Have you ever noticed that nobody likes having debt? Seriously, I challenge you to chase down a single person who says, “I frickin’ love debt!” Surely, it pains people to see that money fly out the window every week. But why do people stay in debt?
Unfortunately, Americans have an ongoing love-hate relationship with debt. Not to mention, debt has some enormous physical and psychological side effects. Don’t believe me? Check out these sobering statistics from a survey by Northwestern Mutual:
- 45% of Americans say debt makes them feel anxiety on at least a monthly basis.
- 35% report feeling guilt at least monthly as a result of the debt they’re carrying.
- One in five (20%) report that debt makes them feel physically ill at least once a month.
- One-fifth (20%) of U.S. adults are not sure how much debt they have.
- Over one in three Americans (34%) are unsure how much of their monthly income goes toward paying off their debt.
So, why do people stay in debt rather than getting out? Sadly, there are several reasons why people choose to keep debt around. I implore you to arm yourself with knowledge! Examine your life to see if any of these things hold you back from true financial freedom!
8 Reasons Why People Stay in Debt
1. They have to keep up with others
I knew a guy who worked in construction. Every morning at 5 AM, he would climb into his 1996 Honda Civic and make his way to the work site. Inevitably, he always parked his car between two large pickup truck.
As he exited his vehicle, his ears would receive the quips about his tiny little car. His coworkers were relentless in their teasing, even questioning his manliness. Eventually, the constant snide remarks about his manhood got to him. “I’ll show them,” he said to himself.
One day, he arrived in a brand new, fully decked-out Ford F-150. However, he also had to take out a $38,000 car loan. All that just because of the remarks of a few childish coworkers.
Peer pressure and constant comparison to others keep people trapped in a cycle of debt. Sometimes the pressure comes from the passive-aggressive remarks of others.
More often, the pressure comes from within ourselves. For example, maybe your neighbor just bought a nice new car or an expensive lawnmower. Your own car and push mower look downright junky in comparison. So you go and buy new ones just to keep up.
However, you won’t find joy when you compare yourself to others. Instead, learn to be content with what you have. After all, you don’t know your neighbor’s true financial situation. They could have mounds of debt and just buy stuff to keep up appearances!
“…for I have learned in whatever situation I am to be content.”Philippians 4:11b
2. They don’t budget
Back in college, it scared me to take a look at my bank account. I knew I wouldn’t have anything in there, so I preferred ignorance. Why? Because I had no idea where my money went each month!
Later, I just got a credit card to cover anything that wasn’t in my bank account. This led to quite a large amount of credit card debt later. If only I had a solution to knowing where my money went!
Funny enough, I eventually found an answer to my dilemma! What was it? Budgeting. Yes, it turns out that having a monthly budget got me out of debt. Moreover, it keeps me from going back into debt. How so? Because now I know where all my money goes!
If you don’t keep track of your money, it goes wherever it wants. This can lead to a cycle of continuous debt. In contrast, making a budget tells your money what it can and can’t do.
Budgeting gives you a sense of power and control over your finances. If you don’t know where to start, I recommend beginning with a free app like EveryDollar.
3. They can’t say no
Barry just called again. He wants to go hang out at the sports bar and tell you all about his life problems. You know you’ll end up spending $30 on food and drinks, but you go anyway.
The next day, Drew calls and asks if you want to go with a group to Busch Gardens. You don’t want the group to think you hate them, so you put the $80 ticket on your credit card and go.
Then your spouse decides you need a new TV. You don’t really think so, but you want to keep them happy. So you go to Best Buy and finance a $700 big-screen 4K ultra TV.
Sometimes we have the most difficult time saying a simple two-letter word: NO. Typically, this stems from a fear of what people think of us. We think that we commit the ultimate relational sin when we say no to someone.
However, it’s important to establish boundaries in all relationships. This is especially true when it comes to spending money. Otherwise, you could find yourself going into debt just to make other people happy.
4. They don’t have an emergency fund
One morning, you climb into your car and put the key in the ignition and turn it. Nothing happens. You turn it again and again, and nothing. Your spouse tries to jump your battery, and it still won’t go. You have to call a tow truck, which takes it to a shop where they run a diagnostic.
They tell you that they need to replace the fuel pump and it will cost $900. Oh, and don’t forget about the tow, which was $150! How on earth are you going to pay for all this? Unfortunately, you have to pull out the credit card.
Many people force themselves into debt when the unexpected happens. However, having an emergency fund turns most emergencies into minor financial inconveniences. Most financial experts recommend having at least 3-6 months of expenses in a savings or money market account.
Believe me, emergencies will come. And they never come at the most opportune times. Build up some money for at least a small emergency fund this month!
5. They always want more stuff
You flip on your 32-inch TV and think of how much you really want a 52-inch TV. So, you go finance one at the local electronics store. A new video game console just came out. Why not go and get it? After all, you have the credit limit for a $600 game system plus $200 worth of games. Furthermore, you have an empty room. You absolutely NEED to fill it with furniture! You can afford to finance $3,000 of furniture for 60 convenient payments of $55, right?
I don’t believe it’s a bad thing to buy stuff. However, you shouldn’t buy stuff when you can’t afford it. We live in a time where the monthly payment reigns as king. But in reality, you end up paying a whole lot more than if you just bought it outright.
6. They don’t want to sacrifice
One month, you start taking a good, hard look at your bills. You have a $400 car payment, $7,000 in credit card balances, and another $500 going to various knick-knacks.
Now you feel pretty overwhelmed! You’ve got to get out of this! So you start to talk to a financial coach, and they suggest you begin by cutting things out of your budget. Like what?! Well, your cable, Netflix, and eating out at restaurants. Nah, forget it. You’ll just stay in debt.
Sometimes, you just don’t want to give up the goods for a short period of time. After all, it’s not easy to knock out your debt.
But I would encourage you to keep a long-term vision in your mind’s eye. Think of how much fun you can have when you don’t have ANY debt! Think of how much you could give! Face it, life is a lot more fun without debt.
7. They believe debt is normal
You talk to Joe and he mentions how he got a 0% car loan. Then Lee mentions how she’s still paying off her student loan. After that, your parents call and tell you about the new RV they just finances. You start to think that debt isn’t so bad. After all, why else would everyone do it?
TV commercials have trained us to think of debt as a normal and good way of life. If you can just afford the monthly payment, you can buy whatever you want. Unfortunately, this tactic has worked great. The majority of Americans believe debt to be a normal way of life.
However, I think there’s a better way to live. Can’t you think of a better use of all those monthly payments? I sure can. In reality, debt is a thief that keeps you from living and giving the way you want.
8. They don’t know how to get out
You stare at your credit card statement and you start to feel hopeless. How on earth will you pay off $7,000? Then you take a look at your student loans. You still have $35,000 to pay off. And your car? No way you can pay off $25,000 quickly! Even though you make $80,000 a year, you start to feel as though this debt will never go away.
But here’s the truth: you can get out of debt. Is it easy? Of course not! But is it possible? Absolutely! You can get out of debt by creating a plan and sticking to it!
Finally, you order your debts from smallest to largest and start paying them off using the debt snowball method. The debt snowball method provides the most motivation as you knock out your debts one at a time.
Debt Stinks. Don’t Stay In It.
There could be many more reasons why people stay in debt. But I encourage you to go against the grain. Time to stop making excuses and make a plan to kill your debt? If you need help, here are a few resources I recommend:Try Audible and Get Two Free Audiobooks
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