Personal Finance and Money Management

It seems like everyone has nice cars these days, large houses and a whole lot to show.  Although, have you ever thought to yourself maybe these people are in debt?  A lot of the people that look “flashy” find themselves head over heels in debt.  You may be surprised as to who really is in debt, and who doesn’t have one dollar in debt.  You may also be surprised as to how they got themselves in that situation.  That raises the question, how do people get into debt?

How do People Get Into Debt?:

Not saving – First of all, the people that find themselves in debt are the people that don’t have good saving habits.  It is said that if you save 10% of each paycheck you bring home, you should be fine throughout your life.  Ten percent really isn’t that much.  Although to some, it is.

Spending more – It’s simple, people spend more money than they make.  They bring home a $500 check each week, and spend $150 on groceries, some on clothes, gas money, and entertainment.  Now they find themselves spending $550 each week.  That $50 turns into debt immediately.

Credit cards – When people get themselves into debt, they tend to use a credit card often.  They don’t pay their bills off in full which tacks on interest, and they keep spending which leads to even more of a problem.  Soon their cards are maxed out.

Health insurance – Health costs are extremely expensive if you don’t have good coverage.  So, unfortunately it is easy to get into debt this way as well.  Office visits, yearly checkups, tests, etc really add up over time even if you do have insurance!

Jones’ – The debt builders are also those that want to keep up with the Jones’.  The neighbors have a new car, now theirs isn’t as nice.  The neighbor children just got a trampoline and now their children want one.  It’s never ending.  If you’re not careful with your spending you will be in debt easily this way.

House/car – The people that have an ordinary house and car are in much better of a situation than those that don’t.  A big house means more furniture to buy, more to heat it, and the more your mortgage payment will be each month, same goes with a car and insurance.

It is very easy to get ourselves into debt.  If we buy what we want, don’t save, and don’t plan for the worst it can very well happen to anyone.  Although, the tops reasons for getting into debt are listed above!  Don’t fall into these categories.