Debt
How People Fall Into Debt
Unfortunately in today’s demanding society, many find themselves racking up thousands of dollars of debt. There are many different reasons as to why people wind up in this mentally and finically stressful position. While some people are just fiscally irresponsible and lack personal discipline; others that are much more responsible aren’t immune to debt, they can be hit with an unexpected medical bill or job loss. Living outside of ones pay check and unexpected medical incidents are some of the more common way people fall into debt.
Credit cards are attractive for many people because they don’t have to physically carry money with them; but they are also dangerous because of interest rates that the banks charge. These rates can vary from bank to bank but in addition to interest rates if you can’t make your payment deadline the banks will charge you extra for a late fee which just makes the problem worse. For example my friend Chris learned this the hard way when he purchased a pretty pricey mountain bike using his credit card. It took Chris six months to pay the bike off and he winded up pay thirty percent of the bikes total price back just as interest. Needless to say this made Chris much more cautious about using his credit card and when he does use he pays it off as fast as he can to prevent the interest from racking up. However not everyone learns this lesson, many times the interest compounds and people can’t pay back the interest let alone the actual price of the item causing them to fall into debt, which is only made worse you buy big ticket items like cars and houses.
Living outside of your means just to have nice things is also a bad habit which can lead to even more debt problems. Instead of being fiscally responsible and budgeting and purchasing items that they can afford based off their income people tend to think there income will always be there and that there income will continue to grow but that isn’t guaranteed. The
Unfortunately in today’s demanding society, many find themselves racking up thousands of dollars of debt. There are many different reasons as to why people wind up in this mentally and finically stressful position. While some people are just fiscally irresponsible and lack personal discipline; others that are much more responsible aren’t immune to debt, they can be hit with an unexpected medical bill or job loss. Living outside of ones pay check and unexpected medical incidents are some of the more common way people fall into debt.
Credit cards are attractive for many people because they don’t have to physically carry money with them; but they are also dangerous because of interest rates that the banks charge. These rates can vary from bank to bank but in addition to interest rates if you can’t make your payment deadline the banks will charge you extra for a late fee which just makes the problem worse. For example my friend Chris learned this the hard way when he purchased a pretty pricey mountain bike using his credit card. It took Chris six months to pay the bike off and he winded up pay thirty percent of the bikes total price back just as interest. Needless to say this made Chris much more cautious about using his credit card and when he does use he pays it off as fast as he can to prevent the interest from racking up. However not everyone learns this lesson, many times the interest compounds and people can’t pay back the interest let alone the actual price of the item causing them to fall into debt, which is only made worse you buy big ticket items like cars and houses.
Living outside of your means just to have nice things is also a bad habit which can lead to even more debt problems. Instead of being fiscally responsible and budgeting and purchasing items that they can afford based off their income people tend to think there income will always be there and that there income will continue to grow but that isn’t guaranteed. The