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Debt Traps: What They Are & How You Can Avoid Them

Debt is a lot like weight. 

Phrases such as "simply spend less than you earn" and "eat less than you burn" sound simple enough. However, the obesity epidemic and the staggering number of consumer and business bankruptcies say otherwise. 

The bad news is there are a number of situations that lead to thoughtful, responsible people accumulating unsustainable debt. The good news is that taking a moment to learn about these common debt traps can help you avoid falling into them. 

Using your savings to pay off your debts

The appeal of using your savings account to pay off your student loans, auto payment or other debts is understandable. The problem is that it is easy to go overboard and leave yourself without an emergency fund. Then, when life happens, you can quickly find yourself drowning in debt with no financial life preserver in sight. 

Losing track of your subscriptions

It's a great time to be a consumer; your choices are nearly endless when it comes to video, music, and reading services. Unfortunately, $8 here, $10 there, and $9 everywhere quickly adds up. If you fail to take a moment to consider the total costs of your subscriptions, your finances can quickly become overwhelmed. 

Emotional purchases

Whether a purchase is made in order to avoid disappointing a loved one around the holidays or to "keep up with the Jones'", allowing emotions to drive your spending can result in a credit card balance you cannot afford to pay off. 

These are three of the big debt traps that people fall into. Take a moment to think about these and consider whether they play a role in your own family's finances. Then, click here to learn about additional debt traps. 

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Sigmon & Henderson, PLLC
518 S New Hope Road
Gastonia, NC 28054

Phone: 704-269-6374
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