these questions can help you get a better idea of why you are dealing with significant debt.
If you can’t determine the root of your problems, or if you are dealing with so much debt that you can’t come up with a budget that allows you to afford to repay it while still meeting your other financial commitments, it could be a good idea to speak with a Licensed Insolvency Trustee. There are options out there and living a debt-free life is possible.