How Do People Fall into Debt?

Debt in society is an overwhelming stress factor for many individuals and families. I know that I am one of those individuals and have been for years now. I made a lot of stupid mistakes when I was younger and now that I have a family, it unfortunately is effecting me still today. So how do people fall into debt? There are several contributors like job loss, family, illnesses, poor judgment and management. I will go over effects and consequences, solutions, and prevention people go through and what steps to take to avoid and take control of your debt.

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Effects and consequences of being in debt can be a long term and severe issue for an individual or family. This can cause an individual to become very depressed and pick up on drinking or may possibly start using drugs because they feel they have no other way to cope with it. You find yourself living paycheck to paycheck because your weekly budget no longer exists and your credit is maxed where no other funds become available. As things get tighter, the ability to keep paying decreases and more debt increases. It could become so severe that it may affect your personal relationships with family, friends and significant other where your family no longer wants to associate with you. This could be because you are always begging for money or your problems are too much for your family to handle. Your significant other may not be able to handle the issue either because it is just as a heavy burden on him or her as it is on yourself.

Effects and consequences of not being able to pay your debt is you start losing things. Your house can be foreclosed on, cars repossessed and extracurricular things like boats and recreational vehicles can be taken away. You can get your wages garnished if you have defaulted on certain loans, or even go into tax collection for not paying your property taxes. When and if you can start getting out of the red and into the black, your credit score could be highly effected and will prevent you from getting any new credit loans. Certain employers run credit checks and if you do not clear their standards, you can lose your job or it can affect any future employment.

Solutions can be created to help you get back on your feet and become debt free. It certainly is not an overnight fix and will take some time possibly. One suggestion is to attend a consumer credit counseling class. This is where a counselor can sit down with you and review all of your debt. They will help you set up a budget and work on decreasing your debt over time. They also suggest seminars and workshops that can better educate you on managing your money and debt. You can find a local counselor through the yellow pages or online. Another approach is bankruptcy which is more severe but necessary to clearing your plate and getting a new start. It takes a total of 7 to 10 years to fully have this removed off your credit but if you are willing to wait and can mentally handle what this entails, you should consider this option. Any local attorney with specialty in bankruptcy can review your debt and help finalize.

If you have retirement accounts, savings accounts, bonds, life insurance you can close these out and apply the money to your debt. If you have family that is willing to help, you may be able to obtain a small loan from them and pay them back after the debt is gone if they can wait that long. Obtaining more loans through an actually financial institution is not a solution I find to be a smart one. This will cause more debt and more issues down the road. If you have to, sell off items that are paid off in full to help. It is something no one wants to do but sometimes you have to give a little to get a little.

Once you have eliminate some of your debt by the suggestions above and preventing yourself from falling back into debt, is to start a savings account and put so much in it a week. Over time this will add up that you have a significant amount set aside in case there is a job loss, family, illnesses, poor judgment and management. Instead of buying the most expensive items, look for bargains or off brands. Biggest suggestion is set a monthly budget so you have a clear outlook of what will be spent and what is left over.

I certainly can say when I was younger my greediness of getting things I wanted and not thinking of the outcome overtook my clear decision making. At an early age you don’t really think of what it will do to you in the future and to your family. I have done credit counseling and I can say it has been an effective and positive experience for me. In order to stay out of debt you really have to want to try and stick to it. It will require a lot of willpower and change in your spending habits. I am still today trying to get myself out of this hole I dug myself into and I take it one day at a time.

It is a known fact that our society is in debt from all the news we hear every day on television, radio or read in the newspapers. There are some people that will try, won’t try and some that just can’t do it. Everyone needs to think about the future of your children and what you want to leave them when you are gone. Considering the consequences and ask yourself is it worth the long term repayment? Do I really need to take that much? Can I buy that somewhere else at a better price? Taking the time and researching things you are potentially buying will help you in the long run. If you or a family member are subject to a job loss, family issues, illnesses, poor judgment and management; contact your debtors and explain the situation. Find out your options instead of ignoring the issue. A lot of companies have deferment payments for 6 months or so. There is help out there it’s just a matter how people want to stay out of debt or fall into it.

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