Saving Money Main Reason Why People end up in debt

[Deleted member 13140]

So what exactly is debt, before I tell you why and the main reason why people go into debt, I want to explain what it is because I'll steal a things from it to clearly make people understand understand concept.

Money that one person or entity owes or is required to pay to another, generally as a result of a loan or other financial transaction.

When you look at the definition I want you to underline or atleast just carry it off heart - Generally as a result of a loan, now ask yourself what will cause someone to take a loan.

There are hundreds of reasons both genuine and not genuine, and I have empathy for the genuine, because I know how hard things are nowadays.
But ones that aren't genuine, I also have empathy for it because they is always a deep reason why people behave anyhow they do, so that's why I want to address

This- Don’t go for what you can’t afford

It is a typical problem in our teens who always have peer pressure ' or, more accurately, generation Zs society that most people have a tendency to flaunt their wealth and end up in debt.

However, it is always preferable to live within your means and avoid becoming enslaved by huge debts.
Remember that, debt isn't a normal thing it could destroy or make you if used wisely

 

[Richee84]

There are different reasons why people end up in debts. Debt is seen as a financial assistance given to someone in time of need or help. Debt have it advantage and it also have it own disadvantages. Mostly people go into debt when they are in need of financial assistance and there is no mean of getting it so they end up going to borrow money from financial institutions or cooperative in order to meet their needs at that time. For a business to expand and keep it customers they may need to borrow money to expand there business and improve their profit or total revenue. If an individual or organisation collect a loan and use the loan for the purpose which is been meet for then the loan has been utilize effectively and repayment of such debt will be much easier. But if a loan is not been use for the right purpose then it may be a little bit difficult to repay back such debt and the person or organisation will be plung into more debt which will be difficult to come out from. Debt when collected should be well managed so it won't be a continue liability on that person.

 

[Hagson1]

They are many reasons why people end
Up in debt, for someone to collect debt it is a clear picture of insufficiency of finance. That doesn't mean that the person is poor or do not have money, but it means that what he has is not enough to cater for his need at that particular time. Therefore he needs financial assistance which he will later pay back. Debt means a financial assistance give to someone at his point of need which will later paid back to the lender at the time which is negotiated. People collect debt with family, friends, relatives, business organization etc. To help them established their business, or solve a particular situation that is above their capacity. Another reason why some people ends up in debt is lack of proper financial maintenance. Some people lack that ability to manage what they have, instead they go on spending recklessly which leads to financial instability. Instead of them to apply the method of economics which is using the scares resources they have to bring out profitable results.

 

[Alexandoy]

I have experienced being in debt too often and for long periods. What I can say is that I was always a victim of circumstances. In our culture the gift is very important especially for someone like me who has a good job and gives the impression that I am well off with my finances. Working in a bank has that disadvantage because people think I have more money than them. The gift was my usual waterloo, so to speak, when it comes to having debts. I had to borrow to buy a wedding gift and next would be the gift to my godson's birthday. Aside from that there were the emergency needs like someone in the hospital or worse someone in my circle had died. But for my own spending I have full control and I couldn't blame myself because I am actually frugal in life. I am not much for luxuries and even with food my taste is simple dishes only.

 

[Abigael]

Taking loans which are not genuine is truly one of the reasons why people get stuck in debt. Most of those loans are not planned for and so one does not know how to pay it back. Therefore, avoiding what you cannot afford is really one of the best ways to avoid bad debt.

Another way is to try as much as possible to make the money you need. Apply for jobs offline, search for ways to earn online or start a business. That way, you will be able to earn money rather than depending on borrowing. It is important to note that even as you make money, make sure to avoid debts.

You can avoid debts by spending the money you earn wisely, No matter how small it is. Make a budget of things you actually need and satisfy those only. Have so much self discipline when doing this so as not to get tempted by your urges.

Lastly, it is important to cultivate a saving culture. Any extra money you get should be saved for the rainy days. That way, instead of borrowing money for emergencies, you take it out of your savings. These tips will help you stay out of debt as much as possible.

 

[moonchild]

Well, debts are bad no matter how we decide to look at it, but sometimes it's circumstantial because this is life, there's no guarantee things will go as planned, we have emergencies, unexpected expenses and many more, so we can't runaway from debts completely especially if one is a low earner, this is also not a reason why we should borrow every here and then to satisfy our insatiable wants.

Firstly, I think debts are incurred to solve a bugging problem is justified, for example school fees or hospital bill or other things that deals with a life or death situation or future plans other than that it's not advisable.

Debt can make you lose control of your own finances because you will be constantly servicing a loan with your the money you make hence disrupting your plans and making you live the paycheck to paycheck life.

In a recent report from an American research center in Ohio, US, they found out that more than 70% of American residents live from paycheck to paycheck, this is really bad and it shows lack of self control in individuals.

In my country Nigeria, We have some loan sharks that came into the country mostly Chinese owned, that built apps and offer loan services with outrageous interest this has made a lot of people's condition worse because if you refuse to pay at the stipulated date they'll embarrass you by sending degrading messages to your contacts.

This is just one of the millions disadvantages of loan or debt, stay away from loans and you'll live long

 

[Good-Guy]

There are many reasons for why several folks end up in debt. One of the main reasons why this happens is when they take a huge amount of loans that they cannot pay back. Secondly, whenever this happens, they tend to cross the deadline of repayment of loans and they end up getting more into bad debt due to an increase in the rate of interest. Many financial institutions would raise interest after each deadline and the person or the business organization eventually ends up becoming a defaulter. In very extreme cases, the person or the organization ends up getting bankrupt. During the pandemic, this is what happened.

Before the pandemic started, many business corporations and businessmen took huge amount of loans and they were not aware of what was coming. They took loans and they failed to pay the money back due to closure of businesses. In order to prevent such situation, many banks and institutions withhold mortgages. However, as far as I know, they cannot withhold interest rates and eventually the businesses have to pay the interest money back. Whenever the business loses mortgage, it loses a big asset. Thus, this leads to financial losses. This is why you should never borrow huge amount of money which you could not pay back in the future.

 

[Sotherefore]

Lolz, I know some people who are having so much loans to repay back on their neck are always guilty of this and sometimes they may not really make a proper analysation of the business they are establishing before getting a loan to do so , which could possibly expose them to so many risk because without proper planning and preparation in businesses there may be lack of understanding and sometimes also the required knowledge to start up and maintain this business may not be there which could possibly leads to business failure.

A lot of people are going for what they cannot handle just because they are interesting to Have a financial freedom but in most cases it may not likely work as expected but a person should consider so many things before getting a loan to start up a business and you did not really get a loan to run every of your business affair.

A person should have at least 65% of the business capital then getting 35% loan to add up and establish a business may not really be a bad idea as long as you understand you will be able to pay back the money you have collected.

 

[Rachael]

One of the valid reasons why most people end up in debt is because they do not have any plans of paying back. There are people who just collect loans without having any other way nor collateral which could be used in sorting out outstanding debts. The urge to collect loans or borrow money would be their first priority by having a back up or striking plan where this money could be repaid, leaves them in debts. Before taking a loan, you should always have other alternatives where you can always repay just incase the major plan does now work out as expected.

 

[Kendy]

To me, I think one of the reasons people end up in huge debt is because of the inability to have a feasible source of income and also taking of loans that are having high interest rates and short duration on repayment. Some individuals just opt for loans without critically reading the terms and conditions and analysing if those conditions are actually favorable and time permitting in conjunction with the kind of business or the kind of investment they want to do with the loan. Also, some other people do not even wait to maximize profits, they actually jump on any available loans they see and this is always not the way out because there are some circumstances that may impede your chances on making profit and this will mean accumulation of more interest rates on the original capital. It is always best to take loans that do not have huge interest rates and also consider taking loans that have a logical timeframe or repayment. In addition, it is good to avoid taking loans in the best way as possible. You could ask for other alternatives like; empowerment opportunities, grants, from government or crowdfunding or you could even borrow money from family members which might not require you to add an interest rate when returning the money.

 

[funmi]

Many people become indebted as a result of the fact that are living above their means of income and they are struggling to meet up with a certain level of societal standards and expectations. I know of so many people who are living above their earnings and they do this all in a bid to impress those living in their neighborhood so that people may think highly of them. Whereas they do not earn up to what they are showcasing to the people to see. This is most times regarded or called fake life. There are others who lack self control when it comes to spending, they seem to have a very high taste for virtually everything. Beginning from their shoes to wears they always go for expensive stuffs all these normally gets them indebted. There are others who are so used to gambling and what ever earning that get either from their business, or jobs they will always prefer to spend it on gambling. There are others who has taking the use of alcohol as a life style, hence they spend virtual all their earning on alcoholic substance or drinks and they become indebted. There are many other reasons.

 

[eldavis]

One major reasons alot of persons end up in debt is poor management skills. I have been through this before in the past, so I am speaking from experience. Alot of persons tend to spend more than they are earning hence they run out of money even before another one comes in. They end up taking loans just to sustain themselves. Most of these persons are unable to separate their wants from their needs, hence they misuse the little resources they have.