Reasons People Acquire So Much Debt

People and Debt

People in their early 20s are already in debt. Do you know how that feels? To be in debt when you are that young can wreak havoc on your finances until your retirement. If you don’t clear that debt soon, you’re at risk of having this ballooned in a few years. The reason why people are in debt vary. Still, in the United States, for example, Americans as young as 18 are already applying for massive student loans to attend Ivy League colleges. They don’t think about how they’re going to pay off these loans in the future. They depend on the promises of having a college degree.

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But in recent years, there has been a question of whether it’s still practical to pursue an expensive degree in exchange for having to pay for huge student debts. Some 50-somethings are still paying off those student loans, while others have barely made a dent ten years after graduating from college. Can you imagine the huge pressure these loans put on individuals who have yet to start their careers?

Some people are better at managing their debts. Singaporeans in their 20s are good at handling their debts generally. In what part are Singaporeans failing? According to recent studies, the Achilles heel for those in their 20s is personal loans. In Singapore, people take out personal loans to pay for a wedding or supplement a home renovation loan. Recent figures showed that the average figure of debts for those in their early 20s is $28,166. This is enough to make you seek a debt consolidation plan.

So, what are the other reasons people are in debt? Is it simply because their salaries are not enough? Are they living expensive lifestyles?

No Income or Reduced Income

With no money coming into the household, people will turn to personal loans and credit cards to make ends meet. They’ll use their credit cards for groceries and for paying bills. When they get employed, their salaries are not enough to cover the interest rates of these debts. That’s why a lot of people have huge credit card bills despite their simple living.


Plenty of people get into debt because of divorce. Aside from the division of assets that often leave one party dry, they also have to pay the huge lawyer fees associated with a divorce proceeding. It puts a strain on the personal finances of the ex-couple. Not to mention, they now have to live in separate houses with separate living expenses. They need to provide a good enough home for their children, so a bachelor’s or bachelorette’s pad is not an option.

People and Debt

Poor Money Management

Do you know that a lot of people don’t have a monthly budget? That’s the reason they get into debt. If you don’t follow a strict monthly budget, you will not know if you’re spending way over what you can afford. Listing down your expenses every month will help make you see where your money is going. This way, you can cut unnecessary expenses and help yourself avoid debt.


What does underemployment mean? So many people think that underemployment is a temporary thing, that it will make ends meet for now. In fact, it is getting you into so much debt that even with good employment, you won’t have much leverage to get out of the debt anymore. You have to start looking for a second job so that you won’t rely on your credit card so much.


It’s a favorite pastime for many people, but it is also one of the top reasons you are in so much debt. It can have a lasting effect on your life. You might even find yourself selling properties to pay for your gambling debts. This is a guarantee that you will get into so much debt that you might turn to loan sharks to pay them off. The idea of “winning big” in gambling has never worked for anyone. It will certainly not work for you.

Medical Expenses

The worst thing that can happen to anyone is to face huge medical bills because you won’t have any options but to go into debt to afford the treatments. While there is insurance and government aid to help you afford the treatments you need, they don’t always cover everything. When you are desperate to see a doctor or undergo treatment, it’s an easy decision to swipe your credit card.

Debts can follow you to retirement, so it’s important to find a way to settle these while you’re still gainfully employed. You don’t want to be paying for these while you’re enjoying your retirement. Managing your finances early on will not only reduce the risks of getting into too much debt but also give you peace of mind.

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