How can people let themselves get so much in debt?

Question

I've heard reports that the the average household is $25,000 in debt. I am constantly amazed at this and would like to know how they allow this to happen. Does the phrase "living within your means" mean anything? Personally, I've never had any debts and pay as I go. I have a house and car that are paid for. If I need a new car, I save until I have the money before I buy it - and my take-home pay is about $33,000 a year.

Answer 1

You didn't mention if you're married or have children, but from what I gather, you sound like a single person. It's easier for unattached people to manage their finances without a spouse and family to support who are in constant need. This is especially true if the spouse is a stay-at-homer. The more people the more money is needed for food, larger residence (probably mortgaged), insurances (life, home, health, car), educational needs, medical - not to mention the proverbial "keeping up with the Jonses" in the way of gadgets (sometimes not even necessary ones).

It's a slippery slope for many who live pay check to pay check to provide for all these needs with the ever-increasing costs of them and a salary not keeping up with the spiraling inflation.

Answer 2

Our credit card debt has been as high as $12000. But it's currently under $1,000 a month and we pay it off with no interest.

How can one get in debt? Well, spending money you don't have via a credit card is a fast easy and popular way. Another thing, though, is medical debts. Remember, we are a nation of people lacking adequate healthcare insurance. My deductible is close to $3,000, and there were two years in a row that I had to pay most of that right off the top. Also, things like car trouble and having to buy a new car. And work on the house. An electrician recommended we rewire because of a problem with our main fuse box, and it will cost over $2,000. We can put it off until we have the cash, or use the card and -voila!- be in debt. Also, our family lives two thousand miles away. One trip there a year sets us back a thousand bucks or more. But what are we to do? Just email each other a lot?

What I'm saying is, this question will attract a bunch of tart short responses about how stupid people are. But the truth is sometimes life circumstances help put you in debt. Or put another way, sometimes choosing to live life, versus just sitting back sipping iced tea and reading last weeks newpaper by the light of an open window, costs.

Answer 3

It's not about being greedy or anything. It just happens at times that you need the money and you can't help it. My whole life, I was like you, never wanted to get into any debt, always saving my money to buy the stuffs I want but then came a moment in my life where i had to make the choice to abandon my studies or take a loan to complete, what would you have done in my place?

And now, I'm stuck with a debt. Fortunately, it's not a huge loan, can be paid in a few years.

Answer 4

Basically this happens because people don't understand a simple concept about borrowing money, especially borrowing through a credit card, which is essentially what you are doing when you use a CC. If you walk into a place and want what they have for sale, fine, but if you can't afford it out of your regular checking account, you also can't afford to simply put it on your credit card. If you can't pay for it when the bill comes due at the end of the month, don't buy it, save for it and pay for it. Of course if everyone did that all CC companies would be out of business, lol.

Answer 5

First of all I am very proud that you're able to "live within your means", that is a very hard thing to do in today's society.

Banks give young people credit cards at the drop of a hat. I know this from personal experience.

I got my first credit card when I was 18.
I thought I was responsible enough to be able to handle it, especially since I come from a family full of debt, I thought I had learned from my parents mistakes.
I was fine for a couple of years, and to this day don't really know where I went wrong.
It is the wonderful concept of Instant Gratification that exists all too much in this country. if I wanted to buy something, I could save 15% by opening such and such account. I always thought I had it under control. it's not like a checking account where you have to stop when the money's gone, and you don't really pay attention to how much you're spending.
I always paid my bills on time, and paid more than the minimum, so before you know it, I have all these people wanting to give me more credit.

I come up with all these "plans" to get me out quick, if I take out this loan and pay everything off, then it will be easier to pay quickly, consolidation. but it was always way too easy to get another credit card, or to use it when I had no money.

I am not really sure how it happened, but I always was able to convince myself that I wasn't doing bad, and that I would be able to pay it down quickly.

Now I know better, having a car that is not paid for, multiple maxed out credit cards, and a few loans at banks.
I am now not trying to take any shortcuts in getting myself out, I know it's going to be a long hard road, and I am aiming to be where you are!

that's the thing that does it. shortcuts, instant gratification and impatience, all added to the ease of getting credit, and the ease of convincing yourself that everything's going to be ok.
It's a horrible thing for society to do with our young people...but it happens, and I think it's getting worse.

Good luck to all in debt!

Answer 6

spending more than you earn is the American way of life, Americans love extravagance and luxury, they are constantly exposed to the extreme...I think it's irresponsible too, but banks and other financial institutions are so generous, they give loans and mortgages to almost anybody regardless of income. Not everybody is as responsible with their finances as you.

Answer 7

Because people want bigger and better things, they get greedy.. and the lenders or banks know that!

Its like giving drugs to a druggy!

Answer 8

We are a nation who has the (WANT DISEASE), I want, I want, I want. But when it comes to making the payments on the I WANT DISEASE, we change to I WON'T DISEASE.

Please keep doing what you are doing with your way of living. You are like a rare Diamond in this world that we live in and I take my hat of to you.

Answer 9

well i had the same,then lost it all,cause i had total trust in a woman who said she could handle every thing,the next you know im broke.some people in these situations ,had no control of it.