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(continued
from previous page) Top 10 causes of debt
By
Steve Bucci
• Bankrate.com
5. Gambling. Call it
America's new entertainment or (considering the boom in tribal casinos)
the Indian's revenge. Either way there is a guaranteed exchange
of money from you to "the house." It can be addictive,
hard to stop and loans are freely available. Gambling establishments
may be the only place you can mortgage your house while intoxicated
and have it be legal. I'm sorry, I forgot -- this is entertainment!
6. Medical expenses.
Gaps in coverage, lapsed policies and increasingly costly alternatives
make this a popular category. Just about every doctor I know now
takes credit cards. If you think it's for convenience, think again.
The medical industry wants to get paid at the time service is rendered.
They know that if they don't, the chances of their getting paid
drops. This means more debt for you, less for them. To be fair,
they are not in the lending business, but this only masks a bigger
problem
7. Saving too little or not
at all. The simplest way to avoid unwanted debt is to prepare
for unexpected expenditures by saving three to six months of living
expenses. With a savings cushion in place, a job layoff, illness
or divorce will not cause immediate financial strain and increase
debt. You always hear, "Pay yourself first." Do it and
it will grow and be there when you need it. No one has ever regretted
having a savings cushion.
8. No money communication
skills. It is important to communicate with your spouse or
significant other and your children about finances. Keep the lines
of communication open and discuss financial goals and spending styles.
If you are married to a spender and you are a saver, you will want
to map out a strategy for you both to get what you want. Know what
credit accounts you each have and promise each other to be honest
about what each other spends. Many people find out that their spouses
have racked up thousands of dollars in credit card debt and they
had no idea that the accounts even existed. This often leads to
number 2 above.
9. Banking on a windfall.
Spending tomorrow's money today is very tempting. Especially
if you believe that tomorrow will come no matter what. A planned
job bonus may not be a sure thing. The inheritance that you believe
will come your way may not. The lesson is don't spend the money
until the check clears.
10. Financial illiteracy.
Many people don't understand how money works and grows, how to save
and invest for a rainy day, or even why they should balance their
checkbook. The schools don't teach it, your parents may not have
sat you down and explained it. It doesn't matter. You are responsible
for your life and your money anyway. Financial mistakes are increasingly
expensive and complicated to resolve. Get educated and get in control.
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