Credit Cards

Being in debt basically means you spent the money you don’t have, which is what credit cards actually promote. The convenience it brings, and the idea that you can purchase anything even if you can’t afford it yet can bring a financial threat. Credit cards are not for everyone. It can be hard to manage, especially if the person lacks self- control.


Acquiring a loan can be a good idea if you are able to afford to repay it, however, this is a slippery slope should you fail to repay as per the guidelines and agreements. Short term lenders like make it clear on their website that failure to repay the loan will cause financial problems and involve penalty charges. So the lenders aren’t really to blame. Or are they? A recent crackdown on UK payday websites was introduced by the FCA last year and numerous payday lenders have consequently gone out of business.

Reduced income

This is one common reason to take on debt. Sometimes, even if you find yourself suffering from reduced income, your expenses are still the same, or they even tend to go higher.

Unemployment/ Underemployment

Closely related to number one, these two have major significance in debt accumulation. Some people may think that these are temporary. However, no one can really tell, and if it tends to extend for longer periods, you are bound to charge your purchases for quite some time in order to survive. This should drag debt along as you have no or inadequate income to go towards debt payment.


Many people can fall trap in this habit, in fact, there are lots who have lost everything in life, even their families, due to gambling. When you got caught in gambling, you just can’t help planning your revenge against “the house”, even if it means using your “real house” as collateral to get some money for playing. Gamblers are often trapped in the notion that they can hit a one- time jackpot and quit, until they lost everything already but still hasn’t won anything back.

Medical Expenses

With ongoing improvements in medical facilities and services, the cost of healthcare also arises. As people are living longer now, it might also mean longer years to pay for medical bills and prescription drugs. What you can do is to stay on top of your health and invest in medical insurance to cover for some of your bills.



Taking out a student loan can be one of the wisest forms of debt, because you are practically investing in your future. However, it would not be helpful if you depend all your needs on it. It pays to have a secondary source of income to limit the amount you need to loan. In addition, you should assume that you would have lowest possible wage after graduation and calculate how long it should take to pay off the loan. If you can have access to scholarships, you should take advantage of them instead of depending on student loans entirely.

Lack of Savings

Having insufficient amount in emergency funds can often drive people into debt, because of the lack of cushion for the unforeseen. Something as simple as a broken heater can ruin your month’s budget allocation if you are living paycheck to paycheck. Because this is something you need to fix urgently but do not have enough cash to pay for, you will need to charge your other purchases just to address this small problem, which could’ve been avoided if you had the extra cash to spare.