Struggling with debt? With the average individual’s debt increasing due to personal loans, student loans, and credit card debt, it’s time to go deeper into their causes and discover debt relief services for financial peace and well-being.
Debt is a serious problem in the United States. According to statistics, the average individual debt is $96,371. It’s usually attributed to three common causes; personal loans, student loans, and credit card debt. The danger is that without immediate and careful financial management, debt piles up, which leads to financial stress, which affects physical health as well as mental health issues. Often, debt relief services are the only way out of escalating financial difficulty.
Common Causes of Financial Difficulty
People wind up in debt for many reasons, and then they tend to fall into a debt cycle, where they repeat patterns of poor financial management. However, it’s possible to narrow down the causes of financial challenges to nine primary problems.
1) Poor Planning
It’s easy to spend your paycheck without really thinking about it. For instance, you buy groceries that you need, and maybe a few treats. A week or so later, you buy groceries again and see a movie. A week later, you buy groceries again and go to a fancy restaurant.
In between, there have been regular expenses, school fees, mortgage/rent, car payments, insurance, etc.
You haven’t spent extravagantly, but you haven’t kept track of your spending either. You have no idea what your bank balance is until you start getting notices for non-payment. It’s a good idea to investigate at this point to help you alter your bad spending patterns or seek advice on the right debt resolution program.
2) No Emergency Fund
An emergency fund is essential to staying out of financial trouble. The fund covers unexpected expenses, like replacing a car battery, cruciate ligament surgery for your dog, or repairing your roof after storm damage.
Without a fund, expensive emergencies go on your credit card and rack up credit card debt, with escalating interest and monthly minimum payments.
3) Low Income
Consistently spending more than you earn is a chronic financial problem and a source of major financial stress. This isn’t about overspending on luxury items, but rather about a job that doesn’t pay enough to make it through the month.
A low monthly income is why many Americans work two or more jobs.
4) Financial Illiteracy
Financial literacy is the ability to understand the value of money, how financial systems work, and how to make good financial decisions to stretch your income and take advantage of investment opportunities. Not many people are financially literate, which is why they make bad decisions and increase their money troubles.
However, anyone can be taught financial literacy and make good decisions regarding spending habits and financial security.
5) Spousal Disagreements
It’s essential for spouses or partners to be on the same page financially. Couples where one person is frugal but the other is spendthrift can be brought to the brink of separation if they don’t discuss finances, financial planning, financial goals, and debt management.
It’s a partnership that requires both parties to commit to certain actions or refrain from certain activities. Compromise plays an important role as far as this matter is concerned, so that financial issues don’t develop.
6) Debt Accumulation
We mentioned personal, student, and credit card debt above as primary causes of debt. It’s challenging enough when you have just one type of debt to deal with – student loans are particularly common – but many people have two or all three types of debt on their shoulders.
Unfortunately, one often leads to another, and many people turn to payday loans to settle debt, but this just digs the hole deeper as the advance runs out, income is depleted, and they are faced with sky-high interest.
Ideally, you should use debt settlement programs as soon as you start to feel overwhelmed – before you even consider payday loans. However, it’s never too late to take advantage of debt relief services to improve your financial health.
7) No Budget
Budgeting ties in with financial planning. A monthly budget takes a financial plan and gives it structure. Without a budget, many financial plans blow away with the wind.
Of course, a budget is useless if you don’t stick to it, so you need to practice self-discipline and curb impulse spending.
8) Delaying Savings
Putting money aside every month is difficult for people whose priorities are putting food on the table and clothing for their children. Any money that can be spared at the end of the month goes into savings.
Ideally, you should put something into your savings account at the beginning of the month. This makes it easier to stick to a set amount. Your budget should make provision for savings. A financial advisor can help you work out a realistic spending budget. A safe amount is 30% of your income, but even 10% can make a big difference to an emergency or goal-driven fund.
9) No Goals
It’s easier to save money when you have a goal, be it a short or long-term one. It could be a family goal, like going on a mountain hiking holiday, or it could be a personal goal, like going to night classes at a community college. It could be practical, like paying off the remainder of your mortgage, or indulgent, like a weekend at a five-star spa.
Saving without a goal can begin to feel pointless, and you can convince yourself that maybe you have enough money in your account. You pause payments and spend the ‘free’ money on anything you like. Before you know it, you’re under financial pressure and flirting with debt again.
Alleviate Debt With Specialist Debt Relief Service Providers
Debt is a serious financial problem that negatively impacts your life for many years. You don’t want to choose an unqualified, fly-by-night company that ultimately worsens your financial situation. Alleviate Financial Solutions specializes in debt settlement programs.
Our experienced staff will guide you through the debt relief process in a stress-free way. After all, when you’re in debt, help should accommodate your needs and not become another source of stress.
Contact us at (800) 308-2935 for a free consultation. Alternatively, complete the contact form, and we’ll get back to you.