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The Main Causes of Falling into Debt

Debt is hard on everyone, and if you are in a relationship it can put a serious strain on in. Debt makes the simplest things in life hard to deal with, and many people choose to ignore dealing with their debt than facing it head on. Unfortunately the more you ignore it, the worse it tends to get. Debt simply will not go away on its own.

So how do people suddenly find themselves getting deep in debt? There are actually a few common ways that most people don’t even realise are affecting them. Remember that you are not alone in this situation. Many people find themselves struggling with debt every year, and understanding how this situation happened is actually key to helping you deal with it. Below are the main causes of falling into debt that people experience. You may have experienced one of these reasons yourself. By taking control of the debt, you can get yourself back out of it.

Loss of income due to redundancy.

  • Probably the most common reason for people to fall into debt is loss of income. Many people take out personal loans or borrow on their credit cards during a time in their lives when they were working full time or even getting overtime. With the current global financial crisis hitting everyone hard, many companies are cutting back on overtime and jobs. While you are looking for a new job, it is important to contact your creditors and alert them to your circumstances and work out some form of agreement with them to get you through until you are solvent again.

A Family Addition

  • Most families today have two incomes coming into the household that support your current style of living. Even if you plan for a baby, the additional expense of bringing a new life into the world can take a toll on your finances, especially if the mother has to stop working early due to complications. Plus, maternity leave benefits are usually only a portion of what the mother normally brings in. Living frugally through this time is essential, and you will need to rearrange some of your debt in order to afford to care for the new bundle of joy.

Divorce or Separation

  • Going from a two person household to a one person household is hard on both parties, and unfortunately it happens very often that one person is left with more debt than the other. This is where problems immediately start and instead of running out to get a loan to handle all of the debt, you are better off sitting down and reworking your budget or entering into a formal debt management plan that can help you balance and manage your debt with your lower income.

Ill Health

  • If you are too ill to work you may be entitled to receive sickness payments, but like maternity leave, the payments are usually only a portion of what you normally bring home. If you can use money from an insurance claim to help pay your bills that is good, but if not your debt could get out of hand. Death is another problem that can leave you in unexpected debt. Once again, contact your creditors as soon as possible and let them know what is going on. Most creditors are willing to work with you through these trying times.
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