5 Biggest Causes For a Person’s Spiral Into Debt

Debts can result in disastrous consequences in the lives of individuals. Debt has the capacity of consuming assets, hurting relationships and causing mental instability. There are many reasons that people fall into debt. Although there are many effective programs that can help with eliminating debt like debt settlement, debt consolidation, etc. it is important to be informed about the causes of financial error to avoid a scenario such as this one. Some of these may feel familiar, while others may not be even close to what you are going through at the moment.

  • Reduced income: When your expenses exceed your income, you are likely to fall into debt. This is because you are likely to experience delays in paying your bills. With a lower income, you can be sure of getting into debt. Therefore, it is important to understand and control the change in income, to create a plan and budget that takes into account the plan as soon as possible.
  • Underemployment: In most cases, employees feel that underemployment will last for a short time. However, it can have lasting effects on your life. This is particularly the case if you have to take a loan to make ends meet. Therefore, if you are underemployed, you should consider calculating your expenses even as you consider looking for a second job. This will help you cushion your chances of falling into debt.
  • Credit card: A credit card, when poorly managed, can result in people getting into large debts. The cards usually generate a situation where people spend beyond their means. Therefore, to avoid accumulating debt through credit cards, experts strongly advise users to thoroughly understand the terms and conditions of the credit cards they are intending to apply for.
  • Poor money management: Many of the times, a poor budget invokes debt. Therefore, it is important to have a monthly budget. Without having in place the right budget, then you will not be in a position to track down your expenses. When you take the initiative to list down how your spending will be for the entire month, then you will be in a position to know exactly how the money ends up. This offers the best way for determining where you can cut down on some unnecessary expenses. This will play an important role in avoiding debt.
  • Divorce: This is not an economic factor but it may play a significant role in debt occurrence. Many marriages are ending up in divorce. The divorce comes with a strain on one of the spouse’s personal finances. In some divorce settlements one of the parties can demand a lot enough to force the other party to go into debt.


  1. S. B. says:

    Another common cause of debt is a major medical issue. In the United States, if one does not have health insurance and a major event occurs, you can rack up debt really quickly.

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