Top 6 Reasons People Go Into Debt!

Why do people go into debt? Well, over the years I have seen it all, heard it all and lived through most of it! I’ve come up with my list of why people go into debt but realize this list could be much larger. Your debt load depends solely on your own situation as people who have a high debt load are there for their own reasons. I’m not here to say what is right or wrong or to point fingers, rather simply to share the most common reasons that I have come across in my years.

Reasons Why People Go Into Debt

1-Divorce or Separation- When couples split they don’t realize the amount of debt they can incur when dealing with lawyers, real estate agents or spouses debt etc.

Factor in child or spousal support and that can take a big bite out of your pay leaving you short to pay the bills. Keep in mind money is the number one reason couples fight and split up! Rebuilding life and finances after a divorce is possible but like anything is a journey to a destination.

2No Budget– I’ve said it over and over but a Budget is imperative no matter how much money you make. Some people feel a budget takes too long to do or feel they don’ t know how to tackle starting a budget. It’s important to know that if you are in a relationship in order for a budget to work both parties have to agree to using it. Either way money fights and money problems can arise when the team is missing in teamwork and finance if you are in a relationship.

Some people put their own time and happiness before finances and again this can bite you if you let debt build. An example would be going on a honeymoon that costs $4000 when you are 40k in consumer debt!

There are so many websites on-line that will help you with  a budget.  Canadian Budget Binder is one of them where we publish a Budgeting Series that will help guide you on your journey.

Tip: If you want to get out of debt or stay away from getting into debt start a Budget today and stick to it!

3-Putting Purchases on Credit Cards When people go shopping some tend to get emotionally stimulated when they see, touch and feel  items and justify why they need them. This type of  emotional spending is what sales associates thrive on. If you walk in with the puzzled look or come across as an easy target, guess what?. You will be the sucker of the day! You need to find out why you are filling the void or the hole in your life, so you can stop the emotional spending.

How many people rush out to get the latest Cell phone like the IPhone 5 or the biggest and best 3D Smart TV? Where does most of this end up.. you guessed it- on credit!

Tip-Leave your emotions and impulsive feelings at home male or female. Shopping with emotion will cause you to overspend. I don’t care how orgasmic the product makes you feel, if you don’t have the cash you don’t buy it! Easy Credit+ Minimum Payment= Lots of money and No Sleep!

Being Lazy– Just because you make a nice chunk of money doesn’t mean that you can’t get your hands dirty or put a little more sweat into keeping your finances on track. I have mates who hire house cleaners, lawn maintenance (mowing the lawn), grocery shoppers, dog walkers, gardeners etc. Then they complain that they are strapped for cash or in debt up to their eyeballs.

Come on, seriously! A little work goes a long way especially when the money stays in your pocket.

OK, granted some people are busy, and others have physical limitations but for the most part I’m talking about the people who simply blow money when they are fully capable to do it.

These services come at a premium cost and are relatively easy to do on your own. Unless, of course you have so much money that you don’t know what to do with it. Get out there and give it a try, I’ve survived it!

There are plenty of so-called millionaires with little to no Net Worth because they blow it like it’s water. They are no richer or farther ahead than the average person who makes an average salary but saves their money. The same goes for everyone else.. be smart with your money, spend less than you make and save!

5- Loss of job/Injury/Illness/DeathThis one is a big one as some people tend to go hog-wild when they get a big raise, or take home a huge salary. They play to fit the role buying the nice car, the big house, boat, cottage you name it!

In an instant this can all be taken away and no matter your income level.

Ask Yourself these questions because for some debt comes because of unexpected emergencies beyond their control.


What would you do if you financed all the big-ticket purchases and you suddenly lost your job?

What if you injured yourself at home or at work and are no longer able to work?

What would you do if a medical emergency happens in your family?


Prepare for these potential situations with an Emergency Savings Fund and not spending more than you earn.

Stay away from keeping your debts so high that if something did happen you would be up the river with no paddle!

Make sure you have all the proper insurance coverage! You never know when you will need it. It’s better to say “Thank Goodness I’m/We’re covered” than to have nothing at all.

6-Immaturity and Ignorance

The last reason some people go into debt is potential ignorance to the fact that they don’t know how to manage their money. They have no idea what they spend and are immature with their money due to lack of knowledge. They worry about finances only when the bill comes in and hope they have the money left from their pay cheque to pay it. Some people don’t ask for help or don’t want help because they don’t think they have a problem and know everything about money management.

These people are most apt to declare bankruptcy or have serious debt!

Tip– Be Open to educate yourself on finances, ask for help and don’t feel ashamed. We are all human and not perfect by any means. There is no such thing as a stupid question. Someone is always willing to help.

Tip– Educate your children at a young age so they grow up understanding finance and money management. Starting to learn at a young age will help your children along the way and could be one of the best lessons you can teach your children.

No matter what your reasons for going into debt, you will pay a high price for not managing your money properly. Take a step in the right direction, never give up and fight debt.


Are you NEW to Canadian Budget Binder?

If you are new Start here!

Would You Like To Guest Post for Canadian Budget Binder?

Do you have a Question for Mr.CBB please click HERE to ask him!

Are you on Mr.CBB’s Blog Roll? Check HERE… if not and you want me to check out your blog and add you to my ever-growing blog roll simply click here and fill out the form. Introduce yourself and lets LINK UP!

If you are new to Canadian Budget Binder LIKE or Follow Mr.CBB on TwitterFacebook and Pinterest or you can also sign up for email notifications here.

Related articles

Photos courtesy of: Stock.xchng

Share to...

Similar Posts


  1. I agree with above… with today’s economy and the way the job market is more and more people are staying in school longer or returning to school.

    I’m 48 and did the same. Ironically, We were told in our class to expect the wait time to find a job from 6 months to 18 months today.

    It’s been six months for me and it’s the longest, I’ve ever been out of work with not much in sight. I ow have the burden of being out of work dubbed with a hefty student loan to carry.

    I have had no debt in ten years, and now have a hefty loan that in hind site, could have bought me a new car to get me to a region that does have jobs.

    If I had known then what I know now…. I would have bought the new car instead!!!

  2. I agree with all of the above and would add school. More than half my debt is school related. Tuition, books, rent etc it all adds up!

    1. True, I hear ya. I look at school as a good debt as long as you are working in said career than its a good investment/debt. I bought my books used on kijiji for school and saved alot. I also saved up with part time jobs. This helped to pay for my University so I had no debt after 4 years. I also went back to school in Canada and paid cash for all of that as well. School doesn’t have to end in debt as long as parents teach their children to save. Thanks for your comment rain4ever and hope you get your education paid down quickly! Mr.CBB

  3. I agree with all of these. And as a divorcee myself, I can say #1 proves that debt can happen to anyone, no matter how hard they try to stay out of it!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.