7 most common causes of debt

7 most common causes of debt

We normally consider that we are in debt only when we are unable to pay our commitments. It is not so. In fact, every time we consume something and do not pay at that very moment, we are taking on a debt. The problem is when we are unable to pay these debts.

It is common to leave many things for future payment. Hence the importance of closely controlling expenditures, especially those over time, taking care that the accumulation of accounts does not lead to excessive indebtedness.

Below, find out about situations that can lead to over-indebtedness.

Seasonal expenses

IPTU, IPVA, Income Tax or school supplies. It is common, at the beginning of the year, for families to have difficulties due to these expenses that occur at a certain time of the year. There are also commemorative dates, such as Christmas, Mother’s Day, Children’s Day, birthdays, etc. Lack of planning and control can lead to unexpected disbursements, which can lead to the need to borrow or finance. If you want to minimize the possibility of getting into debt, the tip is: plan yourself!

Seductive marketing

Sales techniques and technology available to marketers drive not only sales, but unplanned purchases. This can cause budgetary and financial imbalances, or even over-indebtedness. Therefore, it is important to be aware of the attractions of seductive marketing and the commitment to the fulfillment of personal or family financial planning.

Deficit budget

It is common to find people wanting and enjoying a standard of living above financial reality. Easy credit facilities lead to an excess of term purchases, which often compromise the financial situation of families. Taking care of the family budget must be a constant search for all of us. So put what we learned about budgeting into practice.

Income reduction without expense reduction

The loss of employment or part of the family income without the proper reduction in expenses can easily lead a family to excessive indebtedness. When faced with a situation like this, make a careful budget review, adjusting expenses to the new reality.

Emergency expenses

Unforeseen events happen, like a defect or a vehicle crash, or health problems in the family. But we are not always financially prepared to overcome these obstacles. Making savings to cover eventualities is an important care not to fall into debt. Another way to deal with emergency expenses is through prevention, taking out insurance.

Divorce

Many couples, when they end the relationship, separate and share the assets they owned. In addition, some expenses that were unique to the couple, now have to be paid individually. On the other hand, each person starts to have his income – there may even be the payment of alimony. In this case, it is necessary to adjust to the new financial reality to avoid indebtedness.

Little financial knowledge

Not knowing the impact that the payment of interest can cause on the personal and family budget and the failure to read the signed contracts are situations that effectively contribute to the indebtedness process.

Excessive indebtedness can have serious consequences, which is why it is so important to keep an eye on and control the budget. 

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