7 Reasons Why People Never Get Out of Debt (and how to avoid these pitfalls)
Most people today believe that debt is an everyday part of life. They have come to accept it like it is a member of the family. But the danger with that is the risk associated with debt. If you are unable to pay your payments, the loan defaults and racks up more charges like interest and late fees. Learn why people never get out of debt and how to avoid these pitfalls.
Getting out of debt takes work. It is not for the faint of heart, but the rewards of not owing anything to anyone are amazing. Yet many people will never experience how sweet that payment-free life can be.
Let me be clear…I’m not mad at you if you carry debt. But chances are if you are reading this, you wish you didn’t. That’s why I’m here to bring you hope.
But first we need to know why people never get out of debt.
Why do some people stay in debt?
1. They do not have a budget in place.
Ahhh, the budget. I could not write a post about debt and not have the word budget mentioned. Here’s the thing, a budget tells your money where to go. If you have a budget in place, and you are sticking to it consistently, you have a plan for your money.
More often than not, people go into debt because they have not planned where each dollar goes. Let’s use Christmas as an example.
It comes around every year.
But so many people buy gifts on credit cards because they have not planned for Christmas expenses in advance. That is where the budget comes in.
Having a line on the monthly budget for Christmas expenses will help alleviate the temptation to go into debt during the holidays because you would have saved all year long for these expenses.
The same is true for simple things like groceries. Having a set budget for groceries each week keeps you from running out of money before the month is over.
Getting into the routine of writing a budget may seem daunting at first but I promise it will save your financial life. It is the most effective way to improve your money struggles.
A budget app that my family uses and I highly recommend is Every Dollar.
2. They have no emergency fund in place
Did you know that many Americans today don’t have enough money in savings to cover a $500 emergency if it came up?
And I can assure you as the sky is blue, an emergency will come up. Because of this, people often rely on the false security of a credit card or a bank loan to help them get through unexpected circumstances.
This keeps the cycle of crisis-debt-crisis-debt going and is why people keep their debt around for so long. When you have an emergency fund in place, you can sleep better at night because that protection makes an emergency an inconvenience rather than a hailstorm (and we Texans know a thing or two about those).
Building up an emergency fund takes time and discipline but is not important for keeping yourself out of debt when the unexpected occurs.
3. They are convinced that they will always have debt
Some people have had debt for so long that they think it is just a way of life. Unfortunately, they have accepted it as the norm.
Maybe it is because they have never had anyone tell them otherwise.
Well, let me send you a lifeline…You Do Not Have to Live With Debt! I don’t care what the credit card companies say, or what the commercials tell you.
I am here to tell you otherwise.
You CAN live life without any debt. Living debt-free takes work and intentionality but it can be done. You just have to have a plan, and I am here to help you along the way
4. They cannot curb their spending
This is a big one. Getting out of debt not only requires a plan, but it also requires discipline. Impulsiveness and emotional spending are traps that many people find themselves in. Some money struggles are not just caused by emergencies and unexpected events.
Yes, those things do happen. However, if we are going to get our finances under control, we have to learn to say, “No!” to the temptation to spend our hard-earned money on all the shiny new things.
I asked my kids the other day why they think most people buy things impulsively. Before I could finish, they both yelled out….”FOMO”!!!
FEAR OF MISSING OUT – This is really a thing. And the item we want so badly oftentimes ends up in the back of the closet because we thought we had to have it. But as it turns out, it wasn’t all that important to begin with.
Buying things on impulse or without thinking it through hinders you from making progress toward paying off debt. Over-spending is a huge setback and is why people stay in debt.
5. They Only make minimum payments
Financial guru, Dave Ramsey, gives a wonderful illustration of the cheetah and the gazelle (taken from the Bible passage Proverbs 6:1-5). The cheetah, being a hunter, knows it was outrun its prey to survive. The gazelle, being the prey, must outrun the predator to survive.
Think of your debtors as those same predators that we must RUN from in order to survive financially.
When it comes to paying off debt we must RUUUUNNNN!!!!
Paying off debt MUST become a priority for us and not something that we just put on the shelf for a better time. You see, making minimum payments on things like credit cards, student loans, car payments, etc… is exactly what those predators want.
They send all those warm and fuzzy letters in the mail talking about how loyal we are, so here is a credit limit increase, or blank checks we can use on anything we want. You know what I’m talking about! And, in that moment we feel like We. Have. Arrived.
Now, step back and think of the cheetah and the gazelle!
Do you still feel warm and fuzzy inside?
That sweet little loyalty letter isn’t so sweet when you think of it as a cheetah out to destroy you and your family. This is why we must make paying off debt a priority and do so with Gazelle Intensity and RUUUUNNNN!!!!
6. They are trying to keep up with the Joneses
How is it that we always seem to impress people that we either don’t know or don’t have a close relationship with? Something within us seems to have a need to outshine the other person.
Pride, insecurity, or simply having a “one-up” on someone else is dangerous territory for anyone who is wanting to live in financial freedom.
Trying to keep up with someone else only leads to further problems because stems from a lack of gratitude. Gratitude is being grateful for what you already have, despite what other people have.
Gratitude is a choice and a lack of it keeps you chasing after bigger, better, and more. You see something that someone else just bought and you feel entitled to it as well.
One of the key reasons why people stay in debt is a lack of gratitude and wanting what other people have just to keep up. Don’t fall into this trap.
7. They are not willing to make temporary sacrifices, so they stay in debt
The final reason why people stay in debt and never live financially free from payments is that they are not willing to make short-term sacrifices. They are convinced that they will be paying off debt forever, so why bother?
You cannot move the needle even a millimeter if you are not willing to sacrifice.
Often time, people don’t even know where to start so they avoid it altogether. I get that 100%! That was me for a long time. It isn’t until you get to the point where you are sick and tired of making payments to someone else that you take aggressive action.
When my husband and I reached that point, we didn’t care what it took, we were determined to get that chain of debt from around our neck and be free. Yes, we had to sacrifice and yes, we had to say no to a lot of things. But let me tell you, it has been so worth it.
And that, my friend, is my hope for you as well. You can do this and kick that debt to the curb.
I promise you, it will be worth it in the long run.
