Why is it so easy to get into debt?
Ron is a single father of three and has been working hard to maintain a normal family life since the passing of his wife two years ago. He has had to adjust to a single-income household, while raising their children.
He is not fond of accumulating debt but unexpected life changes have created a challenging situation for him. He starts to rely in personal loans as well as his credit card to get him through financially tough months.
People handle financial situations differently, which is why it can be so easy to get into debt for some people, compared to others.
Ron’s situation could have been alleviated by a healthy savings culture in his home. Without any savings, it becomes much easier to become dependent on credit.
There are numerous ways that make it easy to get into debt:
A debt spiral may occur when you avoid taking calls from your creditors. It’s always advisable to be upfront and completely transparent if you are facing financial challenges.
If you spend money because you think that you need to have the same things as those around you. Comparing yourself to your peers or competing with your neighbours when you don’t have the same financial standing is likely to have negative consequences.
You need to know how much money is coming in and what you are spending. If you are spending recklessly without a set budget every month, this could lead to you getting into debt.
Reduced income can lead to accumulation of debt. This is another reason why it is so easy to get into debt.
To avoid falling into debt traps, simply take the necessary steps to ensure that you have sufficient savings and that you develop financial discipline.