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Reasons Why Debts Accumulate
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Reasons Why Debts Accumulate

Unstable economic environment, rising cost of living, rising fuel costs. These are just some of the many reasons why Americans make it difficult to stretch their incomes and why accumulated debts get out of control. However, certain situations takes things from bad to worse, making it hard to repay all the accumulated financial obligations. In order to help you avoid this situation, we have listed down some debt causes you need to watch out for.

Income Loss

Recession resulted in unstable employment. Literally, one can have a stable job with a steady income today and tomorrow, he or she could lose that job, causing a domino effect that will drown one in debt. The same goes for people who are juggling two jobs, the loss of a second source of income could also cause major debts. Unfortunately, there is no definite solution to this kind of problem. However, it can be avoided by being vigilant when it comes to your own debt and your own job. At this kind of economy, no one can afford to sit back and relax.

Irresponsible Spending

People tend to be lax when it comes to spending their money a decade ago. They throw their cash on everything they want and then recession happened and boom, they start complaining about all the credit card debt they accumulated. Worse, it's hard to adjust if you are already used to a certain lifestyle. However, if you got creditors knocking on your door, it's time to rethink about how you handle your finances. Start controlling your expenditures and reserve your cash to essential items otherwise, you might get into legal trouble with your creditor for unpaid debts.

Miscalculations

Miscalculating your debts also plays a major role in most financial problems. In most cases, people ignore little expenses because they think these expenses will not affect their income. However, these small expenses are usually the cause of massive credit card debts so it's best to keep a record of all your expenditures no matter how small they may be.

Medical Bills

In some cases, major medical bills cause credit card debts, especially if afflicted with a condition that is hard to treat or require regular check-ups. A large chunk of people fall into debt because they are under some kind of treatment or their loved one fell ill. Unfortunately, there is no working around this problem unless you have saved money to cover for this kind of emergency.


Street Talk

Thanks! Vivienne, it is indeed tough to prepare for recession. Medical bills pile up quickly. The old advice of 3 to 12 months living expenses in the bank does not help enough in unstable times with medical bills. blessings, Cynthia

Reply
  about 1 decade ago
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