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The Sucky Reasons You Are Always In Debt

Ever wondered why?

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There is no point denying that everyday American’s are rubbish when it comes to managing their finances.

It is a society where the definition of broke is how much month is left at the end of your money, and it is a more common issue than you probably realize. We’re not talking about those who can afford to buy a $250,000,000 home, but even those that are bringing in over $76,000 a year tend to find they are living from paycheck-to-paycheck, which must mean there is more going on than just low pay.

Oh, yeah, the big question that is on almost everybody’s lips is, “why is it that even those people that are on relatively good incomes always broke?”

That is the question we asked a wide range of financial experts in the hope of working out just why so many people end up battling against financial hardship. Hopefully, this list will help you realize why you are always so broke at the end of the month, and thus what you can do to improve your lot.

  1. The Education System Sucks

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Math. English. Chemistry. Politics. Art. Trigonometry. Football. Drama. Schools teach all of these things to help you better understand your option and what you want to pursue in your career – all of which is a choice – yet they don’t teach you the one thing that affects everybody – the one thing that isn’t a choice – money. That is the root of the issue; the education system; a system that is designed to help us do well so that we can get good jobs and thus enjoy a good salary. But all of this is redundant if people don’t know how to manage their money most effectively. What can you do? Well, apart from starting a petition and begin lobbying, your best bet is to seek out a money management class – either online or in your local area – and be proactive about your need to learn.

  1. You Are Caught In The Debt Trap

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Unfortunately, it is so easy to get caught in this dreaded debt trap, especially if you start out poor to begin with. It is part of the flawed system we live in. Unfortunately, when we get caught up in all things debt, you tend to get desperate, looking at more than just a several lending options in a bit to dig your way out. Credit cards, payday loans consolidations, and settlements, it is all easy to fall into. We’re not saying that any of these are evil, in fact, many of them are needed by millions of people. However, when people are desperate they don’t always get the best deal or pick the right option, that is the problem that needs addressing.

  1. You Have No Emergency Fund

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One of the most significant gut punches you can get financially is an unexpected cost that you can’t pay. That is why having an emergency fund is so important. However, 73% of Americans have less than $1000 dollars in their savings account. That is seriously harmful. That is what is putting you are so much pressure because, when life doesn’t go to plan – and it rarely does – you haven’t got the resources to ride it out. To put it in terms of severity, the founder of Good Financial Cents listed it as the second most harmful thing to your financial stability, behind not knowing the full extent of your debt.

  1. Your Are Ignorant About Your Personal Finance

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This one links back to the education system slightly, but the reason you – like most people – are broke at the end of every single month is that you haven’t been taught (or learned) about personal finance. This is a big problem because, as some famous wordsmith once said, knowledge is power. Let’s use the term compound interest. This is one of the big reasons why you can’t get out of debt and yet, chances are, you don’t even know what it means? It means the interest you pay back is accumulated. The other thing that needs to be addressed urgently on this front is our attitude to personal finance because, at the moment, a lot of people seem to spend money to make them happy now without any consideration of how their money could buy them financial freedom in the future. It isn’t an easy shift, but it is one you should have on your mind.

With all of this in mind, the fundamental formula that everyone needs to appreciate, accept and champion is this: financial woes come from spending more money than you make. That, as far as we are aware, is the only cause of bankruptcy. Do with that what you will.

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