What are the major causes of debt?

What are the major causes of debt?

Do you ever wonder how people end up with sizeable debt loads? Do you worry that this will happen to you? There are common reasons why people end up with debt. It can help to know what these factors are so that you can work towards avoiding these problems to protect yourself.


Not having a budget

The biggest reason that people end up with debt is that they routinely spend beyond their means because they don’t have a budget. When you consistently spend more than you make, it doesn’t take long for that debt pile to grow.

Being underinsured

Insurance premiums can seem like a pain to pay, especially when money is tight. Rest assured, being properly insured will not only give you peace of mind, it can save you from taking out crippling debt if you suffer property damage, are injured or sick or lose a loved one. Make sure you’ve got adequate homeowner/tenant, auto, life and health insurance.

Heavy student debt

With the rising cost of education, more and more students are graduating with substantial debt. It can be hard to move forward when you are already saddled with debt. Try to keep student debt to a minimum.


Having a gambling problem is an addiction, which can wreak havoc in all areas of your life, especially your finances. If you or someone you love is a problem gambler, get help right away.

Loss of income

When you lose your job, it can be even harder to make ends meet. People end up taking out debt just to cover costs. To reduce this particular risk, keep your debt load low and your savings substantial, so you are looked after should your income be interrupted.


Not only is divorce emotionally painful, it can lead to debt problems. Sign a pre-nuptial agreement to avoid costly financial conflict. Try and split things amicable and still offer financial support if possible, to avoid taking out lots of debt.