Top 20 Causes of Debt: Part II

11. Not saving
Well now, this should come as no surprise! Saving even a minimal amount each month will allow you to build up an account that can help to protect against any unexpected costs, or against a loss of income, in the future. Remember the saying “pay yourself first”.

12. Pregnancy
Pregnancy is another of those life-changing events that changes one’s finances too. In addition to the costs of medical care and of bringing a new person into the world, maternity leave also can have a big effect on income. Particularly if both partners have been counted on for earnings, pregnancy and parenthood is a huge adjustment.

13. Education
Some types of debt are considered “good debts”, or those expenses that are investments in the future. Student loans are such debts. Nonetheless, they usually are very costly and cause many people technically to be in debt.

14. Failed business
It is an unfortunate fact that many start-up businesses fail, and when they do the results can be financially devastating for the business owner. Particularly for small businesses, business owners sometimes become personally liable for debts incurred on behalf of their businesses.

15. Reduction in income
When an individual loses some portion of income that he or she is used to, it can be very difficult to adjust. Whether your hours are cut back, overtime is taken away, or you have to quit a second job, you must adjust your spending habits to compensate for the loss. If you continue to spend the same amount with your reduced income that you did beforehand, then you will find yourself in debt.

16. Spending money before you have it
Nothing in life is certain. Do not spend money that are expecting to get in the near future, but that you do not have currently. Whether it is an expected yearly bonus, a birthday present, an inheritance, or anything else, wait until you have the money in your account before you spend it. Or, better yet, save it!

17. Living outside of your means
You must develop a budget in order to determine exactly how much “disposable” income you have to spend on non-essential items. If you are living extravagantly and have no money to put into savings at the end of the month, then chances are that you are living beyond your financial means.

18. Gambling
While this might not seen like as serious or common a cause of debt as the other reasons listed, gambling actually does contribute to a great deal of individuals’ debt problems.

19. Single parenthood
Parents who are raising children on their own, for whatever reason, often have strained finances. This is just one scenario in which a savings fund is especially important. Should anything happen to the parent’s main source of income, a nest egg will be crucial.

20. Not understanding money
Even with the best of intentions, one can find him- or herself in debt simply by not being educated about finances. Without understanding how money works for you and against you, how it grows and how to use credit to your advantage, you may find yourself in a bad financial situation. For extensive information on debt and finances, visit our DebtHelp Knowledge Center.

Go to Part I of this article.