The Top 10 Causes Of Debt (And What You Can Do About It)

The Top 10 Causes Of Debt (And What You Can Do About It)

I’ve personally never been in serious debt, and I’m lucky to be able to say that. That doesn’t mean that I’ll never succumb to the dangers of debt, though. There are all sorts of reasons why debt can become a major problem in people’s everyday lives. It doesn’t take a whole lot to turn your finances upside down.

Knowing how to try and avoid debt is crucial to ensure you don’t make bad mistakes. One way of doing this is to equip yourself with the knowledge of how most people find themselves in debt. So, here are the top ten causes of debt.

Lack Of Income

Failing to make enough money in your job will eventually lead to debt. It’s that simple! If you’re finding it difficult to obtain employment in the first place, you’ll be in an even tougher position.

Trying to figure out what you can do about it is a little difficult. Obviously, you should be taking the time to better yourself. If you can find any opportunities to progress your career, you should take them. Get help from careers advisors and find a way to get yourself back on your feet. You’ll also be entitled to benefits if you’re struggling to make ends meet.


Unfortunately, addictions don’t offer any long-term positives, but plenty of negatives. As well as all the damage you’re doing to your body; you’ll be putting yourself at serious financial risk. In time, addictions like drugs, alcohol, and especially gambling will lead to huge money loss.

It’d be naive of me to suggest that you should stop right away. Instead, think about investing savings into a rehab program. If you can recognize that there’s an issue, here, that’s a great start. Now, seek the help of others to ensure you don’t go any further into debt. Hopefully, you’ll get your life back on track as well.


The separation of a couple often leads to money worries. Disagreements about who is entitled to the money will arise, and one person inevitably ends up worse off than the other. Divorce is another one of those circumstances that can strike at any time. You might have had some healthy finances before, but now you’re in trouble. You can seek help once again, but this might be a case of living carefully for a while until you’re back on your feet.

Get used to living a simpler lifestyle without some of the luxuries that you will have become accustomed to. If possible, seek help from family and friends at this difficult time.


You don’t get a warning when illness strikes, and there’s no hesitation to spend money on reviving the ill. Unfortunately, some illnesses are very costly to treat. Your savings could be zapped in a matter of months, and there’s nothing you can do about it.

This is where you’d hope that everyone will chip in to help the person out. You could even get creative and run a fundraising scheme to obtain the necessary funds. If this isn’t possible, you might have to seek out a loan to help you in the meantime. You could always talk to medical professionals about your concerns and get their expert advice on how to proceed. They might suggest taking an alternate route to solve your money worries and still pay for the necessary treatment.

Bad Loans

There are all sorts of loans out there for you to utilize. The key to being successful with them is knowing which ones to seek out. It’s a myth that personal loans are a pathway to debt. There are great ones out there which will be of massive assistance to you in the right circumstances.

At the end of the day, obtaining a loan is a big responsibility. Too many people jump on them because of the promise of free money without understanding them properly. Knowing how much you’ll have to pay back and putting an effective plan in place is crucial. Without it, your finances will spiral out of control, and that’s what leads to debt.

Improper Credit Card Usage

This is very similar to the point we just mentioned. If you don’t feel comfortable with using credit cards, you really should stick to debit.

It’s all too common that people see credit cards as a way of buying expensive things without any consequences. Those consequences will arise eventually, though, and that’s when debt problems begin to occur. Anyone who struggles to manage their budget will run into problems like this.

So, what can you do? You either start managing your budget more effectively, or stay away from them entirely. It’s totally up to you!

Poor Money Management

Following on from that last point, let’s discuss poor money management a little further. In this day and age, managing your budget effectively has never been easier.

The internet is your pathway to all sorts of budget management tools. You could download an app to your phone or buy a piece a software for your laptop. You could even go on a website that offers budget management tools for free. It doesn’t get much easier than that. With just a bit of research, you’ll find a lot of options at your disposal.

Business Costs

We’re living in a world where more and more people are attracted by the idea of running their own business. In the initial stages, particularly, running a business is very expensive. You haven’t built up the profits to be able to spend money without worrying about the consequences, either. That’s why you’ll probably have to take out loans and dip into your personal savings.

Unfortunately, when things go wrong, you’ll suffer the consequences. It can never be guaranteed that a business will succeed, so debt is a very real possibility. The only way to really guard against this is to have a backup plan in place, as we’ll explore shortly.


Deciding to have a child isn’t only a big life commitment, but a big financial one, too. Sometimes, the birth isn’t necessarily planned, leading to many financial worries arising. Spending funds on creating a new bedroom and all the facilities they’ll need will drain your bank account!

The same goes for funerals, which are draining in all sorts of ways. They’re expensive things if you’re left to deal with the costs, and you obviously want to give them the best send off possible. Again, this is where having a backup plan is almost crucial.

Not Having A Backup Plan

It isn’t always possible for backup plans to be in place, but it’s the best way to protect against debt. You never know what’s going to happen in your life. We’ve already mentioned many of the possibilities including divorce and illnesses. Money problems can strike at any time. If you’ve got a backup plan in place (savings), you’ll hopefully be in a position to avoid debt.

The only way you can try and ensure this is the case is to be careful with your money. Try and put a certain amount into a savings account every month. If you don’t feel you can afford to do this, think about your current spending habits. Could you alter them to help save for the future? It’s worth considering.

Final Word

You might be looking at this list and getting a little worried that debt could spring up on you at any second. Don’t be worried about it; just be proactive!

Now that you’ve seen how potentially damaging it could be to your life, take small steps to protect against it. This isn’t something you can do overnight.

Start putting some money in a savings account and use tools to manage your budget more effectively. Research the right types of loans that you want to take out, and read the small print! It’s all about making sure you’ve taken enough time and consideration in every decision you make. That’s what will protect you against debt in the long run.

If you find yourself in a situation where you feel you can’t get out of it, don’t sit in silence. Talk to your friends and family and see if they can provide help. There are all sorts of companies that will offer assistance to those in debt, as well as help them to get out of it.

Be warned that if you do get into debt, you’ll suffer from bad credit in the future. This will affect purchases you make, including important ones like trying to buy a house. That’s a whole different problem that you’ll have to deal with, as restoring credit to a healthy state can take a long time.

For now, focus on the issue at hand and deal with it one day at a time. You won’t be in debt forever just as long as you follow our tips and manage the issue carefully.

About Edwin

Edwin is a marketer, social media influencer and head writer here at Save The Bills. He manages a large network of high quality finance blogs and social media accounts. You can connect with him via email here.

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