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What is the Real Reason Behind Debt?

By: Michael Millington

There are two main situations that lend themselves to accumulating debt. The first thing is the mismanagement of your finances. This can be easily remedied with careful planning and a willingness to live within your means. However, the other situation is a little more complicated. The argument can be made that we do not make enough money to cover what we accrue in debts. With salaries only creeping forward over the years and debts making leaps and bounds in multiple categories, it’s not hard to end up at the assumption that pay rates haven’t kept up with debt. Credit cards, personal loans, student loans and many other forms of debt continue to grow in principle size and with interest rates as well.

The bad thing about the disparity between debts and salaries is that there might be no way to mitigate debt increases fast enough to gain financial independence over time. In many instances those with debt end up taking it well into their later years, oftentimes retiring or even passing away with debt to their name. When this becomes the norm rather than the outlier, then a way to reverse (or, at least alleviate) the problem should be explored to attempt financial stability and independence.

The best way to take care of your debt is to plan for it for the present and for the future. It starts with taking into account what you can afford to pay to your debts. Make sure it is a comfortable amount so the cycle of debt can cease. The plan to eliminate debt is two-fold: to eliminate existing debts and to prevent new ones from popping up. Debts take many forms, both secured and unsecured. Know the types of debts that you have and what can be done about them. Unsecured debts, like credit cards and personal loans, can be resolved through monthly, steady payments worked out with your creditors.