15 Possible Reasons Why You Are In Debt - Life's Little Pleasures and Struggles

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Over the last decade, more and more people have found themselves deep in debt. You might be one of them. While there are some obvious reasons for you and others to be in debt, there are also many other reasons that might have contributed to your current financial status which could have been avoided.

Being in debt is no fun. It’s highly stressful, and embarrassing, too. It also affects your relationship with your loved ones, and creates chaos in your family life. Learning and understanding why you have debt is the first step to controlling it and, ultimately, getting rid of it. If you don’t understand your reasons for having debt, then it would be very hard for you to stop engaging in these debt-inducing behaviors. So, the only way to get out of debt is to understand why you are in debt in the first place.

Reasons Why You Are in Debt:

1. You buy things you don’t need:

You spend your hard-earned money on stuff that you really don’t need or use. You are an impulse buyer and make many unplanned, last-minute purchases without planning or giving it much thought. Shopping is a kind of entertainment for you. And you are now paying for it with your financial freedom.

2. You want to impress others or keep up with the Joneses:

You might be in debt because you want to keep up a so-called good or polished appearance. You want to impress other people and be like them who you think have it all. You love to have nicer car, bigger house, latest gadgets, name-brand clothes, or shoes, or handbags, or wrist-watch. And you fail to differentiate between your wants and needs, and end up wasting tons of money on stuff that you really didn’t need in the first place. In the end, you find yourself in debt – not being able to pay your bills.

3. You are overspending:

This is one of the main reasons why you might be in debt. You are spending more money than you earn. Most people who are in debt have gotten into financial trouble because they have spent too much money. This is normally due to not setting up a sustainable budget or sticking to it. If you are spending more than you earn, then you first need to track your expenses and figure out how to cut or trim your expenses.

4. You use high-interest credit cards to buy things you can’t afford to buy in cash:

You charge credit cards to buy things instead of paying in cash. You think you have time to pay it off later, and you don’t consider the amount of extra money you have to pay in interest. Most credit card accounts today have interest rates in excess of twenty percent.

5. You don’t look for sales or discounts while shopping:

Maybe you don’t buy things on sale or on clearance, and pay full retail price for most of the things you purchase. If that’s what you are doing, you are wasting thousands of dollars each year – slowly dragging yourself into debt.

6. You have reduced income, or even worse – loss of income:

Nowadays, this reason is very common. With so many people losing their jobs, or having their salary cut, it’s very easy for them to accumulate debt just to survive. With a reduced income, you really need to come up with a realistic budget and stick with it until situation gets better. You have to cut your coat according to your cloth, as the proverb goes!

7. You don’t have a budget:

You might be in debt just because you don’t have a proper budget. Yes, having a budget is that important. Without a budget, even if you have a very good monthly income, instead of saving money, you will most likely overspend and end up being in debt. Because saving money has very little to do with the amount of money you earn. It needs you to develop some healthy financial habits. Creating a budget is one of them.

When you have a realistic budget, you can track your expenses, live within your means, and don’t tend to overspend. You only buy things you can afford, and won’t add more to your debt.

8. You live in a way bigger house than you need or can afford:

Housing cost is your single largest expense in your monthly budget. When you buy or rent a house that’s bigger than you need or can afford, you end up wasting lots of money on larger monthly payments, higher maintenance costs, higher utility bills and property tax, and lots of random, unnecessary ‘stuff’ to fill up the extra empty space. That can easily put you in financial trouble.

9. Having big medical bills or expenses :

This one is true for many people. Major medical problems drain your bank accounts, increase your health insurance rates, and generally guarantee that you will have long-term financial problems. Also, if someone has to go through a major medical procedure, there is a good chance that their insurance will not cover everything.

And then, there are people who are not insured at all. Due to lack of health insurance, they could easily accumulate tens of thousands of dollars of debt. If you are not taking good care of your health, you are jeopardizing your financial health as well.

10. You don’t have an emergency fund:

You might be in debt because you don’t have an emergency fund or savings. An emergency fund works as a safety cushion. Without having one in place, things can get very stressful and difficult when some kind of emergency happens. Life happens, and when that happens, even the smallest unexpected expense can lead you to debt.

Related post: An Emergency Fund and Your Peace of Mind

11. You are married to a spendthrift:

You will never get out of debt or be financially stable if you are married to someone who is not good with money. If your spouse is not financially responsible, and spends more than you make, you are in big trouble.

Maybe one of you is fully on board with living a debt-free life and the other is not quite convinced that debt is all that bad. But this is not a place to be divided. If you really want to get out of debt, you and your spouse have to be on the same page.

12. You have bad, money-sucking habits:

Maybe you gamble, or drink, or smoke. These are all unhealthy, harmful, money-sucking habits that can suck your money and life – both. You will end up wasting lots of money on these habits that can eventually lead you to debt.

13. You don’t enjoy life’s little pleasures:

Maybe you are someone who spends a fortune on second-rate entertainment. When your money is tight, you need to look for free or low-cost entertainment. Life’s best things are free. Take time to notice and enjoy all the simple pleasures around you.

Take advantage of your local public library. They have plenty of books and movies you can check out — for free. Spend more time in nature. Have fun with your family and friends doing things that won’t cost money.

14. You have a lack of financial knowledge and understanding:

One of the serious causes of personal debt is lack of financial knowledge. Understanding your finances is important, and responsible money management needs you to educate yourself about how to budget, save, and build wealth.

Many people simply don’t have the financial education that is needed to make sound financial decisions. These people don’t think that learning about money management or personal finance is just as important as any other subjects. So, they end up making many big mistakes while handling their money, and eventually find themselves in debt. You could be one of them.

These books have been very helpful to me as well as millions of other people worldwide in shaping their financial future. I highly recommend checking them out below.

15. You have kids:

Yes, you might be in debt because you have kids. Raising kids is very expensive, and if you are not already responsible about your money, you could easily accumulate large amount of debt once you become a parent. It’s particularly harder if you are a single parent or living on one income so one of you can become a full-time stay-at-home parent to take care of your kids.

You may like: The Unspeakable Cost of Parenthood

Final Thoughts:

Most financial debts can be avoided and eliminated. It just needs you to be responsible and intentional with your money. Reassess your values and priorities, develop some good money habits, focus on your goals, create a sustainable budget, and live within your means. Believe me, you can live a comfortable life by managing your money wisely.

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