Why Do People Stay In Debt? Here Are The 9 Reasons

Why Do People Stay In Debt? Here Are The 9 Reasons

Be it credit card debt, student loan debt or payday loan debt – all of them have reached a staggering figure in the US. Do you have any idea why this has happened? Why do millions of people stay in debt? If you ask anyone why he has not come out of debt, you’re most likely to get a deer in the headlights look. Instead of asking people, let us ponder on the probable reasons why millions of people don’t get out of debt in our country.

Reason 1: People think they don’t have sufficient money

Many debtors think that they don’t have adequate money to pay off their debts.

It’s true that millions of debtors don’t earn enough money to pay back their creditors. It’s a problem. But there are so many debt relief options they can try like debt consolidation or debt management. Moreover, the main solution to the problem is to not borrow money.

Reason 2: They don’t feel the need to get out of debt

Americans are quite used to debts. They have seen their fathers buying holiday gifts with credit cards, borrowing home loans, making car loan payments, and so on. So this is quite normal. This is the most obvious reason why people stay in debt. They don’t aspire to lead a debt-free life.

Reason 3: They are not ready to sacrifice

People don’t want to sacrifice. They don’t wish to stop eating out. They don’t want to live without cable. They don’t want to stop living a comfortable life. They love wearing branded clothes. They love to travel in a luxury car. They want to use expensive cell phones. They can’t give up these things. They don’t want to sacrifice anything in the present time for having a better future.

Reason 4: Their partners are not ready to cooperate

It takes a lot of time to pay off debts. It takes a lot of hard work. Most importantly, people can’t do it alone. If one partner is saving money just to reduce the outstanding balance on credit cards and the significant other is spending money like a millionaire, then the end result is zero. Both the partners have to compromise. Both the partners have to be on the same financial page. Both of them should have a single goal – pay off debt as soon as possible. Unfortunately, many couples are not financially compatible. Hence, many people fail to get out of debt.

Reason 5: They don’t know the correct way to pay off debts

Sometimes it’s a matter of knowledge. Many people don’t know how to manage money. They don’t know how to deal with debt collectors or choose the right debt relief option. Sometimes, people need to read financial articles or participate in various debt forums to enhance their knowledge. There are plenty of debt forums where debtors can directly chat with industry experts. But how many people do that? Not a large number of people.

You can get into debt easily. But you have to walk on a long road for getting out of debt. Many people give up after walking only a few miles.

Reason 6: They are too lazy to do anything

Some people know the tricks to get out of debt. They know about debt settlement or debt snowball method. They know how secured and unsecured debts can affect their marriage, relationships, future, FICO score, etc. They know the steps to increase credit score too. But they are lazy people. They don’t want to negotiate with creditors and reduce the payoff amount. They lose motivation to bring a positive change in their life.

Reason 7: They love to pamper themselves with retail therapy

People love to pamper themselves with retail therapy after a busy week. So what if there is no money in the bank account. Credit cards are there. They can use credit cards to buy watches, clothes, accessories, gadgets, cell phones, etc. The problem is they don’t realize the fact that credit cards are gradually mastering them. They are getting addicted to credit cards.

It doesn’t matter if someone has filed bankruptcy and discharged debts. That person starts getting credit card offers after a few months. That’s what Steve Rhode said once in an interview. The moment a person gets a credit card, he starts using it to make impulsive purchases and gets into debt again.

Reason 8: They feel payday loans will solve their problem

I wish payday loans were completely banned in the country. Many states have banned payday loans. I wish other states also take a similar step. A payday loan is a major reason why millions of people stay in debt. The interest rate on a payday loan is very high. Some lenders charge 500% interest on a loan. Needless to say that it is almost impossible to pay such a high rate of interest.

Recently I met a person who had borrowed $1000 from a payday lender and paid $3000, but he was still not out of debt. The lender asked for more money. The borrower didn’t know what to do since it was not possible for him to pay more. Eventually, he had to revoke ACH authorization and stop making payments.

Reason 9: They are too much concerned about their image

What will people think if you don’t watch movies at the theater? What will your neighbor think if you don’t drive a leased BMW? What if your friends come to know that you have filed bankruptcy? What will happen to your image? Yes, many people keep asking these questions to themselves and stop making attempts to get rid of debt.


Some people lack the vision of a debt-free life. They feel that it’s impossible to live without debts. They say “How will I buy a car without an auto loan?” or “How will I buy a new house?” They forget that there are people who buy a car with cash. There are many students who complete their higher studies with financial aids and grants. I know a few of them. It’s dream to be like one of them.

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