Three Reasons Why You Are In Debt

Dealing With Your Debt

Debt is manageable. Self-delusion is not.

This is an advertisement that caught my ad on the subway the other day. As soon as I saw this I wrote it down and knew that it would be the perfect way to start a blog post. I started thinking about how I could start off with this quote and then turn it into a whole article. Then I realized that I need to write about why people are in debt. I could have chosen 26 different reasons for why people are in debt. Instead I decided to choose the 3 main reasons from my personal experience with running Studenomics. To make this post fun I also chose to include how I’m guilty of these three common causes for being in debt.

Unrealistic spending.

What’s unrealistic spending all about? It’s simply about making purchases that really don’t fit your budget/current income situation.

A $300 cell phone may not seem like much, but that’s a couple hundred bucks that could be put towards your debt payment or your retirement planning. It’s difficult to be realistic with your spending because we as a society don’t want to be told that we can’t have something and we especially don’t want to miss out on the newest trends or improvements in technology.

Instant gratification.

What’s the problem with instant gratification? By not waiting to make a purchase, you might end up getting ripped of. You also fall into a viscous cycle where you’re always spending and buying more crap until your credit card debt hits an insane level.

Who the hell wants to wait to buy something? I’m personally dying to get either the new iPhone 4 or the Blackberry Torch. I’m not sure how I’ve managed to delay gratification here. I’m usually average at best when it comes to delaying gratification. I justify most of my purchases by telling myself I work hard so I deserve to reward myself. How do you justify your instant gratification?

Not keeping track of your spending.

Why’s it so bad to not track your spending? If you don’t know where your money goes, you’ll never be able to improve your finances. If you find your problem areas you could slowly start to work on them over time. Crash-budgeting and crash-dieting don’t work. It’s all about gradual improvement.

Sometimes I love keeping track of my spending because it reminds of how far that I’ve come with managing my money. Other times I absolutely loathe tracking my spending due to mistakes that I’ve made. It’s like counting calories after you just ate a whole bag of Doritos. Why would you want to do this? You’re just going to get depressed over how much you just consumed.

Why are you in debt? Are you a serial spender or do you just hate keeping track of every penny? I’m personally not in debt but my spending habits could use some serious improvement.

(photo credit: craigemorsels)

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