It’s common to find people chalking debt up to poor budgeting or a taste for the finer things in life. In some cases, this is true — some people may find their desires have surpassed their financial realities, and now they’re on the hook for making up the difference.
However, more often than not, debt arises as a result of life circumstances. Case in point: Here are five possible causes of debt and how to address them.
What Causes Debt?
The narrative of debt always being a problem of overspending is cut-and-dry. It says people with debt have brought it upon themselves through voluntary spending habits. Again, sometimes this is true. But this theory fails to account for many key causes of debt.
Here are just five potential causes of debt.
This just scratches the surface as to why people get into debt. But one thing is clear: It’s unfair to say debt is simply a matter of miscalculation or overspending. It’s a complex issue with roots in many different areas of life.
How to Address Your Debt
Debt can come from many sources. But how can you go about addressing it? The short answer is it depends on the amount and types of debt you’re facing.
According to Freedom Debt Relief reviews, many people who have enrolled in debt settlement programs cited medical bills and credit card debts as their reasoning for doing so. This is because settlement — which involves negotiating with creditors to lower how much you actually owe — only works for unsecured debts.
Consolidation is also a possibility, either by transferring high-interest credit card balances to a card with low or zero-percent interest or by taking out a loan and using it to repay the rest of your outstanding debts. To get approved for a consolidation loan, be aware you’ll need to provide proof of income.
Bankruptcy is an option in extreme cases where repayment in full is impossible — but treat this strategy as a last resort because it will damage your credit for years to come.
Understanding why you’re in debt is the first step toward choosing the most advantageous solution for your specific situation.
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