How People Get Into Debt And How To Finally Get Out Of Debt
How People Get Into Debt And How To Finally Get Out Of Debt
People get into debt in many different ways, and for a variety of reasons. There is still an element of social stigma attached to having debt problems, but this doesn't take the underlying circumstances into account. Some of the most common causes of people getting into debt are detailed below;
Redundancy
Redundancies have been big news in 2009 and it's a trend that looks set to continue across the UK in 2010. If you've made no provision in the form of savings or insurances for being made redundant, it can deliver a real hammer blow to your personal finances. Your mortgage, rent, credit cards, heating and other household bills will still need to be paid and if your main source of income suddenly stops, then the situation can become overwhelming. The priority for people in this situation is to keep a roof over their head and many turn to credit cards to help pay their mortgage and bills. This is the start of the slippery slope into debt; with no income coming in, the interest on your credit cards and minimum repayments will increase as you rely on them more and more.
Illness
Every year in the UK thousands of people are unable to work due to illness. The problems with debt begin when you don't have any income protection or mortgage cover to compensate for your reduction in income. The amount of sick pay you receive will depend on your employer, so for some the financial impact may be gradual but for others it could be very sudden. If you have to survive on Statutory Sick Pay (SSP) alone, then it's inevitable that you'll have to look to borrowing money to keep your head above water. The last thing you want when you're ill is the added stress and anxiety of mounting credit card debt, but many people can't see any alternative. If you have a long term illness and it's looking like months before you can return to work, your credit card repayments could easily become unmanageable in that time.
Divorce/Break-ups
If you've been with your spouse or partner for a long period of time and then go through a divorce or break-up, it can be very hard to cope both emotionally and financially. Many people find it very difficult to adjust to their new circumstances, especially if they've come from a household with two regular incomes and are trying to manage a set of bills in a new home on only one salary. People who find themselves in this situation after a divorce or break-up often don't want to admit that they are struggling to cope on their own. It's all too easy to rely on credit cards to tide you over for one month to help pay the bills or spend beyond your means on things that make you feel better after the stress of your relationship breaking down.
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