Why People Fall Into Debt
Consumer debt in the United States continues to grow and is now approaching $3.4 trillion as of May 2015. The average person, including children, owes roughly $10,200 in some form of debt. Most of that debt is in the form of auto loans, student loans, and credit card payments. With so much existing debt and the numbers only getting higher, is there any way to reverse the trend? Possibly, but first we must examine why it is that people fall into debt.
- Cars – When your neighbors start driving the latest luxury SUV, you feel like you have to keep up. Spending $70,000 on a vehicle just isn’t in the budget for most people, especially when you can meet the needs of your family with a $25,000 vehicle. Tip: When buying a car, buy what you can afford, and avoid what you cannot pay for.
- Must-Have Gadgets – The latest phone, tablet, or surround sound system can be tempting. When the newest iPhone is released, you may feel pressured to upgrade — even if you can’t afford it. Having the latest gadget is exciting, but it will also be obsolete very soon. Be wise when buying these types of items and only purchase when necessary and when you can afford it.
- Unnecessary Obsessions – Some people shop simply because it makes them feel good. Even if the purchases are small, frequent spending can quickly destroy a budget.
- Co-Signing Loans – Too often, people get roped into co-signing a loan for a family member or friend. When that person defaults, the co-signer is stuck with the debt. While co-signing can sometimes help a loved one, always be cautious — it could damage your finances and your relationship.
- Renting – There are cases where renting makes sense, but often it’s a financial trap. If you can’t afford to buy a TV or furniture outright, renting is not the solution. Better option: Save the money and buy the item later instead of locking yourself into costly rental payments.
- Credit Cards – No surprise here — the average family with one credit card carries over $15,000 in debt. A credit card should not be a way to buy things you can’t afford. Rule of thumb: If you can’t pay the credit card bill in full when it’s due, don’t make the purchase.
Breaking the Cycle of Debt
If people recognize these common causes of debt, they can change their spending habits and stay out of financial trouble. For those who want to pay off or consolidate debt, a car title loan may be a helpful short-term solution.
Need quick cash to pay off debt or cover unexpected expenses? Embassy Loans can help you access your car’s equity — fast, simple, and secure. Contact us at (833) 839-2274 today or apply online to learn how a car title loan can help you regain financial stability without giving up your vehicle.
