Fall Into Debt
Derrick Rose
Mr. Tolaramer
ENG 1111
September 9, 2011
How People Fall Into Debt In today’s financially demanding society, it is unfortunate that some people find themselves having to pay off large sums of debt. It can be a mentally stressful situation. There are many different circumstances as to why people accrue debt. Some struggle with financial discipline and personal responsibility. While others who are more responsible, can still succumb to debt if they suffer a sudden job loss and can’t meet the financial requirements they are obligated to. Money mismanagement and unexpected occurrences are some of the most common reasons why people fall into debt. Credit card misuse is often a source of a person’s debt problems. Some …show more content…
people do not take enough consideration in to the interest rates that come as a result using credit cards to make purchases. If they are unable to meet their payment deadlines, then late fees are added which compound the problem. Suddenly, borrowing and purchasing items with credit cards starts to become an increasing burden. The average person usually earns a moderate pay salary, which can be just enough to cover the household expenses and cost of living, leaving little to be saved. However, that still does not deter irresponsible spenders from making impulsive purchases with credit cards, knowing they will struggle to finance their purchase. If you’re not wise with the use of your credit card, then you can expect to encounter debt. Spending more money than you can afford to for something you don’t really need is also a bad habit which can lead to more debt issues.
Rather than responsibly determining purchases on actual savings and income, people presume their income will always be there and leverage against future income to support a materialistic lifestyle. Extravagant and indulgent shopping habits tend to pile up on your debt. Homes, cars, furniture, clothing and jewelry are items that are frequently purchased on credit. People buy homes that are too expensive to impress their neighbors, not because they need the space. They pay for marble floors and granite countertops because they are fashionable, not because they are more functional. They buy cars, jewelry, and expensive designer clothes to give themselves a sense of importance…to demonstrate their superior status. Unfortunately, these luxury items are only symbols. They represent status, but are often a better indicator of living beyond ones …show more content…
means. People who are at the peak of their financial life feel like they are in a comfortable position to splurge on luxuries.
However, a sudden job loss or pay cut could become financially crippling and severely alter the financial position that they were once in. Now those mortgage payments and car loans become difficult, if not impossible demands to meet. People who lose jobs were they previously earned high salaries, would willingly take on jobs which pay significantly less to try meet their payments. Yet, the light at the end of their tunnel seems miles and miles away. Losing your job is not the only thing that can come unexpectedly. Serious medical problems and severe accidents are also circumstances that are not foreseen. Usually, someone with a decent health insurance policy can cover most of the medical bill but the remainder of such a large amount, compounded with housing expenses and the cost of living, can be extremely difficult for them to pay off. It complexes the situation even more by being stricken to a hospital bed and not being able to work and earn
income. Whether through careless spending or through unforeseen occurrences, debt is a problem many people face. On the other hand, there are also ways to avoid debt. A good way to prevent falling into debt is to always have an emergency savings account which would only be touched in times of sudden need. Having one is a sort of security for times when life surprises you with financial blows, with it you are most unlikely to run into debt. Good budgeting skills can also be helpful. It will help you track your expenses and is the best way to learn where you can cut some unnecessary expenses and help yourself avoid debt.
[698 words]
Mr. Tolaramer
ENG 1111
September 9, 2011
How People Fall Into Debt In today’s financially demanding society, it is unfortunate that some people find themselves having to pay off large sums of debt. It can be a mentally stressful situation. There are many different circumstances as to why people accrue debt. Some struggle with financial discipline and personal responsibility. While others who are more responsible, can still succumb to debt if they suffer a sudden job loss and can’t meet the financial requirements they are obligated to. Money mismanagement and unexpected occurrences are some of the most common reasons why people fall into debt. Credit card misuse is often a source of a person’s debt problems. Some …show more content…
people do not take enough consideration in to the interest rates that come as a result using credit cards to make purchases. If they are unable to meet their payment deadlines, then late fees are added which compound the problem. Suddenly, borrowing and purchasing items with credit cards starts to become an increasing burden. The average person usually earns a moderate pay salary, which can be just enough to cover the household expenses and cost of living, leaving little to be saved. However, that still does not deter irresponsible spenders from making impulsive purchases with credit cards, knowing they will struggle to finance their purchase. If you’re not wise with the use of your credit card, then you can expect to encounter debt. Spending more money than you can afford to for something you don’t really need is also a bad habit which can lead to more debt issues.
Rather than responsibly determining purchases on actual savings and income, people presume their income will always be there and leverage against future income to support a materialistic lifestyle. Extravagant and indulgent shopping habits tend to pile up on your debt. Homes, cars, furniture, clothing and jewelry are items that are frequently purchased on credit. People buy homes that are too expensive to impress their neighbors, not because they need the space. They pay for marble floors and granite countertops because they are fashionable, not because they are more functional. They buy cars, jewelry, and expensive designer clothes to give themselves a sense of importance…to demonstrate their superior status. Unfortunately, these luxury items are only symbols. They represent status, but are often a better indicator of living beyond ones …show more content…
means. People who are at the peak of their financial life feel like they are in a comfortable position to splurge on luxuries.
However, a sudden job loss or pay cut could become financially crippling and severely alter the financial position that they were once in. Now those mortgage payments and car loans become difficult, if not impossible demands to meet. People who lose jobs were they previously earned high salaries, would willingly take on jobs which pay significantly less to try meet their payments. Yet, the light at the end of their tunnel seems miles and miles away. Losing your job is not the only thing that can come unexpectedly. Serious medical problems and severe accidents are also circumstances that are not foreseen. Usually, someone with a decent health insurance policy can cover most of the medical bill but the remainder of such a large amount, compounded with housing expenses and the cost of living, can be extremely difficult for them to pay off. It complexes the situation even more by being stricken to a hospital bed and not being able to work and earn
income. Whether through careless spending or through unforeseen occurrences, debt is a problem many people face. On the other hand, there are also ways to avoid debt. A good way to prevent falling into debt is to always have an emergency savings account which would only be touched in times of sudden need. Having one is a sort of security for times when life surprises you with financial blows, with it you are most unlikely to run into debt. Good budgeting skills can also be helpful. It will help you track your expenses and is the best way to learn where you can cut some unnecessary expenses and help yourself avoid debt.
[698 words]