Not everyone who ends up in debt is a gambler or someone with no financial know-how.
Debt is a very common problem and can easily creep up on people from all walks of life.
The key to avoiding debt is to understand how people get into debt in the first place so that you can actively avoid it.
Here are some of the most common causes of debt and how you can stop yourself from falling into the same trap.
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How people end up in too much debt
There are hundreds of ways that people can end up in too much debt, from experiencing redundancy and failing to make their mortgage repayments, to taking out one too many credit cards and not keeping up with their payment dates.
It’s also important to remember that not all debt is necessarily bad, and really the only time that debt becomes a problem is when it gets too much for you to afford.
Here are some of the most common ways that people end up in too much debt:
They fall into a cycle of debt
There’s nothing wrong with taking out a credit card to pay for your dream holiday, but taking out another credit card to pay for the initial card starts to become a bit of a problem.
Debt is often referred to as a cycle because people tend to turn to other forms of debt to help them out of their initial debt problem, only worsening their financial situation and causing them to try and borrow even more money as a solution.
If you ever find yourself struggling to make a repayment, then speak with your creditors or talk to a credit counsellor rather than taking out more debt and making the problem worse.
They don’t know how to budget
Everyone, regardless of their income, expenses and debt, should know how to make a basic budget.
Budgeting is essential for ensuring that you can afford your outgoings and can stay on top of your debt repayments and without one, you risk overspending or allowing your debt to get out of control.
If you don’t have one already, then sit down and create yourself a basic budget by working out your total income and your total outgoings and making sure that you can afford them.
They ignore their debts
There are a lot of emotions attached to debt and as such people tend to try and bury their heads in the sand rather than facing up to the money that they owe.
Ignoring a debt problem will never make it go away, and instead, you only risk making it worse and angering your creditors.
If you have a debt, then it is your responsibility to stay on top of the amount that you owe and your repayments.
If you find that you are no longer able to do this, then you need to reach out for help as soon as possible so that a debt specialist can speak with your creditors directly and can negotiate a repayment plan on your behalf.
Reaching out for help with debt
People that are in debt tend to try and hide their financial situation from themselves, their partners and their families, when really what they need to do is to admit that they are in trouble and to reach out for help.
There are a number of debt-relief services out there whose sole purpose is to help people get out of debt.
Here at Bankruptcy Canada, we specialize in helping people in debt to get the help they need by matching them with a Local Licensed Trustee who can introduce them to the debt relief services that are on offer.
If you’re in debt and think you need help, then give us a call on (877) 879-4770 or fill out our contact form and let us set you on a path to a new debt-free life.
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