Top 10 causes
Hundreds of readers have written to me asking for
advice on dealing with debt and how to avoid debt in the future.
Between Bankrate readers and my clients at Consumer Credit Counseling
Service of Southern New England, I have a unique source of data.
Yes, it is unscientific, but it is reality as experienced by a growing
number of Americans.
So here goes: Your top 10 causes of debt!
1. Reduced income/same expenses.
Too often we delay bringing expenses in line with a reduction in
income for a host of good reasons and let debt fill the gap. The
sooner you adjust to your new reality, whether it be temporary or
permanent, the better off you'll be.
2. Divorce. More than
half of us do it, some more than once. I can think of few things
more expensive and likely to put you in debt. For those of you who
have never done it and would like to get some idea of the impact,
sell all your assets and get the money in $50 bills. Go to a hotel
on a busy street, and you and your spouse open two windows and see
who can throw the most money out the fastest. It can be breathtaking.
3. Poor money management.
A monthly spending plan is essential. Without one you have no idea
where your money is going. You may be spending hundreds of dollars
unnecessarily each month and end up having to charge purchases on
which you should have spent that money. Planning is no more difficult
than writing down your expenses and income and reconciling the two.
You will be surprised at how powerful you'll feel when you are making
thoughtful decisions about where and when to spend your money.
4. Underemployment. A
close cousin to No. 1, people who experience under employment may
continue to think of it as only temporary or if they are coming
off unemployment feel a false sense of relief. Yes, you deserve
a break, but this is not the time. Get those expenses in line with
your current income. Down the road if you increase your income due
to more hours, a second job, or a better job, then is the time to
start adding in some of the previous spending before you became
(continued on next page)