Knowing The Cause Of Credit Card Debt Is Essential

In the last ten years, the number of households who have been forced to file for bankruptcy has gone up exponentially

. This has occurred because the average household in the United States is over 18,000 dollars in consumer and credit card debt. Many individuals and families are struggling financially today.

In order to get out of a consumer debt crisis and figure out ways to manage money better, it is imperative to discern how the debt came to be in the first place. If this is not understood, it will be practically impossible to get out debt.

Now that America is going through a recession due to the current credit crisis, many more people are trying to stay financially afloat during these hard times. It common to see people in the United States who are struggling with more debt than they can handle, and it is vital to understand why this has happened. People who spend more money than they have usually possess some of the same character traits.

First, they are overly optimistic. These people tend to ignore the reality of a situation. While being optimistic is healthy and the true reason for happiness and success, some people go overboard. These people usually focus on making small monthly payments on items that they cannot truly afford. They assume that something will change and they will be able to pay off their credit card without a problem.

Unfortunately, these people ignore their high interest rates and the total amount of money they owe to credit card companies. They choose to pay attention only to the minimum monthly payments. When the debt increases due to excessive spending and it becomes clear that a problems has arisen, these are the people who assume that the money will magically appear. They often times will not change their spending habits until they have no choice.

The second characteristic they have in common is that they tend to shop as a way to escape reality. Shopping distracts them from the real life stresses that they may be experiencing. Buying something to make themselves feel better is always assumed to not be a problem. They do this so often that it becomes a horrible habit since they are using credit cards to make these purchases.

Of course, they realize that spending their pay check on items that they do not need would be detrimental. They would not be able to pay household expenses. By charging their frivolous purchases, they are effectively spending more money than they are bringing home.

Thirdly, these are the type of people who constantly require instant gratification. Most of the time, these are the individuals who have been raised in such a way that they are accustomed to getting what they want, when they want it. They have not been taught self disciple and do not think about long term consequences for their actions.

If you are currently in debt and looking for a way out, you must evaluate yourself. If you can see any of these three traits in yourself, you may want to consider changing your financial lifestyle. It is fine to buy something new and exciting every once in awhile but do not put yourself in a bad situation.

Excessive shopping is not the only reason why people are in this type of credit situation. Medical expenses and unavoidable financial transactions are contributors as well. However, the majority of credit card debt is really just the result of bad spending habits and no self control. While it is simple to quickly get into debt, it is a long difficult process in getting out. The best thing to do is be financially responsible and accountable for your spending habits.

by: Sharon Taylor.

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