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The Top 5 Most Overlooked Causes of Debt

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My family has been debt free for almost a year now.

When I first started my blog, our success story in erasing my debt in under 3 years and saving over $70K at the same time were the main focal points of my blog. As a matter of fact, I received and am still receiving a lot of messages congratulating me on our success.

One of the reasons I created this blog is to share my journey to financial independence, describe the ways to save and make money, and everything in between.

Since the first day of blogging, I have come to realize that a lot of people do want to get out of debt.

Unfortunately, many of them don’t know where to start.

Some people told me their monthly expenses are more than their take-home income. Some of them got laid off and don’t have enough to even satisfy their basic needs.

The stories go on and on and on.

Personally, the best way to get out of debt or find these causes of debt is to take a step back and look at your situation (i.e. how you manage your finances). You need to understand what you are doing and not doing before you even make other financial steps.

This is what I did when I finally told myself I wanted to get out of debt. It definitely worked.

Top 5 Overlooked Causes of Debt

Here are some of the reasons that many people are still in debt even when they have done so many actions in the past to get rid of it.

1. Treat credit cards like they’re your own money

One the most common overlooked causes of debt is treating credit cards like they’re your own money.

It is tempting to use your credit card especially when you see a big available balance in your credit card account. It is also tempting to use it when you know you are not required to pay off the balance right away.

Remember credit cards are not your money. They are essentially borrowed money that you have to pay back. They’re not free money.

One of the worst things about using credit cards and not paying them in full is that you incur interest and possibly late penalty (if you don’t pay the minimum charge by the due date).

I have seen a lot of people who fell into the trap of using their credit cards like they’re free money. Please don’t fall into this trap.

I recommend that you stay away from using your credit cards. Cut them, freeze them, hide them, or do something else with them but just don’t use them. If you do need to use them, it is best to use them wisely.

Credit cards can be your best friend (i.e. airline points, rewards, and cash back) and are not always that bad. The bad thing is how you treat these credit cards.

2. Think you have more time

When you are young, you think that you have years ahead of you to get rid of your debts.

Make no mistake. As we grow older, our responsibilities change and these responsibilities include financial responsibilities.

Many will embark into the life of building a family, go overseas to do Samaritan work, buy a new house, etc.

If you are in debt and doesn’t have a plan on when and how to solve it, you may or will have a harder time getting rid of your debt when you have more responsibilities later on in life.

The best time to tackle your debt situation is today. Not only will you be paying less in interests and penalties but you are also helping yourself be financially ready when the time comes for you to leap and take bigger responsibilities.

3. Feel like you’ll never get out of the situation

When I was in deep debt, one of the things I told myself was that I didn’t think that my situation would become better. Yes, I said that to myself but I didn’t let that thought overcome my desire and need to be free out of debt.

Remember that no matter what financial dilemma you are facing, there are and will be solutions to them.

There are debt consolidations, personal loans, debt assistance, among others you can avail to help you solve your financial problems. One of the best things you can do now is start or learn how to become more financially disciplined and willing to sacrifice now so you can have a better tomorrow.

4. Live above your means

One of the reasons that may cause you to be debt-ridden is that you continuously live above your means.

Live within your means. Live frugally because there is nothing wrong with it.

Don’t feel bad if you see a lot of your friends with better gadgets, nicer cars, etc. Don’t keep up with the Joneses.

My wife and I live way below our means when we were paying our debt. As a result we were able to pay our debt faster than we expected. Now, we have a better life and we save more every month than ever.

Don’t be afraid to pause your luxurious life for a moment. Think for a better future.

The positive effect of being frugal is that once it’s embedded in you, you can’t help but be frugal for most of the time and the thought of going back to a luxurious life may not even cross your mind anymore.

5. Be complacent with what you have

No matter how you try to fix your finances, if your income is always less than your expenses, you will never get out of debt.

Aside from trimming your expenses, you need to be more proactive and chase for other opportunities to earn more so you can pay your debt and, possibly, save more.

When we were paying our debt, I had a couple of side hustles. I was refinishing pieces of furniture and selling them for profit. I was helping apartment renters move in or out their stuff for a fee.

Sometimes, no matter how you cut down your expenses, your income may not be enough. When this happens, finding additional income-generating opportunities is what you need to do.

Here are some of side hustles that can help you save more money and pay your debt faster:

  • Start a blog. One of the reasons our family is able to save a lot is because of the income I earn from blogging. Believe it or not, you can always start blogging by spending $10 or even less that. The potential to earning through blogging is immense.
  • Answer surveys. Most survey sites are free to join and can help you earn money right away. When my wife was a stay-home mom, she took surveys to help us earn extra money on the side. It’s not a whole lot, but it made a difference.
  • Invest as early as possible. Always remember that time is money. This means that the early you invest, the greater chance your money will grow into a big amount later on. While there’s not guarantee in investing, it is always better to start early even when you only start with just a couple of dollars.
  • Find a job. You can always try to find a part-time job to supplement your income. You can find jobs through different sites such as Snagjob, Indeed, and LinkedIn.

So, what should you do, then?

As with expenses, these are some of the ways that helped my family in the past and has continuously helped us in reducing our monthly bills:

  • Talk to your bill collectors. I wanted to say to pay your bills on time but that’s not always possible especially when you don’t have enough to begin with. The next, best thing you can do is communicate with your bill collectors and request for payment arrangement. You’ll never know what arrangements and deals may have for you.
  • Cut your cable. If you are reading this email, then, that means you have internet. Some cable companies offer free streaming on their sites. If you are not into that, you can always check Hulu, Netflix, Sling, and other platforms, which cost less than a month’s cable bill.

Final Thoughts:

Debt is a horror that can haunt us for a very long time when it’s not solved.

That said, we sometimes just need to step back and reflect on what we’re doing that’s causing us to have debts.

When we do that, we’ll soon find out that debt can be solved easier than what we originally thought of.

What other causes of debt you think people tend to overlook? What have you done to get out of debt?

About Me:

Allan Liwanag is The Master of Practicality over at The Practical Saver. He and his wife were indebted for $40K in 2013. Two and a half years later, they completely paid it off and saved over $200K, at the same time, on a $39,000/year salary.

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