The Most Common Reasons Why People Go into Debt


Nobody chooses to get into debt, but it is something that often occurs regardless of your best intentions. By knowing about some of the most common reasons why this happens, you can get into a better position to prevent it. Of course, there is a myriad of factors that can cause debt, but in the following blog post, we will take a general overview that might help to prevent you from slipping into debt yourself.

Reduced Income

Probably the most common and obvious reason why people get into debt is that they experience a reduction in their regular income. This occurs when your day to day expenses overtake your cost of living. Sometimes, this happens over a gradual period as your finances are slowly worn away, whereas other times it occurs very suddenly. Either way, it can have a significant impact on your life. One of the best ways of mitigating against this is by building up a savings buffer that ensures you have a certain number of days’ living costs already taken care of. Creating a budget can help to ensure that you are not spending more than you are earning. Another strategy is to diversify your income stream and ensure that everything is not relying on your regular full-time salary.

Legal Challenges

No matter what sort of legal challenge you find yourself getting into, it can end up getting extremely expensive if you are not careful. So, you may find that you need to seek out debt lawsuit help at the earliest possible opportunity. Another of the most common legal factors that can impact your financial situation is divorce. A possible way that you can mitigate against any future legal battles is by entering into a pre-nuptial agreement. More legal challenges that can occur often come from running a business, so it is worth being especially careful that everything is above board when you set it up. Getting legal advice early can help to prevent it from becoming necessary further down the line.

Bad Money Management

As you would expect, a highly common reason for people getting into debt is that they do not manage their money well enough. One of the cornerstones of not getting into financial difficulty is creating a household budget. Split everything up into essentials and non-essentials. In the latter column, you have all the little extras in life, such as your daily coffees. By making them at home instead, you can end up saving yourself a bundle. You also have the opportunity to reduce the essentials column as well. For example, you can check out your household bills to see if any companies are offering the same services at a reduced rate. The simple act of writing down your expenses is a great starting point, and it may surprise you to see exactly where your money is disappearing to every month.


While some people can gamble quite responsibly, for others, it becomes a habit that gets out of control very easily. If you are in the latter group of people, you may need to enlist professional support to get through it. The problem that many gamblers have is that they don’t talk about their addiction to anyone, so simply speaking to someone about it can end up making all the difference. A major problem with gambling is the mindset that tells people that they can solve all their problems with a single big win. Ultimately, this is something that people can struggle with for life, and there are not necessarily any quick fixes.

Medical Expenses

Another common issue that can catapult people into debt without much warning is sudden medical expenses. Of course, good insurance is the best way of protecting against this issue, but this is not necessarily within reach of everyone. Again, having a savings buffer built up can prove to be useful, as well as providing you with some much-needed peace of mind. If your current employer does not provide you with sufficient medical insurance, it may be worth looking at what other options are out there in terms of jobs.

Too Much Reliance on Credit

While credit can be a useful tool, if you rely too heavily on it, the interest payments can end up racking up significantly, leading you not to be able to manage them properly. Of course, many people take on debts such as mortgages, but it is those that carry high-interest rates that can prove the be the biggest problem. So, make sure that you are not juggling all your bills on different credit cards. Spend within your means. The availability of quick and easy credit has made the art of saving disappear, but it is worth bringing back. Whenever you are thinking about taking out credit of any kind, you should ask yourself a few key questions about whether or not you are going to be able to make the monthly repayments, how long you will be in debt for, and whether you can afford to take it on in the first place.

Increased Expenses

At the other end of the reduced income scale, we have increased expenses, which can come about for many different reasons. Perhaps you have welcomed a new child into your life, or you have moved to a bigger home. It is often the case that people tend to spend more money when they enjoy a pay rise. By keeping at a similar lifestyle level, this can help, this can automatically allow you to save some cash. Essentially, if you are spending more than you earn, the time has come to make some cutbacks. Your only other alternative is figuring out how to make more money, which may or may not prove to be a viable option.


Inflation can be a major problem because it sneaks up on you, whereas many of the others are more clear-cut. If you do not receive a raise in your salary and your other bills go up due to inflation, this can mean a slow and steady descent into debt. This is one of the main reasons why it is worth doing a regular assessment of your household bills to ensure that you are not spending more than you are making. Also, it would help if you approached your boss for one that at least matches the increase in the cost of living.

Lack of Financial Knowledge

Unfortunately, a lot of people are not particularly clued up about financial information that can prove to be invaluable in their lives. A big part of this is simply knowing where to turn. There is plenty of information available online via trusted websites. Of course, you have all the books, podcasts, web tutorials etc. out there as well. So, making a habit of learning more and more about finances can go a long way towards ensuring that you have the requisite knowledge to carry you through life.

Poor Investments

Another big cause of debt is that people simply make bad investments in life. There are all sorts of areas in which you can channel your money. However, if you do not know what you are doing, this can prove to be a major problem. For example, you may decide that you want to get involved in the stock market. While this is not necessarily a bad idea on its own, you need to know about the market that you are getting involved in. Otherwise, there is every chance that you will end up making a bad investment. Investing with ‘play money’ can help out significantly as it means that you have the chance to practice before you get into real investing. A lot of people also get into difficulty when they launch a business. There is always going to be an element of risk when you get involved in a venture such as this one, so you need to be prepared to absorb this.

Keeping Up with the Joneses

While many of us like to think of ourselves as highly independent creatures, the truth is that those around us greatly influence us. So, you may find yourself being tempted into buying a new car or the latest gadgets because your friends and family are doing it. However, before you make any major purchasing decisions, you should always take a step back to question whether or not it is going to provide genuine value to your life or if you are buying it to impress someone else. The latter reason is not a good one. Whenever you are buying anything, it is always worth taking time out to make sure that it is right.

Impulse Buying

A lot of people have trouble with impulse buying, and there is no doubt that we live in a world that very much encourages you to buy without thinking. We are constantly bombarded by advertising and clever marketing messages that are designed to part us with our hard-earned cash. Again, the strategy of waiting before clicking the buy button is a certainly worthwhile one. A great deal of the time, you are likely to find that you did not need the thing as much as you initially thought. If you are a habitual impulse buyer, go out with a shopping list and stick to it. If you see anything that you are tempted by, you can always go back at a later date to buy it – once you have concluded that you need it in your life!

Identity Theft

The final reason for getting into debt that we are going to discuss is identity theft. While most people think that this is never going to happen to them, it is always better to be safe than sorry. So, make sure that you are safe online, change your passwords regularly, and monitor your bank accounts for any signs of unusual activity. Keep an eye on the news for any leaks with major companies that you may have shopped with.

As you can see from the above article, there are plenty of disparate reasons why people find themselves getting into debt. However, being able to side-step these can go a long way towards ensuring that you stay in a strong financial situation and avoid bad debt. Of course, this doesn’t mean that you will necessarily go through your whole life without any debt at all, but being able to take on what you can afford is a worthwhile habit that you take on for life.


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