Americans are racking up debt faster than ever. Whether it’s a consequence of a poor economy or a poor upbringing, the fact remains that more Americans are carrying debt than in past generations.
Where is all the debt coming from? There are many different ways that people are falling behind. Read on to discover 5 common ways that people are accumulating debt and see if you can identify your own spending pitfalls to stop a bad trend before it gets out of hand.
This probably isn’t surprising. We’ve all heard that the American dream is to own your own home, but in today’s world, homes cost many times the average salary. In some parts of the country, home prices are so steep that a starter home will cost the same as a mansion in a less expensive area.
Another thing to note is that most people feel the need to buy a bigger and better house than their friends, family or neighbors. The keeping up with the Jones’ mentality is causing a lot of families to buy houses that are far larger than they need, upping their property taxes, their mortgage payments and their homeowners insurance.
2. Student Loans
While it’s great that so many Americans are getting a higher education, it’s not so great that it comes at such a steep cost. Student loans can often cost as much as a mortgage payment, making it difficult if not impossible for young people to live independently from their parents.
It’s not just private schools that are getting out of control. Public schools are even cutting their funding to middle-class students, leaving them no other option than to finance their educations in an effort of getting a decent paying job.
Cars have come a long way in the last decade, and today’s cars carry more computerized technology than the first space shuttle. All of this technology comes at a price. Luckily, car loans are usually only 5 years long, so the debt is somewhat manageable.
4. Credit Cards
Credit card debt is crushing millions of Americans. The buy now, pay later lifestyle is leading to serious problems for many people. Shopping addictions, instant gratification and a lack of basic financial skills are turning many people into credit card zombies that are charging themselves into a hole they will never be able to crawl out of.
5. Taxes owed to the IRS
There’s nothing worse than finding out that you owe taxes to the IRS at the end of the year, except finding out that you owe taxes you can’t afford to pay. Most people would pay the IRS if they could, but when money is tight, sometimes you just can’t afford to pay the piper. Unfortunately, the IRS is a relentless beast that will add fines, fees and interest to the money they feel you owe. If you owe money to the IRS, it’s smart to get in touch with a tax lawyer that can help lower your burden to a level you might have a hope of paying off in your lifetime.
Debt can crush you. Unfortunately, in today’s world it’s extremely difficult to live a debt-free lifestyle. Be aware of the different ways that you can fall behind and be diligent about spending only within your means.