How To Escape Debt in 2018
In today’s day and age, people want everything at once ‘All I Want Is More’ seems to be the philosophy of life for most people.
A great house, a good car, need to take annual vacations has fuelled the growth of money-lending companies which in turn has led to more and more people being burdened with debt.
People generally opt for loans when buying a house, buying a car or for education. Then there are credit card debts (for shopping, for dining out, for recreation and entertainment), medical expenses, tax payments etc. Moreover, sometimes poor money management can also lead to debt. There are myriads of factors that force people into debt and although there are several debt elimination programs in place to help people, it is imperative that people are made aware of the causes that lead to debts and do not get consumed by debt.
Let’s take a look at some common reasons people get into debt:
1. Mortgage Loan
Many people opt for a lofty mortgage loan to fulfill their dream of owning a big house in the best of localities. While owning a home is certainly a necessity, taking loan beyond your means can cause a lot of stress. If not handled properly, the repayment of loan can put your financial equation under stress.
2. Car Loan
Owning a car allows you the convenience of going to and fro without depending on public transportation. However, many people do not have the money to buy a car and so have to opt for car loans. Additionally, the desire to own a super-luxury vehicle that costs a bomb can also push people to go for loans even when they do not have the means to repay it
3. Credit Card Debt
Credit Card use has made the financial transaction easier. However, the use of a credit card can also lead to overspending and the one major cause of debt is overspending. You can go on accruing credit card debt and would not even know how much debt you have acquired until the credit card companies come calling. Credit and holders mostly spend on shopping, dining out, or on entertainment. If this stays on budget and is done in-frequently then it might not lead to overspending. But if you have a fascination for high-value branded clothes, exclusive fine dining restaurants or love to splurge on luxurious vacations abroad, then it can lead to serious financial issues over time.
4. Medical Expenses
In countries like the USA where healthcare is expensive, having health insurance is a must. If you have serious health issues, fall ill, go to a hospital but don’t have health insurance, you will probably end up with thousands of dollars in medical bills. Moreover, it may happen that some of your illnesses may not be covered by your insurance. This could easily lead to an accumulation of thousands of dollars in debt.
5. Poor Money Management
A lack of sound financial knowledge, improper saving, and failure to stay within budget all form the crux of poor money management.
Many people lack financial knowledge or experience necessary to make correct financial investments. These people may invest in things which do not give them good returns or may end up taking high-interest loans because they do not shop around or have no knowledge of the alternatives available. Such people may face long-term financial consequences.
Having proper saving methods is important as such money can come handy in your rainy days. However, any people do not believe in saving and spend like there is no tomorrow. Decent savings will always help you in the long run.
To be financially successful, you need to have a strict budget in place. If expenditures are more than your income then know that you are going to get in trouble sooner or later. Hence it is important to stay within your budget limits and not to go on a spending spree.
Your financial situation is in your hands. Do not let anybody else take control of that by falling prey to overwhelming debts.