What’s this Episode About?
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Because paying down debt is already an uphill battle, its important to understand the reasons why people get in debt in the first place. This will help families understand what caused them to build that much debt in the first place, know what temptations they need to overcome, and then know how to prevent themselves from going back into debt again after paying off their debt!
We collected this list from a number of sources to get the most thorough list. We found that many of the reasons resonated across the board:
- Polling our readers on TTC
- Polling readers on social media
- Personal talking and meeting with people and emails
- Our own personal reasons for getting into debt
33 Reasons Why People Get in Debt (not listed in any particular order)
- It all started with The American Dream
- Medical Debt
- I fell victim to the credit card marketing
- Not paying attention to what I was doing
- A lot of high cost bills happened all at once. I panicked
- Emergencies (car, etc)
- Student Loans
- Car loan
- Emotionally trying to fill a void
- Making excuse to experience life before children
- If the creditors approved us then there shouldn’t be a reason why we couldn’t handle it
- Keeping up appearance of two college-graduate professionals
- Thinking it was owed to us because we had gone to school and had full-time professional jobs
- Not wanting to tell one another, “No!”
- Sheer lack of communication in general
- It just happened
- The problem with multiple credit cards – if you’re a good payer they will raise your limit
- Not understanding how interest works
- You keep spending as long as the credit card goes through
- Also not continuously not balancing the checkbook or monitoring the spending
- We really never checked our credit card statements
- Temporary loss of one income – long enough to get behind a bit more
- Loss of job
- Poor money management
- Lack of savings
- Reduced income – either in current employment or going from two incomes to one income
- Home improvement projects (second mortgage)
We address a few of the reasons more in depth
It all started with The American Dream
We attempt to answer the question, “What is the American Dream, anyways?” After addressing that, we then work through the steps on how to overcome and break from the mindset that we need to meet that predefined dream. Finally, our discussion drifts into how to define a new American dream for our own families and how that can result in a much healthier financial and emotional place.
Credit card debt
We share that the average American is in $15,000 of credit card debt.
There’s multiple reasons people get into credit card debt:
- Fell victim to credit card marketing – Flyer in the mail, commercials, ads online, even phone calls. Their marketing is really good!
- Your credit card limits were raised, maybe all of them at the same time – When this happens, it tempts you to spend more and the balances get out of control
- 0% interest on balance transfers – We fell into this ourselves. Our goal is not to say this step should never be considered, but rather show you the dangers present. We explore this more in depth and share some warning signs on when this approach moves into the danger zone.
Throughout this episode we discuss actionable steps on how to help families work through these popular reasons for their own debt and how to create a sustainable answer and approach to overcome each one.
Tips shared throughout the episode:
- Our goal is to get a sustainable lifestyle – Understanding the why and how of how we got into debt in the first place will help us know what to change and what to guard against so we don’t go back into debt
- Be wary of social media – What is shared often is everyone’s “best self”. We need to be careful to not be desiring what everyone has – or rather what they post that they have.
- Need to be careful about living life where “we just let things happen to us” – Instead, we need to be more intentional and keep ourselves from going down that path in the first place.
- Evaluate your relationships – Look at your relationships and ask whether they are healthy in encouraging you to chase after debt. Understanding that we are the “average of our five closest friends” might help us know some of the boundaries we need to setup with our current relationships and help us look for healthier relationships in the future.
Our 2% Tip of the Week:
In this week’s episode we discuss a head smack way to get started bringing in extra income.
- Sell items you have around your home on eBay or back to Amazon. Start with electronics, books, games, text books.
- Use the Amazon app on your phone to find out how much you’ll receive for selling the item to them. Even go to garage and estate sales and use the app to find items you can sell to Amazon
Tune in for the next episode (to be released later this week) for part 2 on this topic as we dig deeper into a few other reasons: think medical debt.
Resources mentioned in this podcast:
- Check out our book, The 2% Rule to Get Debt Free Fast: An Innovative Method To Pay Your Loans Off For Good
- We created a 64-page workbook to give you the tools and the resources to help you pay off your debt. You can see the digital version or the printed version.
- Use the family questionnaire (in our workbook) to discuss your long-term and short-term goals to establish your priorities for your family. Once you can set those as your focus you can ignore the distractions around us.
- Check out this article on how to sell your items back to Amazon or go directly to the Amazon Trade In page to get started.
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