If you look at the number of people in America that are living with debt (hint: it’s a lot of people), then you’ll begin to see that it’s something that is easy to fall into. And once it’s there, it can be difficult to get rid of. As such, it’s much easier – pardon the obvious statement – to avoid going into debt altogether. While the advice we outline below won’t get rid of the debt you have, it may prevent you from going any further into debt in the future.
An Unexpected Expense
You could feel like you’ve got a grasp of your finances, but this grasp might not be as tight as you’d like. For example, if your hot water boiler broke tomorrow, would you have enough money to replace it? A surprising number of Americans would not. There are always going to be expenses that you didn’t anticipate in your life. To avoid them causing too much damage, start putting a small amount of money each week into an emergency fund. It can feel a little pointless, but you’ll be thankful that it’s there when you need it.
Loss of Job
There are very few self-reliant people in society. Nearly everyone relies on someone else to be financially healthy. In most cases, this person is their employer. If you had to stop working, then how bad would your finances be? Whether it’s because of job termination or injury, unemployment can have a drastic effect on even the most healthy of economic landscapes. But you don’t have to settle for less. If you’re unable to work due to an injury on the job, talk to a work injury attorney, and get the money that’s rightfully yours. If your post is simply terminated, then pause all spending (that you can) until you find new work.
A Lack of Knowledge
Most people get into debt for one simple reason: they spend more than they earn. And they do this because they’re not fully aware of how much they’re spending. Those morning coffees, takeout meals, and the like can quickly add up! For the next month, keep track of every penny that you spend. At the end of the month, tally it against how much you’ve earned during the same period. Do things not look so good? Then you’ll know you need to reduce your spending.
Sucked into Bad Habits
Life isn’t easy. We all fall into things that probably aren’t good for us. If you’ve got an expensive bad habit, such as spending too much money in the bar at the weekends, or gambling, or anything else, then you’ll be well served by taking steps to get rid of your vices. You’ll be free of an addiction, and your financial landscape will look much healthier!
What The Neighbors Have
By far the worst, most unnecessary cause of debt is trying to keep up with the neighbors! Don’t focus on what other people have. Do your own thing, and live within your own means. Simple!