With debt, as with so many other struggles, the first step to finding a solution is identifying what is causing the problem.
Tennessee bankruptcy attorneys often observe that - despite the different homes, jobs, and lives of the millions of Americans currently balancing large debt burdens - the root reasons for debt come down to just a handful of scenarios.
Bankrate.com recently highlighted the top causes of debt - some within our control, some not.
Often debt accumulates as a result of consumer behaviors.
It should come as no surprise that many of us grow up with some degree of financial illiteracy. Schools today don't teach money management. Most of us were raised watching our parents pull out a credit card to make purchases. By the time we're in college, creditors are lining up to give us our first taste of plastic. The result is a lost generation of wayward spenders.
It all comes down to simple math: spend more than you earn, and you end up with debt.
Perhaps you spend more than usual during your holiday shopping spree but fail to save more than usual the next month. Maybe you don't have a budget, so you end up spending more some months than others, without ever recognizing the pattern. Maybe you don't have a savings plan, and surprise expenses force you to reach for the credit card.
Whatever the reason, debt ends up filling in the gap.
Organizing your financial information and creating a monthly spending plan is the best way to get expenses in line with earnings. It may not help you cover the bills, but at least you'll know where you stand.
More than ever, people are accumulating debt because of reduced pay or unemployment. When hours are cut or a job is eliminated, consumers feel they have no choice but to turn to credit to make ends meet.
The problem is that many workers who have recently become underemployed don't reduce spending because they view their situation as temporary. When a few weeks with a smaller paycheck turns into a few months, credit card debt snowballs. Throw payday loans with ultra-high interest rates into the mix, and you can really end up in a pickle.
Having an emergency savings to fall back on can prevent a short income loss from becoming a long-term burden. Unfortunately, few Americans have enough savings to make it longer than a month without pay.
When income is limited and debt is high, Tennessee bankruptcy can help people keep their heads above water. Unlike Chapter 13 - which requires a payment plan - Chapter 7 bankruptcy can eliminate debt for people with little income. Tennessee bankruptcy lawyers have seen many clients have their unsecured debt wiped out entirely.
Even a steady job can't protect us from surprise expenses. The reality is that people get divorced, sued, and sick or injured every day. The resulting legal and medical bills can easily total tens of thousands of dollars and bury consumers under a burden of debt for years.
But while it may not be feasible to prevent these expenses, we can control how we deal with them.
If possible, negotiating an affordable payment plan is a better solution than putting it all on a credit card. However, if a payment plan isn't an option, you need a plan for paying down that credit card balance. Making minimum payments and ignoring the bulk of debt is only going to make the problem worse.
Bankruptcy was developed specifically for helping consumers pay down unsecured debt caused by credit cards, medical bills, and legal fees. Filing for bankruptcy in Tennessee has the ability to eliminate debt at any point - but the sooner you file, the sooner you can lower bills and start keeping your hard-earned dollars for yourself.
More Blog Entries:
Hidden Credit Card Debt Strains Tennessee Marriages: February 6, 2012
Consumers with Bad Credit Could Benefit from Tennessee Bankruptcy: January 25, 2012
Top 10 Causes of Debt, Bankrate.com