7 Reasons Why You Are Drowning in Debt


Being 100% free of all your debt is a dream more than 30% of Americans people struggle with. Imagine being able to sleep a full night's sleep, with every single worry swiped from your mind.

Getting overwhelmed with debt have many repercussions. Aside from the emotional toll, debt could have a negative impact on your credits scores.

Many people that engage the services of buy here pay here car dealer because of their inability to access traditional dealership blame it on bad credit scores that comes with previous debts.

Isn't that discouraging?

A bigger downside is this: many people have absolutely no clue as to why they're in such a life-choking debt.

I'll talk about some possible reasons why you might not be able to "shake the shackles" of debt.


1. Out of Sight, Out Of Mind

The golden truth of being a consumer is that "if you can't buy something with cash right there and then, you can't afford it."

Sadly, more than 57% of people disagree with this.

However, there's a silver lining to debt - there's good debt, and there's bad debt.

Good debt usually has interest rates below 10%. Hopefully, the savviest of the savvy take advantage of interest rates with tax advantages, on top of those low interest rates.

Home mortgages (in best-case scenarios) and student loans are prime examples of "good" debt. Whatever appreciates in value is considered good debt.

The evil "bad" debt?

Those are things like titanium/black/gold credit cards and 35-40% loans. Nix them, if you can.


Out of all the credit cards you have, pick the one or two big boys that have the lowest annual interest rates. These cards will then become your "emergency" cards. All the other plastic cretins? Hide them. Remember the adage, "out of sight, out of mind."

2. Poor Money Management

An example of poor money management is buying everything new. Buying new means no one else used it before you.

So what?

There is no shame in using used things. There is shame, however, in having your new toys, gadgets, and stuff taken away because you couldn't pay for them.

Buying everything new sets you up for walking down the red line. "Used" doesn't mean "low quality." Being frugal doesn't mean "shopping like poor people." It's okay to be frugal and buy used.

3. Poor Mindset

It's a fact in today's business world that your mindset determines your success or failure. Having a millionaire mindset ensures you have half of a chance of getting out of debt's potholes and never again fall into financial quicksand.

In "The Millionaire Fastlane", author MJ Demarco attacks several financial institutions and the ludicrousness of them, such as 401(k)s.

Demarco writes, "How to get rich slow: Go to school, get good grades, graduate, get a good job, invest in the stock market, max-out your 401(k), cut up your credit cards, and clip coupons (e.g. be the king of expedia coupon use) ... then someday, when you are, oh, 65 years old, you will be rich."

Having enough money to support yourself and your family several lifetimes over isn't worth a roll of toilet paper... if you're miserable the entire time.

4. Not Budgeting While Married

This tip is extremely handy for newlyweds. Making a budget as a married couple is not enough. Sticking to that budget is. It's why people who manage money as a married couple are more successful than people who spend, willy-nilly, without developing a plan.

You can even use pre-made spreadsheets to keep track of all your income and outcome - totaling the costs at the end of each month (this is a bonus, as it makes filing your taxes come tax season much more bearable).

Tracking that budget is more important than merely creating the budget. Want to make sure you both stick to the track? Use a handy envelope budgeting system. This is a perfect system for younger couples who don't make a lot (there's no shame in that).

Everything has limits, and as a married couple looking to manage money, the envelope budgeting system will set you on the right track to recognising those limits and respecting them.

5. Throwing Money Down The Drain

Want to know how you found yourself in debt quicker than it took you to blink twice? Not saving enough of your money (10% doesn't count for anything, these days, as MJ Demarco proved)... Or even nothing at all.

In his book, Demarco wrote "Society, through its 'Get Rich Slow' mandates, has defined 'normal' for you. Normal is waking at 6 a.m., fighting traffic, and working eight hours. Normal is to slave at a job Monday through Friday, save 10%, and repeat for 50 years. Normal is to buy everything on credit."

The only way saving your income (to keep from spending most of it) helps your debt, is because it can be used as an "emergency only" box.

6. Your Mortgage Is Too Big

Sometimes, mortgages can remind people of nooses. Others, they can be a source of income.

According to the Federal Reserve, on the average, home loans make up a grand whopping 68% of household debt. Isn't that a giant "boulder" people are carrying on their shoulders?

A few simple quick fixes to this problem would be to find a roommate to take care of some costs, or you can opt for renting a spare room to guests. Another strategy is to get rid of unused liabilities like Timeshares.

One of the most renowned American radio talk show host, Laura Ingraham helps people get rid of their timeshares permanently by endorsing reputable companies that help with such case.

So, taking inventory of such things you have that can be better managed for income generation (or cost reduction) could go a long way to help you out of debt.

7. Entitlement

In small towns, when Wal-Mart set up shop and "ruined" other shops, local business owners complained. "We were here first!" They said. "Wal-Mart's stealing our business!"

So what?

This little trap called "entitlement" ensures you're on the path to ruin. According to MJ Demarco, author of "The Millionaire Fastlane", thinking anything else is bad for you.

"Expect a price to be paid. Expect risk and sacrifice. Expect bumps in the road. When you hit the first pothole (and yes, it will happen) know that you are forging the process of your unfolding story."

Last Thoughts

To stay out of debt, it is imperative that you reward yourself for a hard day's work - or when you pass a special milestone.

Always remember that if you can't buy it with cash, right now, you can't afford it. This is the dogma that prevents credit card companies from stealing your life, your money, and (most importantly) your freedom.