10 Causes of Debt 5-10

Causes of Debt #5 Car loans: $768 billion

 

Outstanding auto loans totaled $768 billion in the third quarter of 2012, the highest amount in nearly four years, according to the Fed. Also, auto-loan balances increased for the sixth consecutive quarter.
New auto loans rose for the third consecutive quarter, to $85.8 billion, an increase of 4.4% over the prior quarter.
The percentage of auto-loan debt that is 90 days or more delinquent was roughly steady versus the prior quarter, at about 4.2%.
The rise in auto debt, along with the stability in auto-loan delinquencies, is seen as a positive sign for the health of the overall economy.

Cause of Debt #6 Credit card debt: $674 billion

 

Credit card debt in the United States totaled $674 billion in the third quarter, up $2 billion from the second quarter, but down significantly from its peak of $866 billion in the fourth quarter of 2008.

The Federal Reserve Bank of New York also reported that there are 382 million open credit card accounts, down slightly from the second quarter.

The average credit card debt per borrower was $4,996 in the third quarter, according to the credit reporting bureau TransUnion. That is up 0.5% from the second quarter of 2011 and up 4.9% from the third quarter.

Credit card debt in 2012 followed the same pattern as the previous year, TransUnion reports, with balances declining in the first half of 2012, then increasing in the second half. That seasonal trend is also reflected in the national credit card delinquency rate (the ratio of borrowers with payments 90 days or more past due), which increased from 0.63% in the second quarter to 0.75% in the third.

 

Cause of Debt #7 Home equity loans: $573 billion

 

During the height of the real-estate bubble, Americans relied on the equity in their homes to support their lifestyles in the face of falling or stagnant wages. The viability of that approach evaporated in the wake of the financial meltdown that occurred in late 2007, but home equity lines of credit have remained a significant source of personal debt for U.S. consumers.
On the plus side, that exposure has mainly declined since 2008.
Balances on home equity lines of credit dropped by $16 billion, or 2.7%, to $573 billion in the second quarter of 2012, the Fed reports. The delinquency rate (90 days or more) for such lines of credit has remained steady at 4.9%, as of Sept. 30, 2012, the Fed states.

Causes of Debt #8 Medical debt: Estimated to be hundreds of millions of dollars

 

Not all credit card debt involves discretionary purchases. Many Americans use their cards to pay for medical expenses not covered by health insurance. Reliable figures for what Americans collectively owe in health care debt are not available, but recent surveys suggest it's a big problem.
According to the Commonwealth Fund, a nonprofit health care research foundation, 24% of Americans ages 19 to 64 have medical debt they are paying off; 25% of them owed $4,000 or more.
A survey by the research and advocacy group Demos found that 62% of low- and middle-income households with credit card debt reported that medical expenses contributed to what they owed, adding an average of $1,679 to their balances. And 30% of the households surveyed had medical debt, averaging $6,476, that's not on their credit cards.
Amy Traub, a senior policy analyst at Demos, says about 62% of personal bankruptcies in the United States in 2007 were linked to medical bills or illness, and past-due medical bills make up 52% of accounts reported by collection agencies.

Cause of Debt #9 Gambling debt: Estimated to be hundreds of millions of dollars

 

One particularly toxic kind of debt that frequently ends up on credit card balances stems from the losses racked up by problem gamblers.
Here, too, hard data is lacking, but new casinos and the availability of online gambling sites appear to be giving people more ways to get in real financial trouble.
The National Council on Problem Gambling estimates that about 2 million Americans in any given year could be considered pathological gamblers, and an additional 4 million to 6 million could be considered problem gamblers.
Those with gambling problems can rack up serious debts. Gamblers seeking help from Nebraska's Department of Health and Human Services reported an average debt of $28,158, the department reported in 2011. If that level of debt were shared by half of the pathological or problem gamblers in country, it would amount to between $84.5 million and $112.7 million in total gambling debt.

Causes of Debt #10 Personal business and farm loans: Several hundred billion dollars

 

One form of debt that is generally considered positive is the kind taken on by people who are starting or expanding business.
So, it can be considered good news that the U.S. Small Business Administration's loan programs posted their second-largest dollar volume ever in the 2012 fiscal year, which ended on Sept. 30. The agency's loans for the year totaled $30.25 billion, which works out to about $97 per American, and the SBA says the growing pace of its loans is a positive sign for the economy.
Agriculture remains an important part of the economy, too, and farm loans (which, like small business loans, are typically made to individuals rather than corporations) represent another arguably positive form of personal debt.
As of year-end 2011, the U.S. banking industry had extended nearly $130 billion in farm loans, according to the American Bankers Association's latest Farm Bank Performance Report.  You have to understand that when you start a small business you have to budget yourself and make sure you have a serious plan on how you are going to profit in this business.  Information gathered from (MSN Money)


Hello.  My name is Andre Hardy and I am part of a “Home Business” that is an affiliate of Dave Ramsey and we preach being debt free.We are offering Dave's "The Total Money Makeover" for free to anyone that joins our team and start their journey to being debt free.Click the link below and see what we have to offer.
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10 Causes of Debt/Reason Number 2

#2 Divorce

 

It is not a glorious thing when a couple gets a divorce.  If there are children involved it can be a pain to them just the same.  There are many things that go into a divorce financially.

When you get divorced there are things that can put you under very fast.  Whoever gets the house has to worry about the mortgage, repairs, bills, and property tax just to name a few.  Whichever partner is not rewarded the children has to worry about survival while paying child support.  It also causes them money to spend time with their children as the custodial parent will see them more and spend more time with them doing things that will not cost as much.

One major thing is that you both will have to split all the debt that you have accumulated over the years.  Credit cards, car notes, and any loans you may have taken out.  Factors that weigh heavily on the pockets. 

One way to avoid this to make it easier on the both of you is to have a plan that you both can agree on.  This plan should include each person’s financial situation.  Face it one most likely makes more than the other.  Just because you are divorcing does not mean you have to neglect your former spouse’s needs financially.  Think of the hate that would cause between the two of you and the affects it would have on the children.   If both of you are willing to make sacrifices and have a clean break from all financial ties (with no debt) together this is very important for you to do.

Instead of keeping the house you both may decide to sell it.  This is the most common thing done in divorces.  This way the mortgage is not an issue.  If you can’t afford to keep the car then you will need to sell it and buy a cheaper car.  Your income is not the same as it was when you were married so you can’t continue to live on the budget you may have come accustomed too.

Set a budget for yourself and remember to live within your means and not try to be glorious or go on a spending spree because you are single and you need that new outfit to go out on the town with your friends.  Once you realize how tough things are going to be on a single income the better off you will be.  Build your savings and your emergency fund up and start to do the Baby Steps listed in the “Total Money Makeover” by Dave Ramsey.

Dave Ramsey Giveaway

 

Many of these lessons are taught by Dave Ramsey in his best-selling book “The Total Money Makeover”.  These lessons in this book will teach you how to be prepared.

 

Dave Ramsey’s lesson: “Design a sure-fire plan for paying off all debt---meaning cars, houses, everything.  Recognize the 10 most dangerous money myths (these will kill you).  Secure a big, fat nest egg for emergencies and retirement!”  These are just some of the things you will learn in this book.  It has changed the lives of millions including myself.

 

About the Author:

Hello.  My name is Andre Hardy and I am part of a “Home Business” that is an affiliate of Dave Ramsey and we preach being debt free as well as provide you with an engine to make extra money without leaving your primary job.  We are offering this book for free (The Total Money Makeover) to anyone that joins our team and start their journey to being debt free.  Get Your Free Dave Ramsey Book.

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10 Causes of Debt

10 Causes of Debt

Cause #1: Reduced Income But Same Expenses

How do we get into debt?  There are 10 Causes of Debt in which I will discuss throughout this Debt campaign.  We as people tend to do so many things to get us into debt and the majority of the things we do, we don’t even realize that we are doing them.  Some things we have control over and some things we don’t.  The lesson to be learned is to control things we can and to be prepared for the things we have no control over.  Over the next ten newsletters I will discuss them one by one so you can get a good idea on how to combat debt in your lives and your family’s lives.

 

First Cause of Debt: Reduce Income but Same Expenses

There are many circumstances in life where we lose some or all of our income.  May it be getting laid off from work, illness, paycuts, or having to take a less paying job.  These are things you have no control over, but when these things happen we have to adjust our lifestyle.  We can no longer drive the most expensive car or live in the most expensive house.  It is hard for people to let these things go and it is totally understandable.  We get accustomed to the good things when we have worked so hard to get them.  This is the hardest thing to do when it comes to adjusting to a reduced income lifestyle.

The first thing that needs to be done is to take into account all the things that are extras.  What I mean by extras is those things that you can live without and are not critical to living.  Some of things may be to sell your car for a less expensive one.  If you can no longer afford cable or the big cell phone bill (which many of us have) and find a lower plan that will fit your budget.  Cut back recreational activities.  Now we all understand that we have to be able to enjoy life, but maybe instead of every weekend maybe just once a month.  Find less expensive things you can do at home with your children or go to your local government’s websites and find out what recreational activities they have for free.  Many cities post these on their websites so take full advantage of that.

Once you cut back on many of the things you can live without and are not critical for your survival, then it’s time to take a look at your finances again.  Hopefully by then you have adjusted enough and your mortgage or your rent is not over shadowing you like the Creature Within.  All things are possible as long as you have a plan.

Dave Ramsey Giveaway

Many of these lessons are taught by Dave Ramsey in his best selling book “The Total Money Makeover”.  These lessons in this book will teach you how to be prepared.

Dave Ramsey’s lesson: “Design a sure-fire plan for paying off all debt---meaning cars, houses, everything.  Recognize the 10 most dangerous money myths (these will kill you).  Secure a big, fat nest egg for emergencies and retirement!”  These are just some of the things you will learn in this book.  It has changed the lives of millions including myself.

 

About the Author:

Hello.  My name is Andre Hardy and I am part of a “Home Business” that is an affiliate of Dave Ramsey and we preach being debt free as well as provide you with an engine to make extra money without leaving your primary job.  We are offering this book for free (The Total Money Makeover) to anyone that joins our team and start their journey to being debt free.  Click the link below and see what we have to offer.

http://www.1-2-3-bedebtfree.com/

Like My Facebook Fan Page: http://www.facebook.com/9to5assassins