MAIN REASONS WHY WE GET IN DEBT - Video series 1/2

Do you find yourself asking how did I get here? How did I get into this financial mess? When did it start?

Well, we identified 6 main reasons why, and because it will be too long to talk about all of them in one blog, today I will be talking about the first 3 main reasons why we get in debt and next week we are going to talk about the remaining ones. 

1. Living beyond your means. What does it mean, it means you are living a lifestyle that you can’t afford.

When you buy things that you don’t need, but you have your finances in order and enough extra money to pay for them… please go ahead! Buy it, enjoy it!  But if you are paying it with credit, my friend… we have a problem.

We, humans, are experts in finding meaning to things we don’t need, here is what I mean:

If you have a busy life you NEED to buy pre-made food, spend on eating out or buy store coffee to keep you going on your busy day.  

If you have a high position in a bank, you would say that you NEED to wear expensive cloth. If you are worried about your family’s safety you NEED to buy a brand new car. If you want a good education for your kids you NEED to pay for private schools.  

But, do you really need these? You don’t need to get the latest phone to be able to make a call, you don’t need an expensive diamond ring to express love. Not because it is what normally other people do… it would be the right thing to do. You are smarter than that!!

2. An Emergency or An unexpected major expense.  I'm optimistic, but Let’s be real life happens! Somebody in your family will get sick, you will lose your job, you will have to fix your car or something will break down in your house. The problem is... you don’t plan for it. There are a lot of things on what you don’t spend on every month but you know that one day, you will have to pay for it, like fixing the roof of your house.  So, make a plan, start saving now so all those unexpected expenses will become less painful if you are ready to tackle them.
3. Buying or renting a home that you can’t afford. Or what’s also called “house poor”.  You might be very good on the other previous points but if you are paying a high mortgage, high rent, if you are spending too much on property taxes, utilities, condo fees and maintenances you have become a slave of your home. Think about it, you are missing the option to go on vacation, to work fewer hours a day, to have free time to enjoy hobbies or family activities because you have too many monthly expenses to cover. So keep in mind that you shouldn't spend more than 30% on all your combined house expenses.

In the next blog, I tell you the remaining 3 reasons why we get in debt. So Keep crashing your money goals, and we will see you next time!