Many Tennessee residents may have friends or family members who are in debt and automatically think it's because of poor money management. While this may be true for some consumers, it's not always the case. In fact, many individuals with significant credit card debt are actually frugal spenders and are in their situation due to circumstances beyond their control.
It may come as a shock that those with overwhelming debt tend to spend less. Those who are debt-free tend to make extravagant purchases, such as appliances and vacations.
A new report shows that unexpected medical debt is a huge factor contributing to the growing debt of many consumers. Surprisingly, even those with medical insurance are hit hard. Although those without insurance are more likely to have debt, 60 percent of credit card debt is caused by medical expenses that consumers are forced to pay out of pocket. In order to avoid such debt, many people go without medical care.
Unemployment is another factor. In low-income and middle-class families, job loss contributed to 25 percent of debt cases. In 40 percent of families with high debt, there is a family member has struggled to find full-time employment but has had to settle for a part-time job.
Debt buildup can happen to anyone. Even the rich and famous have been known to spend too much money and end up filing for bankruptcy. Fortunately, there are ways to tackle debt while paying for necessities. It can be challenging, but there are programs that can help. In extreme cases, even filing for bankruptcy can help because it can offer a fresh financial start.
Source: Think Progress, "No, People Don't Get Buried In Credit Card Debt Because They're Bad With Money," Bryce Covert, May 10, 2014