5 Reasons Why People Get Into Debt (2024)

Getting into debt is unfortunately very easy and something that can spiral out of control but there isn’t just one reason why debt can strike.

Getting into debt is an easy thing to do and something that can easily spiral out of control.

The thing is, there isn’t just one reason why debt can strike. Different people have different reasons why they get into debt and circ*mstances for everyone can be different.

I think if you can recognise why debt can happen, it may be that you can stop yourself getting into debt in the first place, or at least recognise that you have a money issue and can hopefully get some support.

Life changes

One of the reasons we got into really bad debt years ago was due to changes in our incomes. After being made redundant, we had less household income and we really struggled to pay the bills. It took a few months to find work again but, by this time, we had spent all our savings and were living off credit cards to get by.

I’ve looked at whetherbeing old or young as well aswhether you are a man or woman affects how you handle finances. People handle financial situations differently at different stages of their lives.

Other things can change too. What would happen if you moved house and the council tax band goes up, or your landlord puts your rent up or the interest rate goes up on your mortgage? How will you cope with changes?

Instead of struggling to make ends meet while you are adapting to the changes in your life, speak to people you currently owe money to and explain the situation. If you are upfront and honest about your finances companies are more than willing to either put a repayment holiday, or lower your payments for a month or so until you can get to grips with your situation.

Lack of an emergency fund

If you have a small pot of money to call upon when the worst happens you can hopefully stop yourself getting into debt. Even £500 sat in a savings account can be a lifesaver if your car breaks down or your fridge freezer needs replacing.

According to the Money Advice Service, four in ten adults – or 21 million people – have less than £500 in savings.

Just saving a little each month can easily boost your emergency fund. Set up a standing order to transfer just a little our each pay day and you will see the savings rack up quickly.

Burying your head in the sand

Not opening the mail that falls on your doormat, avoiding phone calls from creditors and purposefully ignoring financial issues will see you get into debt very quickly – and this debt will spiral. Trust me. I’ve been there, got the t-shirt and had to sell the t-shirt to help clear my debt.

Maybe you that you don’t have enough time to deal with your finances so just outright avoid them or think that by not opening your post it will make the situation go away? Both wrong.

By not dealing with the situation things are just going to get worse. If you can’t pay a household bill then call them (or even get an email address or write if you can’t bring yourself to make a call). Tell then why you can’t pay and what you plan to do about it.

If you ignore one bill, soon it will turn into a bad debt. The next letters will be from a debt management company or a solicitor. They will start chasing the payments instead. Your credit file will be hit badly. Fees will get added on. You may get taken to court and be given a CCJ. Enforcement Agents (which you may know as a bailiff) will turn up, unannounced, at any time of the day and knock on your door.

Don’t bury your head in the sand. Don’t ignore the issues as one letter can very quickly spiral to a lot more letters and a lot more costs.

Living beyond your means

You may not even be trying to keep up with the Joneses in terms of what you are buying. You may find that you buy all the basic brands, rarely go out and have no treats. If you are living pay cheque to pay cheque and are still struggling to make ends meet you could quite easily get into debt to help when things are tight.

The thing is, do you actually know what money is coming in and what you are spending out. Get a hold of your finances by creating a budget and listing out every penny that you earn and receive through benefits as well as writing down everything that you spend out on from rent/mortgage, household bills, groceries and other everyday spending. By seeing things in black and white you can then ascertain how much money you really have left at the end of each month and can start looking at what you can cut out.

It could be that you are spending out on lunch at work each day, or have an expensive gym membership, that could go and would mean that you could balance the budget each month, avoiding the need to slip into debt.

Keeping up with the Joneses

The neighbours have just bought a new car, your colleague is off on another holiday and there are 12 cousins who are all buying presents for each other for Christmas.

Spending money because you think you need to have the same things as those around you or you need the latest bit of tech will soon see you get into debt if you cannot truly afford them. We very much live in a want it now society. Fashions change with the season (some of them worse than others) and the media push products to love and want. It can be easy to get caught up in the splurge.

However, it’s also very easy to not get caught up. Just stop! If you don’t have the money then it doesn’t matter what others are doing, just don’t do it yourself.

Debt is not cool.

Going to Egypt on a two week 5* holiday and getting a killer tan may be cool but not being able to heat your home this winter is not cool.

Having the latest designer clothes may be cool but wearing those clothes while having to eat tins of basic beans – every single night – because you can’t afford other food is not cool.

Sorry to say but there is no other way to say it – if you don’t have the money then don’t spend it.

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These reasons are all about bad debt. This is all about unmanageable debt that you cannot clear each month. Debt that happens when you are not in control of the situation. If you don’t think you can make a full payment each month to clear a credit card then don’t get one.

If you already have debt you could be one of the eight million have problems with debt. Of those people, only one in six are seeking help.

Don’t struggle on alone – please.

Please get support and get yourself out of bad debt and into a debt-free life.

You can get free debt and money advice from Stepchange (call free from a land line on 0800 138 1111 or go to their site and ask for a free callback) or National Debtline (call them for free from a land line on 0808 808 4000 oruse their online web chat service).