The Many Causes for Debt

Money is essential for our livelihood. This is why people crave it, working hard to achieve as much as it they can. Unfortunately, many abuse money and this causes them to fall into debt. Most of the time, the debt is so severe that it takes years to recover from, and sadly, this is very common in our day and age.  It’s easier than ever to fall into this trap. However, you can avoid these many circumstances by being knowledgeable about them. Below is a detailed description of each of these.

Credit Cards

This is the main cause of debt for many people. Unfortunately, the general public misuses credit cards, not knowing its devilish nature.  If you own one, you may use it freely, getting a monthly bill. With each bill, if you don’t pay the full amount due, you will be charged interest that will incur to your next bill. So, if you don’t pay the complete amount off each month, interest will keep adding.

This will cause you to spend a lot of money settling it compared to the amounts you used the card on. If you have many cards and practice this on each, you’re in serious debt. So, you must use a credit card only for how much you can pay off in full at the end of each month. With this, you’ll have no arrears, and will be able to indulge in the many discounts that credit cards offer

Bank Loans

If you have a stable job, loans are easily accessible which draws many to it. Who wouldn’t be tempted by immediate access to a magnitude of cash? Taking a loan out could be wise if the one taken out is flexible. Unfortunately, some banks offer loans that are alright, but the monthly interest is monumental, causing you to spend more on paying it off. Due to the high monthly interest, you’ll be paying off a loan that is triple the original amount you took out.

Many go this route for the purchasing of houses and vehicles. If you’re not careful, you may end up trapped by the interest. Unfortunately, home loans are notorious for having high interest rates.

Similar to credit cards, with each month you miss a payment, the interest will accumulate, trapping you in debt.

Life Savings

If you have no life savings, you need to speak to financial planning firms.  It may seem hard to save, but a little over a long time can greatly help you. Life is spontaneous, resulting in instances where the money is immediately needed such as an unwanted medical expense. If you don’t have anything saved up, you’re doomed.

Many that find themselves in this type of scenario take out bank loans or max their credit cards. As you can imagine, it would be very hard for them to pay it back as they could not even save for themselves.

Gambling

Gambling has become a bane for society. Many are driven to its excitement, spending copious amounts of cash a game. The unfortunate truth is that gambling is set to the despair of the player. It is rigged so the player spends more money than they could win.

As you can imagine, many take gambling’s lure, hoping to win big and spend all their money. This is how you lose your savings and end up in heavy debt.

With that out of the way, you know the many culprits that cause debt.

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