Young adults have their entire future ahead of them. Unfortunately, this means that many of them take advantage of the time instead of doing everything they can to get ahead. Many of my friends talk about debt as if it were just another fact of life. I can’t help but wonder if we are desensitizing ourselves to the negative aspects of it.
This may seem like an obvious question, but if the answer is so clear, why are so many people still struggling with their finances? Through the recent financial hardships of the global financial crisis, many people have become aware now, more than ever, of the importance of understanding your personal finances. While some people still live from paycheck to paycheck, it has never been so clear that everyone should be implementing a budget or savings plan, to counteract any unforeseen expenses. Being prepared is the best thing that you can do, in order to avoid debt. Understanding why people get in debt can help us to avoid the same mistakes, often assisting us to create a healthier financial future.
The Obvious
The most obvious, yet also the most common, reason why people get in debt is simply because they are spending more than they are earning. Most workers receive a regular income from employment, whether it is paid weekly, fortnightly or monthly. Receiving a regular salary should enable people to create a budget, including all incoming and outgoing transactions. The fact of the matter is, however, that some people simply do not abide by their budgeting plan, often outlaying more money than what they are receiving. Overspending leads to unnecessary debt, commonly in the form of credit cards or personal loans. To continue accumulating debt is to ultimately dig a financial grave for yourself.
Unforeseen Expenses
On the other end of the spectrum, there are those people who consistently abide by their budgeting plan, always allocating money towards their savings, who are suddenly struck with an unforeseen expense. Unexpected payments are a part of life, but they can really throw a spanner into the works of your financial situation. We’ve all been in a situation, where unforeseen costs arise, such as a car breakdown, an unexpected trip or hefty medical bills. Although these occurrences are unpredictable, we can always prepare for the unexpected, by sticking to a budgeting or savings plan. While the total of your savings may not cover the entire cost, it will greatly reduce it, allowing you to rest at ease knowing that your financial future is not ruined.
What now?
If you have found yourself in the unfortunate place of being in debt, there are always ways to begin your journey back to financial freedom. Learning about debt consolidation is a great start to better managing and understanding your finances. Debt consolidation involves combining all outstanding personal loans, credit card balances and store cards into one more manageable loan. Whether you have accumulated a great amount of debt or are worried about your financial future, talking to a debt solutions specialist can assist you in better understanding your options.
While it’s not always going to be the best option available to young adults, it is something to seriously consider. It may be that which helps you gain your footing so you can start attacking it more aggressively.
Have you ever considered debt consolidation?
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