Survey Poll: Top 10 Reasons Why People End Up With Spiraling Debt

Where Borrowers Find Loan Approvals

Survey Poll: Top 10 Reasons Why People End Up With Spiraling Debt

Infographic at bottom of page . ūüėÜ

Well almost 10 reasons! For our infographic results of our survey we have the top 9 reasons why people end up with a lot of bad debt issues. For the purposes of interest we have typed out the text below in the image as well.

survey-for-consumer-debtThe survey question was simple. We asked our readers what the main reason (that they believe) for ending up deep in debt. There were many stories. Some really long and heartbreaking, and some short. Sometimes you have to wonder exactly WHAT WERE THEY THINKING!

I don’t believe there is a lot of thinking going on when people are buying. I think it’s instinct and emotion that rules the day.

And we’re talking bad debt – not debt from a mortgage or a solid investment.

The sample size was 24,389 people from all States in the USA.

These were the 9 choices we gave them to choose from:

  • credit card charging
  • medical expenses
  • addiction
  • not budgeting
  • divorce
  • student loans
  • gambling
  • not saving
  • losing their job(s)

Top 9 Reasons Our Readers Had Bad Debt

#1 Reason for debt = LOSS OF EMPLOYMENT

job-loss-causing-debt

The most often chosen reason for having debt was loss of employment. Whether that be for single people, married people, or married with children.

We especially saw this during the “Great Recession” of 2007/2009. Getting laid off or “downsized” is rarely the fault of the employee(s) and therefore it’s normal to have a great deal of empathy for those Americans who are stuck dealing with personal financial losses.

First there is shock, then anger, then hopefully comes the stage where they get back on their feet again – finding new ways to earn a living.

TIPS: be sure to curb all of your unnecessary expenses as soon¬†as you lose your job.¬†Wait until you are making money¬†again before spending¬†money on the “Wants” of life. Only the “Needs” in the short term.

Of course, the question of “a need” or “a want” is subjective. But deep inside you know the answer.¬†[tweetthis]The question of “a need” or “a want” is subjective. But deep inside you know the answer.[/tweetthis]

Quote from the infographic below:

losing your job(s) – fired, laid off,
downsized, punted, let go
sacked…whatever….
it sucks!!!!

#2 Reason for debt = DIVORCE

debt-because-of-divorceThe number two reason for falling into bad debt was divorce. Many of¬†our readers described divorce as the worst stress they have ever experienced. Some¬†shared how proper money management went quickly “out the window” leading up to the divorce, and even months after.

Of course they were concerned about their rising debt, and how their financial futures would be post-divorce, but the stress of the breakup was so intense money took a back seat in their minds.

Some people are so filled with anger they purposely sabotage their bad marriage financially. They go out and spend all the family savings, and then start using their joint accounts of credit to go on spending binges.

In some cases one of the parties will “clean out” the joint accounts completely – financially devastating their soon-to-be-gone spouse.

A lot of personal bankruptcies are caused from divorce.

TIPS: this doesn’t work for all¬†couples, but IF you can maintain civility during your separation and divorce, speak fairly with your¬†soon-to-be ex-partner so you can agree not to¬†sabotage finances in any way. Try and look forward calmly so you can both move on without being burdened with a messy debt. And a messy credit¬†score/rating!!

Quote from the infographic below:

the ugly and dreaded divorce…
nasty or not, tearing up the
sheets can cost you big time!

 

#3 Reason for debt = NOT BUDGETING

monthly-daily-budget-plansThe third most common reason for hitting the “debt ditch” is not creating a realistic budget, and/or not sticking this reasonable budget. So many of us (your humble narrator at one time too!) fail to create a realistic monthly and yearly budget.

Yet it’s so easy to do.

You know the drill right? Simply write down your total earnings per month in one column, and then your total expenses in the other column.

You don’t need to use QuickBooks or some fancy piece of software to do this either – a simple piece of paper and pen will work just fine. You can also use a basic spread sheet, or even a handy APP on¬†your phone or device. Either way, you need to be watching what you spend and how much money you have left at the end of each month.

Like many parents use to say,

“It’s not what you make…..it’s what you spend.”

True to some degree, but I prefer learning how to spend the least, AND learning how to EARN a heck of lot more! But that is for another article.

TIPS:¬†when creating a budget pay special attention to reality. Make sure you look at how the seemingly “small stuff” (like your daily Starbucks cost) adds up. If you want your budget to truly work you need to be honest with yourself in regards to how much you ACTUALLY spend each day and month. Then when you have created a realistic budget you must stick to it.

Quote from the infographic below:

not creating a budget then
sticking to the budget as a
lifestyle habit

 

#4 Reason for debt = OVEREXTENDING CREDIT

credit-card-frozen-in-iceAnd believe it our not this one is not higher than #4 – cranking up your credit cards, getting more credit cards, and cranking those up. Then getting more credit with a consolidation loan, and then maxing out the credit cards again! Happens ALL the time, and yes, your humble narrator has been there personally.

Yep – it’s always tempting to get “the stuff” you want now, while telling yourself you will pay it off later. Later often never comes. Then if for some reason you lose a job, get sick, get divorced, etc, etc, etc……you’re screwed. Hello bad credit scores, final notice letters, nasty collection phones calls!

By and large, we all need to have a credit card we can use for things like traveling, or at the very least for juggling a budget. Here in lies the caveat – it’s SO EASY to over spend. It’s instant gratification, and you get your “stuff” now!

TIPS: So like all the clich√©s before go – don’t charge with credit cards unless you have the income at the end of each month to pay it all off. I learned the hard way and ended up in personal bankruptcy –¬†I was in the financial dog house for 7 years.

You don’t need to freeze your credit cards in a block of ice, or stick them in a safety deposit box, or bury them¬†in your back yard. All you need to do is get your max limit set as low as possible, and never use it unless you can pay it off at the end of the month. If you can’t afford to do that with the earnings you have, don’t use the credit cards all.

Quote from the infographic below:

going wild on the credit
cards, loans, trips, stuff

#5 Reason for debt = GAMBLING

The #5 reason for getting into bad debt is gambling. Gambling has always been a bad idea (unless it’s just rare recreation – see “Tips” below) because “the house” always has the edge, and the more you play the more the odds are stacked against you.

Like the Penn & Teller quote:

We live in Las Vegas, an entire city built on glorious bad math

Not sure the casino owners were happy with that comment.

gambling-debtBut gambling debt isn’t the worst where you might think it is. Sure, people get themselves in trouble in the big casinos in Los Vegas and Atlantic City – but that’s not where the majority of people get themselves in to debt problems. It’s in the local bars and casinos on the slot machines and tables. This is where the carnage is the highest.

A not-so-fun fact there.

TIPS: when and if you gamble ONLY gamble what you can afford to lose. Another clich√© I know, but it’s critical. On a personal level what I do is only risk what I feel comfortable with losing. Even if I can mathematically afford to lose $5000, I set a loss limit of $300. I enter a Casino about twice a year at the most. This is manageable, and it’s a lot of fun.

Quote from the infographic below:

poppa needs a new battery for
his car baby! press it! let it ride
in Vegas, or hang out in a dark
and dingy local bar plugging
coins into a VLT

 

#6 Reason for debt = MEDICAL EXPENSES

medical-expense-debtNumber six on our list of “the big uglies” for debt is medical expenses. It happens to the best of us sometimes, and there is often nothing you can do about it. Car accidents, bad genes, fluke slips in the bath tub, road rage altercations – you name it. There are lots of ways to get hurt in this life. This is what we mean when we wish people “good luck”.

Health is primary – without it, even great wealth means diddly-squat.

Sometimes medical expenses bankrupt entire families. Either because the insurance company won’t cover the costs (and you can be sure they’re looking for a way to get off the hook), or the patient is under-insured, or the patient has no insurance at all. Whatever the reason is, huge debt can come crashing down on the patient and/or their family.

TIPS: not much you can do when bad luck rears it’s shrunken little head, but you CAN make sure you have a comprehensive medical insurance plan with a verified reputable insurance company. I know that in the United States bankruptcy via medical expenses is too often real, but you must try to find affordable insurance for yourself and your family. Obamacare is an attempt to help lower income families to get insurance. Far from a perfect solution, but a step towards a solution.

Quote from the infographic below:

those unexpected and nasty
medical expenses and possible
insurance company bad
behaviour

#7 Reason for debt = NOT SAVING

no-savingsThe number 7 most common reason for having unmanageable debt is not saving. This goes hand-and-glove with not budgeting.

Even after we’ve budgeted for our expenses and income, we need to include some money each month for savings. I know – I know…..boring right! I want to use that cash for fun!!! Let’s live in the moment!!

Well the truth is most people live to be around 80 years or older. You need to live for today AND tomorrow. If you squirrel away some savings every month of every year you will be surprised how that money can add up to give you a little emergency money Рenough for a couple months rent/mortgage, a vehicle, etc.

I know it’s another clich√© and a drag, but a penny saved is a penny earned.

TIPS: instead of looking at saving as¬†impossible, look at it as a must. You must save¬†money for the future. It’s more important than another night on the town, or some new “thing”.

Quote from the infographic below:

never saving the rather rainy
assuming your expenses will
never grow, you won’t lose your
job, you won’t get divorced
and the sky will never fall

#8 Reason for debt = STUDENT LOANS

student-loan-debtI¬†also would have thought student loan debt would be further up the scale than #8. But alas….you can’t argue with the masses¬†(in this case over 24,000 people in our¬†“masse”).

It’s always a great idea to educate yourself, and there isn’t any investment as good as an education if you plan it out properly. Whether it be a high-end ivory level university, a technical institute, or a local college. BUT unless you and/or your family can afford to throw away money, you better be enrolled in something that you LOVE doing, and a field you can MAKE DECENT MONEY in after you’ve graduated.

Maybe you are gifted and have a full scholarship! Fantastic! Go get ’em!

But for most of us, we need to be practical and study in a field we can be gainfully employed in for years to come. I’m ALL for “learning for the sake of learning”, but not until the bills are paid baby.

TIPS: don’t sign up for any kind of course or program¬†unless you KNOW you have a long-lasting passion for it. Always “stay in your passion”. Otherwise you’re wasting your time and money – maybe wasting other people’s time and money too.

Quote from the infographic below:

student loan debts and no
gainful employment after the
oh-so-fun graduation party

 

#9 Reason for debt = SUBSTANCE ADDICTION

One of the saddest and most desperate stories of financial ruin. I’ve seen it in my own family and it’s tragic. Drug(s) and/or alcohol addiction¬†is #9 on our shit list for debt problems. It’s a four-fold take-down into the debt ditch (sometimes literally a road ditch too).

  • One: the substance abuse takes¬†the person’s¬†eyes off the ball (what’s important)
  • Two: it causes bad decisions which inevitably drains the bank account
  • Three: the actual cost of the drugs and/or alcohol being consumed
  • Four: the ability to earn money is greatly diminished

debt-because-of-addictionThe slippery slope is fast and extremely painful for all concerned. The person who has lost control, the loved ones, and all those who happen to witness the decent into hell-on-earth. It plain sucks.

TIPS: if you are a person who is in the high-threat zone for substance addiction, get help fast. Face reality and confess you are powerless when it comes¬†to the substances¬†you are addicted to. Get help from every and any avenue you can find – and don’t quit trying. At some point you will have to get toughened up and find the determination to stay clean.

Quote from the infographic below:

drinking and drugging like
it’s 1969 (or the ’80s…
or anytime!)

So that does it (I think) for our “Almost 10 Reasons For Bad Debt”. If you enjoyed this bit, please pass it along using the social media buttons to the left.

You can also embed the infographic on your site easily by using the code provided below.

Best of luck my friend!
reasons-for-debt-survey