Controlling The Causes Of Debts

by : Benedict Smythe

A very large portion of the world population is presently beset by grave debt problems...debt problems that often times lead to the filing of bankruptcy. Statistics reported that in United States alone, over 1.3 million bankruptcy petitions are filed last year and the number is still growing by leaps and bounds. Debts are not the sole concern of the low income earners. More often than not, people with six figure salaries incur the most debts.

Poor management of income is the most common cause of debts. Spending more than what you earn would result to unmanageable finances. Irrational and impulse spending would cause a person to be overwhelmed by debts. This concern can be easily solved with effective budgeting. A monthly plan will be easy enough to make since all you have to do is fit the expected income to the listed possible expenses. This budget will curve the impulse to buy non-essential things and will effectively cut down expenses. With the aid of this monthly spending plan, debts will be reduced.

Reduced income due to unemployment; underemployment, death of one of the earners in the family and due to divorce can cause the mounting of debts. A reduction of income should also mean a reduction of expenses. But this is not always the case since oftentimes, debts would fill the gap. People would have the idea that underemployment or unemployment is only temporary and debts incurred will be paid once earnings is back to normal. Bringing the expenses in line with the current income would be more effective.

Lapse or gaps in medical insurance coverage would also cause a person to be snowed under by debts. Nobody welcomes sickness but being sick is beyond the control of anybody. Uncovered medical expenses would constitute debts. Medical insurance premiums should be on the priority list of your budget. Saving a part of your income will not come amiss. Nothing would beat being ready for unexpected expenditures. A "nest egg" or a saving cushion would prepare you for any financial strain that would result from illness, job layoffs and divorce.

Enormous debts could result from gambling. Compulsive gamblers wouldn't think twice to mortgage the house, the car and any other possession of value. Since loans are always available, gamblers are weighed down by excessive debts. Counseling organizations are always available to help compulsive gamblers.

Credit Counseling will help a distraught individual to manage his debt concerns. For a minimal fee, these counselors would help you with your debt problems. These professional counselors who are expert in financial management could give you invaluable support to regain your financial footing. In U.K., Wilson Field is one of these reputable agencies who give assistance to individuals burdened with debts.

Most people think that money is meant for spending. No enjoyment will be derived from looking at it unless you are a miser. But since money does not grow on trees, indiscriminate spending should be avoided. It is always prudent to save for the rainy day. At the end of the day, it is you who will reap the rewards or suffer the consequences of your financial mistakes.