So, you’ve found yourself in debt? And you’re struggling to get it back under control?

YOU’RE NOT ALONE.

With the ease of obtaining credit cards and loans, many people are spending money they don’t have and racking up large debts with speed. In fact, recent statistics show that approximately 80% of Americans are in debt and the amount of debt is also on the rise. It’s time we all get out of debt!

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Unfortunately, debt can create a number of mental health challenges, potentially creating stress, anxiety or depression. The negative side effects of debt can also include relationship breakdowns, bankruptcy and eviction.  It can be hugely important to get out of debt quickly & learn how to avoid unmanageable debt in the future.

So, let’s start by looking at some of the reasons why people get into debt in the first place.

Debts can accumulate for a number of reasons, including unexpected expenses, underemployment or reduced income, divorce (and other big life changes), or lack of savings. However, a very common factor which leads to debt is simply bad spending habits! We live in a “more, more, more” society and it can be a costly exercise keeping up with everyone else. It can feel essential to buy the latest iPhone, wear the latest fashion, upgrade cars and homes, attend all the social events and go on epic holidays.

As a result, many people feel compelled to spend money they don’t yet have. Or, they don’t budget properly and simply don’t realize they’ve overspent until it’s too late.

Once debt builds up, it can be difficult to climb out of.

Did you know that the Average American debt payments in 2022 is 9.5% of their income? This is quite shocking and definitely requires some review.

The average American spends more than 9% of their monthly income on debt payments. Despite debt overall increasing, Americans are still spending less of their income on debt than nearly any time in the past 25 years.

This drop could be related to debt relief programs and other allowances made for coronavirus-related income loss — though it could also indicate that consumers have paid off their high-interest debts.  For more details and statistics on these rising debt numbers and an explanation behind each of them, click here. 

But for now, lets explore a few of the reasons why people tend to stay in debt include:

• Feeling hopeless. Debt might seem so huge that it would be almost impossible to get it under control, therefore it can feel pointless to even try.
• Relying on retail therapy. Buying stuff can cause a spike in “feel-good” hormones, so we feel happier and more positive than before. However, retail therapy is often a short-term solution that can cause long-term problems. If you feel down about debt and you’re then buying something to feel better, then the cycle continues and the debts keep growing.
• Feeling comfortable being in debt. Some people would feel more comfortable staying in debt than making the necessary sacrifices to get out of it! However, this can cause problems in the long-term, for example, if your income changes and you’re no longer able to afford the repayments. It’s usually a good idea to get out of debt so it won’t be hanging over you if your circumstances change.
• Just not knowing where to start.

If you’re ready to take control

& get out of debt,

we’ve created a 10 step guide to help you!

 

We hope you enjoy using this guide and taking some positive steps towards financial freedom