Possible Reasons You’re Still Struggling with Debt

Debt is one tough son of a gun.

According to Northwestern Mutual’s 2018 Planning & Progress Study, the average American is saddled with $38,000 in personal debt. And that doesn’t even account for home mortgages! Perhaps more alarming, the study finds debt is rising (up $1,000 per person from 2017) and the population carrying “no debt” is shrinking (from 27 percent, down to 23 percent).

Of course, debt doesn’t just happen. It’s always tied to something.

Below are a few possible reasons you’re still struggling with debt, and a few suggestions for how to overcome those circumstances.

Overspending: The first reason for struggling with debt is fortunately the easiest to curb. If you’re overspending on groceries, subscription services, clothing, dining out and the like, the simple solution is to stop overspending.

If you’re going above and beyond in your spending, you may also be over-relying on credit to cover those costs. Instead, consider carrying a predetermined amount of cash with you. Think of it like an allowance. Once that cash dries up, you must train yourself to say “no” to buying a new pair of jeans, lunch with a coworker, or even drinks with your wife. In time, you’ll find a workable spending plan that keeps you satisfied without wreaking havoc on your wallet or your credit score.

Excessive Healthcare Costs: The number-one reason Americans file for bankruptcy is due to medical debt. While you can certainly curb spending when it comes to clothes and dining out, it’s virtually impossible to shun health issues indefinitely.

Banking on insurance to cover the costs might not be enough. The Kaiser Family Foundation finds more than a quarter of U.S. adults struggle to pay their medical bills, even with insurance.

To stymie medical issues from bankrupting you, do your best to create an emergency fund of at least $1,000. That way, if you’re blindsided by an injury, medical emergency, or other unforeseen cost, you won’t be caught totally off guard.

No Budget to Speak of: Don’t have a budget? That’s a problem. It’s easy to overspend when you don’t know how much is realistic.

Sure, building a budget might not sound fun; but it’s vital nonetheless. Start by calculating your take-home pay each month, then subtracting your anticipated costs. Start with rent, gym fees, loan payments – anything that you know the exact amount. Next, tally up all the variable costs including electricity, groceries, gasoline – and anything else that requires monthly payments but varies in total.

In the end you may find more disposable income than you thought. Or, you may find how tight your budget really is. Either way, you now have a map to navigate your life.

No Savings Plan: Financial expert Andrew Housser touts the importance of financial planning one year, five years, and 10 years down the line. This is good advice because it puts the importance of saving in a wider perspective.

Rather than just saving what you can, this strategy urges folks to think about holiday spending, a large purchase they plan to make in the next few years, and the potential financial obligations they may have in a decade’s time.

Create a short- and long-term savings plan to prep yourself for the future.

Only Paying the Minimum Required: Carrying a balance on your credit card is normal – until it isn’t. Unfortunately, many people prefer to pay the minimum balance on their credit cards thinking it’s helping them.

While it’s better to pay something rather than nothing, the minimum balance is designed to extend lines of credit as long as possible. During this time, the interest rate accumulates and drastically increases the overall cost.

To avoid losing control, do your best to pay off purchases when you make them. If you need a little extra time, that’s okay. Just pay off what you can, when you can, rather than just relying on the minimum due.

Debt might be tough to overcome, but a little bit of planning and anticipation goes a long way.