According to the Federal Reserve Bank of New York, the country has hit a new record in 2017, USD $13 trillion worth of household debt was noted. That is a mix bag of student loans, credit card bills, auto loan, mortgage, student loan and other forms of loan. For some being in debt is a struggle and a curse, others find it as the only solution to meet the means.
According to a study by the Pew Charitable Trusts, eight out of 10 Americans are caught in some form of debt. Around 69 percent of the study respondents stated that the debt they accumulated is the result of expanding their net worth or attaining a certain opportunity. Every individual has their own story of why they’ve entangled themselves with debt. Here are some reasons why people are liable to debt.
Poor Money Control
Lack of proper budgeting and inadequate financial literacy lead to mismanaged funds. Some people incur debt because of overspending and a lavish lifestyle. They choose to live way above their means,and their income was not able to follow. Basic knowledge about cash flow and sticking to budget can prevent debt. Keeping your self-control over sales, the holiday rush, and enticing lifestyles will make things better.
If you think you are lucky in the casino, but still borrow money, then you are on your way to the black hole of debt. Gambling, for some reason, is a beloved entertainment in many parts of the world. Las Vegas, Macau, and Singapore are a heavy hitters in the gambling world.It is easy to offer your land title, your car, or your expensive watch when on the height of tension while playing poker.
If you think living as a single person and keeping up with your own lifestyle is expensive, imagine keeping a nuclear family well-fed. Apart from keeping up with the expenses for oneself, a breadwinner needs to think about the needs of each family member from education and transportation, to other miscellaneous costs.
Buying diapers and milk for the baby may look expensive because it needs to be replenished consistently, but expenses only increase as a person grows. A child will start needing more clothes, expenses for schooling, and other involved needs.
Sadly, health is a business in our society, and increasing medical debt has been at an all time high. Hospitals are not made to care for you for free, but they do provide service based on how much you can pay. Medical costs are twice as expensive in the U.S. than any other country due to a number of reasons, meaning that many people will have to borrow money to pay medical bills. You are lucky if you have a procedure that your insurance policy covers. Most people consider a visit to the hospital a luxury. Most feel like they are better off taking Tylenol, than seeing that hospital bill.
Not all investments lead to good fruition. Some investments lead to no gain at all, and even worse, debt. Losing an investment can mean losing all the money of an individual. Most investments play like that… either you win some or lose all. So educate yourself on investing.
This is probably the most overlooked cause for debt, but lack of insurance can lead to a lot of financial turmoil. Our life is full of surprises and everyone has their fair share of bad and negative happenings in life. Insurance can prevent any stresses brought by a life event, and keep you ready for whatever the future holds.
Accidents and emergencies can happen anytime, and since they happen without any indication, most people are not equip to handle them. For example, you have a small grocery store, but no insurance cover it and then a fire happens.
You can only watch all your products turn to ash, unlike when you have coverage. When you have coverage, all you have to do is call your insurance provider, give them proof of what happened, and then you can be compensated for whatever is lost and help you start anew.