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What causes your debt?

Let’s face it, no one ever wants to be in debt but unfortunately it happens every day. You are not alone; many Americans are also in debt. According to Experian’s annual study on the state of credit and debt in America, the average American has a credit card balance of more than $6,000. That is up nearly 3% from last year. According to an isolated report by the Federal Reserve, the amount of credit card debt has reached its highest point ever, surpassing $1 trillion in 2017.

Reasons for debt

People can be in debt for a number of reasons. They include:

  • Possibly lost job- any time you lose your job it can be very difficult to pay bills. A great way to be prepared is to live below your means. Do not spend everything you make.
  • Health problems- any health issues you or your family members may face could be costly and lead to debt. Another way to help is to set up a fund in case there is an emergency.
  • Student loans- these loans can be costly and can lead to you being behind on the payments. However, there are repayment plans available if you borrowed from the federal government.
  • Not managing your money properly- this can lead to debt because if you are not keeping an eye on the bottom line, it can be dangerous. You have to be aware of your spending habits and know exactly where your money is going always.
  • The cost of going to college- colleges increase their prices almost every year it seems because it is so expensive now to send your children to school. Parents can be prepared by setting up a fund called the 529 college savings plan. This will ensure that your kids will be ready with all of the college costs paid for.

If you are in debt like so many others, do not feel bad. It happens so often. But there are steps you can take to get out of that debt and finally have a great financial future. You just need to take the first step and start working on your debt now.

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