Are you constantly finding yourself in debt? It may feel like an endless cycle from which there is no end, but did you ever take a minute to scrutinize how you got to where you are financially? While debt is common, recognizing the most common ways people fall into debt can help you understand the reasons behind your situation. It can also assist you with finding relief, whether the solution is temporary or permanent. Let’s go over some of the leading causes of debt and some possible ways out.
Unemployment and Underemployment
One of the most common reasons why a person would quickly run into debt is the loss of a job. Many people live paycheck-to-paycheck, through no fault of their own. They simply do not have enough money to fall back on, and when that income stops coming in, it can leave them high and dry. Bills pile up, and they quickly fall behind, often taking out loans to keep up on payments. Sure, unemployment insurance may help for awhile, but it is not available to everyone. Freelancers and unskilled workers are often left to their own devices after losing a job.
Underemployment is another concern. Oftentimes, people take on any job that they can find in this tough economic climate, but not all jobs allow a person to make ends meet. Rather thanfalling into debt, it is best to look for a second job to compensate for the lack of hours or pay at your primary place of employment.
Unforeseen Medical Expenses
Any type of medical treatment is bound to cost a ton of money, and health issues tend to occur at the most inopportune times. Also, doctors and hospitals, who need to make a living as well, are growing ever more impatient with patients that are unable to pay their medical bills timely. This results in many medical bills being turned over to collection agencies sooner than they ever were in the past.
And, while the Affordable Care Act has requirements for every eligible citizen to carry medical insurance, not all policies cover all expenses, and some policies are actually much less generous than others. Expensive treatments, such as those used to treat cancer or HIV are not always covered by basic policies and can send the average family into debt pretty quickly.
Many patients take out loans or pay their treaters with credit cards for the time being. For example, an installment loan online application can work as a great temporary fix while medical financing is arranged.
Going Through a Divorce
It is sad to acknowledge, but more than half of American marriages end in divorce, and that bleak reality can take a toll on the wallets of a formerly happy couple. After all, litigants are subjected to state-specific laws which govern the division of assets in particular situations.
However, in addition to the personal pain that both parties may feel when going through a divorce proceeding, one party may also demand too much from the opposition, forcing him or her to give up a disproportionate amount of assets and income. And, in some cases, he or she may be obligated to compensate the attorney’s fees of the other party. This is a quick segue into debt. The best way to handle this matter is to try to work things out amicably with your ex, and come to an agreement that is fair to both of you.
Lack of Savings
Many people are unable to save money for future plans or emergencies because they simply do not have enough disposable income. This means that if a major expenditure were to arise out of the blue, they would find themselves running up mounds of debt, since they do not have a cushion to fall back on.
While the best way to prepare for unemployment, illness, or divorce is by saving a portion of your income each week, it’s not always that easy. However, if you do not have savings to keep you afloat, you can always turn to your assets. Do you have a home? Perhaps you can use the equity to get you stabilized. If you have a vehicle, you might consider filling out a car title loans application to get instant cash. These can be a lot of help in the short term.
These are just a few of the ways that you can stumble financially and find yourself drowning in unanticipated debt. However, by following the accompanying solutions to get back on your feet after a fiscal disappointment, you should be back in the black in no time.