How Can Debt Happen?
Read below to understand the most common reasons that people in Scotland get themselves into debt. We know that debt is very easy to get into, but it can be extremely difficult to get out of. But being aware of the common causes can help you avoid it, or prove useful if you are already having trouble with your money.
If you are in this position – you are not alone. Trust Deed Scotland® is here for you. Or, if you are worried about a partner or family member who has gotten themselves into financial difficulties, ask them to reach out to us.
We would like to break the taboo that is associated with unaffordable debts, so that you can understand that it is very rarely the individuals ‘fault’ and that the most important thing is getting help with debts from thereon.
A Change in Circumstances
One reason for building up debt can be a change in circumstances. A reduction in income, or one-half of a couple losing their job, can be a tricky thing to adjust to. However, the quicker you can get used to being on a stricter budget, the less likely you are to fall into debt.
As soon as a change occurs, it’s important to look at your spending and do what you can to cut back. Life events such as divorce or illness are also common causes of debt, and it can be particularly difficult to stick to budgets or pay attention to finances during these stressful times.
A change in circumstances can also go the other way. Getting a job after a period of unemployment is a cause for celebration, but you should still be careful with your spending. The temptation to splash out can lead to living beyond your means and potentially cause financial trouble down the line.
Unexpected bills are a very common reason for why people do get themselves into debt. For example, dental bills, parking fines, and vet bills.
As a company that have advised thousands of clients since 2009, very rarely in our experience does a person find themselves in debt through reckless, or deliberate misspending. For us, it’s important that we help our customers to understand that taking the first step of seeking help, while also the most difficult; is ultimately the most important step to take.
Gambling and Over-Shopping
Gambling and shopping have become far more accessible activities thanks to the internet, which means the number of people developing addictions to these pastimes has increased too.
Struggling to control the amount you gamble, or how much you spend on nonessential items, is a sure-fire way to get into debt. Organisations such as Gamblers Anonymous Scotland can be very helpful for situations such as these.
Not Having a Spending Plan
If money is especially tight, a monthly spending plan or budget is vital.
In a 2023 Trust Deed Scotland® customer survey, 25% of our customers told us that a lack of control over their finances was the biggest cause of their financial difficulties.*
Going back through your receipts and checking how much you are spending on specific things will also enable you to identify less necessary purchases. Shopping around in various supermarkets and checking which offer the cheapest options can be a smart move too.
Making plans and checking on your spending will also make you feel far more in control of your finances, and allow you to see if a problem is developing, thereby enabling you to take action or seek help before the problem worsens.
Spending Your Savings
Not everyone is in the privileged position to be able to put a little money aside each month. If you can, however, this will be hugely beneficial if you run into any unexpected expenditures in the future.
The need for repairs in the home, for example, can come from nowhere, and having money set aside will prevent you from having to pay out of your monthly income, which could potentially throw other payments – particularly direct debits – into disarray.
Not Talking About Money
Finances can seem scary without proper explanations, and people can be made to feel bad for not understanding specific terms used when speaking about money.
If you have children, beginning to educate them about money and how it works from an early age will help them significantly in the long term.
If you are in a relationship, you should also talk often and openly about your finances. Keeping money problems a secret will only cause issues later on – money brings on enough stress as it is!
Why Do People Get Themselves Into Debt? – Where To Get Help
How does debt happen?
Whatever the reason for debt, it’s extremely easy to find yourself in debt.
If you are concerned about your financial situation and need some non-judgemental debt advice, you can talk to Trust Deed Scotland®. If you are thinking about reaching out for debt advice, and would like more information in the meantime, try our Trust Deed Wizard® Tool to see how we can help.
*Trust Deed Scotland® Customer survey from November – December 2023, with 2,246 customer responses.