In the current world that we’re living in, it’s almost impossible to avoid being in debt. Money is a tool that can fulfill your dreams, improve the quality of your life and even take you to places. But, are you finding yourself having to take up a loan frequently and not sure what could be the cause?
Let’s take a look at five of the most common reasons.
One of the most common reasons for debt is the shortage of money for necessities. It could be due to unexpected circumstances that we’re going through that we do not have enough budget for the particular month or it could just be a recurring expense that we deemed as a necessity.
“We had a client who although works in an executive position, had his monthly expenses went up the roof. She was forced to pay for her mom’s hospital bills. With high expenses on medication and procedures, she was highly dependent on Credit Card transactions. And when she received the bills, she was shocked. Interest, late payments, and the principal amount, she got trapped in debt”– Case Study
2. Not willing to make a sacrifice
Are you willing to give up online shopping for a month? Could you survive with homemade meals for a week? If you find it very difficult to make sacrifices, chances are you will end up finding yourself borrowing money to keep up with your lifestyle habits.
“It all started with one loan. So he looked for options to get cash or credit to sustain his living and also to repay back his loan. Started from 1 bank, it turned to be 4 banks. Little did he know, he could not afford the hefty repayment amount”– Case Study
3. Limited Savings
The future is uncertain. Thus, it is essential to have savings to save us from unexpected situations.
We might not know when we will be facing an emergency in our lives. When you have enough savings, you have easy access to get out of the situation. But when it is otherwise, you will end up taking loans to suffice the situation.
“Once she had an online business that was doing fine until she had to let it go. With some mistakes made with investments for the business, her savings were slowly depleting to service her loan and to run the business. Alas, one day, she had to resort to using her son’s savings just to sustain a simple living.”– Case Study
4. Gambling Addiction
When one gambles, they hope to win something bigger in return. But will lady luck always be by your side? Nope, we bet.
It is a highly addictive form of entertainment when one has the mentality that they will hit the jackpot. From there, they would keep on trying at the expense of borrowing from banks and personal moneylenders.
“It was once an activity for him to enjoy, and a curious trip to the newly open gambling place. It then grew into an addiction and something he hopes to pay his growing loan. A loan he took to pay off debts and to allow him to gamble more”– Case Study
5. Lack of discipline
When you have no control over your money, it means that you have poor money management. One of the signs is when you have the habit of spending your heart’s content and overlooking your budget. At the end of the day, you will have trouble coping through the month and resort to borrowing money.
The moral of the story is that money is like water. You have to set some limits for yourself so as to avoid living in the debt trap.
Try living within your means, set realistic goals, and creating a timeline are some useful ways to manage your money well. Hope this helps! 😉